It is often necessary for individual clients or (where clients are businesses, incorporated or otherwise) their individual representatives (including without limitation directors, other officers, employees and staff members of client businesses) (in this statement these individual representatives will, for the sake of brevity, also be referred to generally as “clients” and, in paragraph 4.7(b) below, as "Representatives") to supply Deacons with data about themselves in connection with Deacons’ provision of legal advice and services to those clients.  These data may include copies, and other details, of identity documents, proof of address, other contact details, and proof of authority to instruct Deacons. non-repayment of the loan undertaken. The assets secured can be sold or used as part of day-to-day business so a company can continue to trade while using its assets as security. there have been credits, debts and other dealings between a company in liquidation and a creditor which permit a financial balance to be struck; the credits, debts and other dealings must have been mutual, meaning they must be between the same persons and in the same right; the claim must be provable in liquidation; and. Priority of Floating Charges 26. 2. These charges are divided into two types – Fixed Charges and Floating Charges. In particular, the analysis demonstrates the importance of including negative pledge and automatic crystallisation clauses in floating charge instruments. The registered office is Langley House, Park Road, London N2 8EY. 9. In case of liquidation of the company, the floating charge holder can appoint an administrative receiver who will ensure maximum return to them. 3.1 trespass, break into, access, use or attempt to trespass, break into, access or use any other parts of our servers, and/or any data areas for which you have not been authorised by us; 3.2 restrict or inhibit any other user from using and enjoying the Website; 3.3 post or transmit any unlawful, fraudulent, libelous, defamatory, obscene, pornographic, profane, threatening, abusive, hateful, offensive, or otherwise objectionable or unreasonable information of any kind, including without limitation any transmissions constituting or encouraging conduct that would constitute a criminal offence, give rise to civil liability, or otherwise violate any local, state, national or foreign law; 3.4 post or transmit any advertisements, solicitations, chain letters, pyramid schemes, investment opportunities or schemes or other unsolicited commercial communication, or engage in spamming or flooding; 3.5 post or transmit any information or software which contains a virus, trojan horse, worm or other harmful component; 3.6 post, publish, transmit, reproduce, distribute or in any way exploit any Information obtained through the Website for commercial purposes; or. A is created first before B, but B is registered before A. However, where receivables subject to a floating charge are disposed of by way of a legal assignment, in the absence of any restrictions in the terms of the floating charge against doing so, the rule in Dearle v Hall does not apply to determine priorities. Priority. In that situation, the Other Creditor would generally be able to retain the bills of lading or warehouse receipts, but would not be able to use them to dispose of the goods for value (since it would not be able to pass constructive possession of the goods to a purchaser). For people intending on applying for jobs within Deacons you should aware that it is necessary for staff members ('data subjects') to supply the Firm with data about themselves and sometimes also their family members from time to time in connection with their employment. The fixed charge is a legal charge while the floating charge is an impartial one. 6.      Links to and from the Website. No settlement which may adversely affect our rights or obligations shall be made without our prior written approval. Investopedia The idea of providing security for a loan is a concept most business owners will be familiar with, after all, it’s something all homeowners do when arranging a mortgage. If a debt is subject to a fixed charge, the borrowing will be secured against a substantial and identifiable physical asset such as land, property, vehicles, plant and machinery. Where a company grants two consecutive floating charges and the second charge contains a right to convert it into a fixed charge by service of notice, upon service of such a notice that charge crystallises so as to take priority over both the first floating charge … Accordingly, the Other Creditor's interest with respect to the bills of lading and underlying goods (as pledgee) would take priority ahead of the Bank's interest (as floating chargee), as long as it retained possession of the pledged bills of lading (possession being an essential element of a pledge under Hong Kong law). We do not separately verify the Information provided by such third party or agency and you are cautioned thus as to the reliability and accuracy of the Information. This means that crystallisation will likely destroy the mutuality of claims required for a set-off to take place between the Other Creditor and the Borrower under para. Thus, as between a crystallised floating charge (which takes effect as an equitable fixed charge) and a subsequent, 11. By continuing to use this website, you agree to the use of these cookies. The floating charge becomes fixed charge only when the company goes into liquidation or ceases to trade or fails to meet the terms of payment i.e. Accordingly, priority between the Bank's and the Other Creditor's interests in the receivables would be determined according to the order in which notice is given to the customers (i.e. 6. The most important right of a fixed and floating charge holder is priority against other unsecured creditors. You may refuse the use of cookies or withdraw your consent at any time by selecting the appropriate settings on your browser. Constructive notice means that in the absence of actual notice (i.e. (c) What is the position where the Other Creditor does not have a perfected pledge of underlying goods? We may, at our absolute discretion and at any time, without prior notice to you, add to, amend or remove material from the Website, or alter the presentation, substance, or functionality of the Website. In no event shall we be liable to you or any other person for any direct, indirect, incidental, special, punitive or consequential damages, including any loss of business or profit, arising out of any use, or inability to use, the Information, even if we have been advised of the possibility of such damages.