can security for mortgage[s] be reduced when the security is subdivided

[EGU 591]

Thanks in advance for any constructive advice.

I won't go into the history but one way and another we have survived the last 5 years, a year ago we just scraped through to refinance away from an 8.95% floating rate to a main stream bank so now we have a new lease on life.
To refinance, it took all the assets we had as security,as of early this year a sub-division of a block of land held as security was completed and as a result the value doubled, we contacted the bank to apply to have some of the sections released, after jumping through the hoops the bank has offered to lend us more $$$ but will not release any sections unless we can present proof of an offer to buy a section or a sale and purchase agreement.
Although the $$ would do a lot of good we would much rather have the sections released from the mortgage.

What are our options?

[artemis]

I recently had a property released as mortgage security. Cost me $100 in fee to the mortgagee (AMP) and about $150 to the lawyer. I am selling the released property and wanted it released well in advance to make sure there are no hassles at sale time. Thus it was released well before it was even on the market. Seems strange that they will offer more $ but not release some sections. Would it help to contact another lender and ask current lender to match or you will walk?

[EGU 591]

unfortunately it is "solely owned freehold maori land" which most banks are prejudiced against and even those that will accept it as security have their own set of requirements and restrictions. Over the last six years we have pretty much tried every lending institution for refinancing with no luck until March last year when we found our present lenders so we would prefer not to shift at this time

[mattinvestor]

unfortunately it is "solely owned freehold maori land" which most banks are prejudiced against and even those that will accept it as security have their own set of requirements and restrictions. Over the last six years we have pretty much tried every lending institution for refinancing with no luck until March last year when we found our present lenders so we would prefer not to shift at this time

why

are they prejudiced against them? I'm not familiar with the implications of "solely owned freehold maori land"

[EGU 591]

Maori Land cannot be easily sold to any Tom,Dick,or Mary even though it is owned by one person, it can be passed on to a family member but others wanting to buy need to have blood ties to the parent block. There appear to be only three lenders and each has different criteria but they all will lend a maximum of 50%.

[essence]

Maori Land cannot be easily sold to any Tom,Dick,or Mary even though it is owned by one person, it can be passed on to a family member but others wanting to buy need to have blood ties to the parent block.

IF one has a single shareholder Maori freehold land, there is no legal impediment to you "gifting" that shareholding to another person, whether that person is Maori or not.

However, it is not looked on very favourably by the Maori Land Court (MLC), which is why it's almost never done. One can have a "side" agreement to pay the shareholder $xx in compensation for their shareholding that the MLC does not know about.

There appear to be only three lenders and each has different criteria but they all will lend a maximum of 50%.

Currently there is an issue with more and more Maori shareholders wanting to partition their land to a single shareholding, so that they can attempt to get lending from any Bank. This is because the major four banks will not lend against Maori Land.

See this MLC case. Read it carefully (Introduction and Clauses 6, 11, 12, 13), stress particularly the Introduction and Clause 13. This was and still is the thinking of all the major four Banks.

Housing New Zealand has a policy in place similar to the Welcome Home Loans but for Maori to build on their land. There are severe hurdles in qualifying for any money however. IMHO, this policy was put in place for political points - it is unworkable and to my knowledge very few (under 5?) grants have been made in the last four to five years. If anybody knows the actual number, please post it here.

It has been a long time since I've had to deal with this, but off the top of my head, for one to qualify for funding from HNZ you need to meet most if not all of the criteria below -

a) Have an Occupation Order. NOTE NOT a License to Occupy, these are two different things
b) Meet the financial criteria. One can definitely be above the top end of this threshold but definitely not below it.
c) The dwelling is to be built on wooden piles. In case the borrower defaults, then the dwelling can be removed(!)
d) Have had a job continuously for the last two years.
e) Have lived in the area where the land is for the last two years.

It seems easy enough to meet the criteria doesn't it?? But most Maori Land is not near urban areas, there are (generally speaking) very few jobs in these areas and to have the income to meet the criteria, people need to move away from the land. Or alternatively if people are living on the land in caravans etc, then they are either unemployed or working seasonal jobs. These jobs do not meet the lower income threshold.

I know lots of urban Maori would love to build on their ancestral land. They would build according to Council requirements, which is fair enough, but getting $'s to do so is almost impossible. Council fees are not wiped for Maori Land. So the situation arises whereby someone has a shareholding in multiple owner Maori Land, wants to borrow from Banks (and can't), has to finance it from other sources (potentially pays a higher premium), has to pay the same resource Consents/Buildings Consents as everyone else. All seems fair, eh?? No.

Most Maori land does not have Council provided sewer/water/stormwater/paths/rubbish collection, so it could be argued - and has been! - why should Maori pay Council rates for something we're not receiving, for land we already own??

For most Europeans reading this article, they will say, well they're getting the land "for free" anyway. Here's the cultural thing. It's not for free. The Maori who inherit Maori land are required by social custom to look after the mana of the land and provide for future generations (thus they can't/won't sell to non-Maori). In essence, they are the caretakers of the land, not the owners. Ownership is a European premise.

This is a VERY emotive subject and one that is being dealt with through the MLC every day. Much wiser and more educated people than me, are being flummoxed daily by this situation.

I haven't written this to create a furore, but for non-Maori to understand that it is not as easy to build on Maori land as one would think. Just going out, buying a block of land, deciding the design etc, just doesn't/won't work.

*stands back and waits for backlash!!*

[eri]

Most Maori land does not have Council provided sewer/water/stormwater/paths/rubbish collection, so it could be argued - and has been! - why should Maori pay Council rates for something we're not receiving, for land we already own??

same on waiheke

very little services

but still charged rates

[mattinvestor]

hey essence,
thanks for the very detailed clarification.
Seems like alot of hassle for a non-maori to purchase and invest in maori land...
i'll probably stay away from maori land then...

[hungyenwap]

i like it...........

[EGU 591]

Thanks Essence, it is coming up to a year since you posted a reply to my thread, I would have acknowledged your input sooner but only became aware that anybody had bothered replying at 4 a.m. this morning. As you have taken the time for such a comprehensive reply I thought I should update the situation, although unchanged at this time it looks as though my partners blood sister is keen on buying a section at a family rate, while she has no actual shares in the block her blood line is such that she can whakapapa back to the original owner which is more than can be said for the "carpetbaggers" who managed to claim shares in the block because her grandfather happened to die at exactly the wrong time and his wife transferred shares to her name when she should only have had a "life interest" then his lands should have passed to his only child (daughter) who had 5 children. As a result of the share transfer, when the wife died with out a clear direction in her will (the daughter pre-deceased her by several years) the lands were split between her 10 grandchildren instead of the daughters 5 children which would have followed the bloodline. Anyway, if she buys the section the money will go toward the mortgage over the sections, whether or not it is sufficient to remove the remaining sections as security over the mortgage remains to be seen, however it may reduce it enough to approach other lenders and re - finance the homestead alone. Thanks for your input

[Maccachic]

hey essence,
thanks for the very detailed clarification.
Seems like alot of hassle for a non-maori to purchase and invest in maori land...
i'll probably stay away from maori land then...

Pretty sure there isn't any Maori land in Aussie (not yet anyway)