Protected trust deeds: improving the process consultation

9. Home Equity

9.1 Subject to 9.2 (below) the value of the debtor's share of the equity in their dwelling-house will be frozen at the date the trust deed was granted. This may be revised at any future point prior to the debtor's discharge where the debtor fails to meet his or her PTD obligations.

9.2 Where it proves necessary to sell the debtor's home the equity freeze will cease to have effect so the net proceeds of sale will be paid to the PTD estate.

9.3 The debtor must be provided with a clear written explanation illustrating the net worth of the equity to be released (where applicable) and must be informed that this figure may be re-calculated should he or she fail to meet their PTD obligations.

9.4 Following discussion with the debtor there must be an attempt to release the debtor's net equity in the dwelling-house where practicable. This discussion should occur at the beginning of the PTD administration. The trustee should consider all means at his disposal including the potential for a re-mortgage, use of the Scottish Government Mortgage to Rent Scheme, settlement from a third party or any other method which the trustee considers to be fair and reasonable. The trustee's plans for releasing the equity will be detailed in a statement that will be signed by both parties. The statement will be copied to the AiB along with Form 3, or where this is not possible, within 6 months of the protection of the trust deed. Where the debtor is unable to realise sufficient funds to buy out the equity the trustee will extend the term of the PTD where appropriate to allow sufficient funds to be in-gathered.

9.5 At the time the debtor is asked to release the net worth in his/her dwelling-house, the trustee, or a suitable member of his/her staff, must advise the debtor to seek advice from an independent financial adviser. This advice will identify the most appropriate mortgage vehicle and the length of the proposed repayment term.

9.6 For the purpose of the release of net worth, the property shall be valued by an independent professional valuer on an open market basis.

9.7 When dealing with the debtor's dwelling-house, the PTD trustee should refer to Section 6.10 of the Notes for Guidance for Interim and Permanent Trustees published by AiB which can be found at: http://www.AiB.gov.uk/guidance/DAS/nfgpostapril/notesforguidancepart1to7n