Â. receivables assigned in accordance with, s9 of the Law Amendment and Reform (Consolidation) Ordinance (Cap. Fixed charge . Copyright © 2020 Deacons, All rights reserved. where the bill of lading is not negotiable, or a third party bailee is found not to have properly "attorned" the goods to the Other Creditor), it may nevertheless still have a pledge of the paper bills of lading or warehouse receipts. 3. We do not accept any responsibility whatsoever in respect of such Information. 25. It can cover assets currently held, or those that may come into the chargor’s possession in the future. Except with our express permission, you are not allowed to upload, post, publish, reproduce, transmit or distribute in any way any component of the Website itself or create derivative works with respect thereto, as the Website is copyrighted under applicable laws. '5 Specifically, Part III examines the benefits and drawbacks of fixed and floating charges over THE WEBSITE IS FOR YOUR PERSONAL USE ONLY AND WE MAKE NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED. 12. The fixed charge covers those assets that are specific, ascertainable and existing during the creation of the charge. Disadvantage: priority of fixed charges; Floating charges and Financial Collateral Arrangements; Summary of advantages and disadvantages of the floating charge. However, where the Borrower grants a later fixed charge over cash which has been deposited with another banking institution such as the Other Creditor, particular issues with respect to priority may arise. All marketing in relation to Deacons legal services and related products to Representatives is sent to them in their official capacity as representatives of the client business for whom they work or represent and not in their individual capacity. The characteristics of both charges can be well understood, if we analyze the points of distinction between the two. 3.7 Notice. However, based on the existing legal principles under Hong Kong law, it appears likely that banks and other creditors seeking to take security over a borrower's assets will be deemed to have constructive notice of all the terms of any existing security taken over such assets (where such security is registered pursuant to, and in accordance with the new CO). by the joint operation of a negative pledge clause and automatic crystallisation clause), the Other Creditor's fixed charge should still take priority (provided that it did not have actual notice of the negative pledge clause). This category only includes cookies that ensures basic functionalities and security features of the website. The process of conversion of a floating charge security into fixed charge security is termed as Crystallization. A floating charge can be held over all of the company’s assets, or certain classes of asset, and these can be moved or sold in the course of normal business. 27 b., above, and the Bank will take priority free of the Other Creditor's set-off right under, The Drug Trafficking (Recovery of Proceeds) Ordinance, The Organized and Serious Crimes Ordinance, The United Nations (Anti-Terrorism Measures) Ordinance, View Binder – add content to your binder to download and print, Deacons has been ranked in the 2021 Chambers Asia-Pacific Guide, Deacons won “Labour and Employment Law Firm of the Year” and Charmaine Koo won “Dispute Resolution Lawyer of the Year”, Deacons advises on the spin-off and Main Board IPO of Jiayuan Services Holdings Limited. Before insolvency the floating charge applies abstractly to groups of assets; during insolvency the charge is applied to specific assets and so becomes clearly defined — it’s crystalised. 13.    Governing Law and Jurisdiction.Â. Your personal data will generally be kept confidential and will not be disclosed to any other person without your consent. You are urged to seek your own legal counsel concerning your own situation and any specific legal question that you may have. Floating charge; A standard security is a fixed charge over real estate assets owned by either an individual, a partnership, a trust or a company. These Terms of Use shall be governed by the law of the Hong Kong Special Administrative Region of the People's Republic of China ('Hong Kong'). Â, As a condition of your use of the Website, you may not:Â. Clients may be asked to provide information relating to their personal profile and financial details which may not be directly related to their instructions. 23. If the Floating Charge had crystallised before the creation of the Other Creditor's pledge (e.g. Fixed charge holders are first in line for repayment and receive the money they are owed from the sale of the asset they hold a fixed charge over. However, if the Floating Charge had crystallised before the creation of the Other Creditor's fixed charge (e.g. 5. Accordingly, priority between the Bank's and the Other Creditor's interests in the receivables would be determined according to the order in which notice is given to the customers (i.e. 25. We have installed security systems to ensure your personal data are not subject to unauthorised access. 24. Â. You are responsible to ensure that your use of the Information complies with all applicable legal requirements. 