With regard to the “all monies” clause, several organisations in the United Kingdom, such as the National Association of Citizens Advice Bureaux – which is a registered charity providing free, confidential and impartial information advice and advocacy from over 3,000 locations through its network of 420 independent advice centers – have raised the issue of the “all monies” clause, with the Financial Services Authority and the Ministry of Justice.
I also understand that in Australia, the Uniform Consumer Credit Code has prohibited such “all monies” clauses, for reasons of unfairness in consumer contracts, since 1996. Therefore, I believe the ABS’s remarks that the “all monies” clause is also practised by banks in Australia, may be incorrect.
Although the ABS has clarified that the “all monies” clause has been used by banks in Singapore for more than 10 years in securing mortgage of private properties, I understand that this was the exception rather than the norm for mortgages prior to 1 September, 2002, because of the CPF first charge on housing loans before this date.
I also understand that not all banks currently include this clause in new or re-financing of housing loans. Where a re-financing involves changing from an existing loan without this clause, to a new one with this clause, I would like to suggest that this be made known to the borrower.
As to “Borrowers should exercise care and be responsible for all loans they take up. Even without the “all monies” clause, the bank can undertake legal proceedings to foreclose the mortgaged property to recover outstanding loans. This has the same eventual effect as exercising the “all monies” clause, but would incur additional legal fees which would have to be borne by borrowers”, banks may have been more reluctant to foreclose in the past on mortgages without this clause, because they will not have priority over the other creditors of the borrower.
However, with this clause, the bank may be more eager to foreclose, as soon as the borrower is in arrears, knowing that it will be paid first from the property sale proceeds.
I am surprised by the statement that only “Some banks communicate the “all monies” clause to housing loan borrowers via their Letter of Offer”. Shouldn’t all banks be required to do so, instead of “some”?
In respect of “In addition housing loan borrowers are represented by lawyers of their choice and are at liberty to clarify and seek advice from their lawyers on the implications of the clause prior to execution of the mortgage documentation”, from a practical standpoint, how many borrowers are advised and given the luxury of time to clarify and seek advice from their lawyers? Moreover, how can you clarify, when only “some” banks communicate?
Does “we will be working with member banks on standardized disclosure practices in explaining the salient clauses”, mean that not all banks are now required to disclose or explain this clause?
In this connection, what is the point of the Monetary Authority of Singapore’s recent proposal of the requirement for a one-page home loan fact-sheet disclosure highlighting what a mortgage borrower needs to know, when such an important item as the “all monies” clause is absent?
