Re: I need a loan in UK

In message <jptlh.22946$k74.5845@xxxxxxxxxxxxxxxxxxxxxxxxxx>, Ronald Raygun <no.spam@xxxxxxxxxxxxxxxxxxxxx> writes
Let me point out, if I may be allowed to be a little pedantic (and if not,
I'll do it anyway) that a mortgage is not "a loan to buy a house". It is
a security given as collateral for a loan to buy just about anything.

I actually almost replied to the OP myself (as I am sure you were expecting) but decided not to on the grounds that I was likely to be warned by you for sticking in 'grumpy old pedantic' mode, but now that you are in pedantic mode yourself I feel I can also slip down there to join you.

Firstly can I congratulate you on still remembering everything I have taught you over the years, especially those when you had a different trade name, but secondly I must take issue with you about your use of the words "security given as collateral". It doesn't make sense.

'Collateral' is often used these days in what I think is the American sense and it may even have crept into some UK English dictionaries on the basis that a dictionary reflects usage rather than defines it. What you should have said was "(a)n the act of giving an item as security for loan" or similar. From the lenders point of view 'Security' comes in two types - 'Direct Security' in which the title to the security proffered is in the same right as the debt (and most but not all 'mortgage' lenders insist on this) or 'Collateral Security' in which the title to the proffered security is different to the debtors. The latter arises when a house owned by A is used to secure a debt owed by A&B. Another is my old Staff House Purchase Loan which was granted to me solely although the mortgaged house was owned by my (now ex)wife and I as joint tenants. For purposes other than the purchase of domestic houses banks would often take a mortgage over an asset owned by a completely separate third party as collateral security. I always felt this was on dicey ground on the basis that a mortgagor could possible claim that his security was invalid against the mortgagor on the grounds there may not have been a commercial benefit or relationship between the mortgagor and the primary debtor. Such thinking was used to invalidate inter company cross guarantees in which assets of one company secured the borrowings of another. There was a case which I think was settled out of court in the 1970s which turned on this point and afterwards my bank would only accept intercompany cross guarantees if there was a beneficial trading relationship between the two companies. I could see no reason as to why that principle could not be applied to collateral security or even to guarantees given by parents to assist their offspring buy houses. I think I discussed this point in this NG many years ago with Paul Burridge. Paul! are you still out there lurking? or perhaps under a new trade name perhaps? How did I end up talking about this? Damn, now I cant find my glasses which I need to finish this knitting pattern I've lost, and why did I come upstairs in the first place?.

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John Boyle
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