Template legal confirmation letter
Under paragraph 58 of the final revised APG 120, APRA has clarified that, subject to certain conditions, a shared collateral agreement may be considered equivalent to a formal second mortgage for the purposes of APS 120 only.
One of the conditions specified in paragraph 58 is that the ADI is to obtain a written legal confirmation that the rights and protections afforded to the ADI under a trust-back agreement are equivalent to a formal second mortgage, including the ADI’s unequivocal right to access the shared collateral in the event of default of the non-securitised loan and following the occurrence of a title perfection event.
The ASF, together with several of its legal firm and ADI members, have agreed on a template legal confirmation letter (the drafting of which was undertaken by King & Wood Mallesons). This template may be provided by legal advisers to ADIs to assist in addressing the requirement contained in the second part of paragraph 58 (if considered appropriate).
The template legal confirmation letter is not in any way deemed to be any form of advice by the ASF, nor should it be assumed that it fully meets the requirements for compliance with paragraph 58 of APG 120.
Download template legal confirmation letter