Hi 44
I find it hard to see the point of it.
If I was a mortgage lender, I would let it be known straight away "Do not bother submitting any PIAs which involve writing down the mortgage. If you have a proposal which involves surrender of the home and dealing with the shortfall - we will consider them. But we will consider them now anyway without the expense of a PIA. "
If the mortgage lender controls 75% of the debt, which they usually do, they would approve a PIA which involved no write down of the mortgage but a write down of the unsecured creditors. The unsecured creditors can veto this if they have 45% of the unsecured creditors.
It's just so messy that it will be unworkable.
There might be an unintended (?) consequence. If the borrowers know that the lender is going to reject the PIA and if the lenders know that they are going to have the hassle of a PIA, they might be more open to doing deals with borrowers to surrender unsustainable mortgages without the hassle of a PIA.
Brendan