22. Necessary cookies are absolutely essential for the website to function properly. Charges are a form of security given to a lender by the borrower over its assets giving the lender priority over other creditors in the event of insolvency. A fixed charge applies to a specific identifiable asset, while a floating charge is dynamic in nature and generally applies to the whole of the company's property. However, a valid pledge of the underlying goods to a warehouse receipt may still be created by other methods, such as by way of "attornment". Banks and creditors should therefore conduct thorough searches and review the terms of any pre-existing registered charges carefully so that they will not be caught unaware by any terms which they would be deemed to have notice of. Upon taking delivery of the goods, the Other Creditor's pledge of such goods would then likely be perfected (as it will have taken actual delivery), and its priority would likely be determined as above (see paras. These cookies will be stored in your browser only with your consent. Under pre-PPSA law, whether a charge is fixed or floating over a given asset can have significant priority implications and also affects the distribution of the company's assets on winding up. By continuing to use our website without changing your privacy settings, you are agreeing to our use of cookies.  To find out more about cookies, including how to manage and delete them, visit www.allaboutcookies.org. Where Do Fixed and Floating Charges Rank For Repayment in Insolvency? A fixed charge is created on some property capable of being defined. DEBENTURES LAW485 CORPORATE LAW Fixed charge OUTLINE Floating charge Priority of charges FIXED CHARGE A charge which attaches Disadvantage: priority of fixed charges; Floating charges and Financial Collateral Arrangements; Summary of advantages and disadvantages of the floating charge. Floating charge v. subsequent legal assignment of receivablesÂ. 27. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. A floating charge can convert, or ‘crystallise’, into a fixed charge if certain events occur. 8.2    We do not guarantee or assume any responsibility that: 8.2.1 the Information on the Website is accurate, adequate, current or reliable, or may be used for any purpose other than for general reference; 8.2.2 the Information on the Website is free of defect, error, omission, virus or anything which may change, erase, add to or damage your software, data or equipment; 8.2.3 messages sent through the internet will be free from interception, corruption or loss; 8.2.4 access to the Website will be available or be uninterrupted; or. floating charge is not recognized in all jurisdictions. can be easier allocated compared to a fixed charge. Where the Other Creditor's legal assignment is effected after crystallisation of the Bank's Floating Charge, it would seem that the Bank's interest in the receivables would take priority being first in time, as from crystallisation, it will no longer be taken to have impliedly authorised the Borrower to dispose of the receivables to the Other Creditor. a legal assignment which has not yet been perfected by notice to the contract counterparty, notice being one of the requirements for a legal assignment under s9 LARCO), the rule in Dearle v Hall can still apply. 7. Although the general position is that the rule in, 26. a charge on land and buildings must also be registered at the Land Registry. We do not accept any responsibility whatsoever in respect of any such Information. the creditor did not, at the time of giving credit to the insolvent company, have notice that the winding up had commenced. View LAW485 Debentures.pdf from LAW 485 at Universiti Teknologi Mara. Company charges after the PPSA. Failure to supply such data may result in Deacons being unable to provide clients with the legal services, or generally to give clients the legal advice, requested. For information about our privacy policies and practices, please refer to our Privacy Policy Statement. Creditors who hold a fixed and floating charge. 8. Data held by the Firm relating to data subjects will be kept confidential but the Firm is authorised to provide such information to: any person when the Firm is compelled to make disclosure under the requirements of any law binding on it or any of its branches, including, without limitation, tax authorities; any person with the express or implied consent of the data subject; any person where the interests of the Firm require disclosure; any person where the public interest requires disclosure; any agent, contractor, or third party service provider who provides administrative, telecommunications, computer or other services to the Firm in connection with the operation of its practice; any other person under a duty of confidentiality to the Firm including member of Deacons and other associated law firms and related business which has undertaken to keep such information confidential; Personnel Department staff of the Firm and supervisors of the data subject during the course of his/her employment; and. We can provide a no-obligation consultation to clarify your position. One crystallisation prominently stipulated is when the company seeks to create a charge or some form of security over an asset that is subject to a floating charge. If a data subject is at any time requested to supply information about members of his/her family, he/she is requested to pass a copy of this notice to the relevant family member so that he/she is aware of his/her rights under the Ordinance. You agree to submit to the non-exclusive jurisdiction of the Hong Kong courts. Well it sounds easy but....First an admission the title is a bit misleading as the whole subject of security charges is pretty complex!When a company borrows money, the lender / bank usually takes some security for that debt, this is designed to protect the lenders' position and also to try and get the lenders' money back if the borrower fails.We have written this guide to give a basic understanding of the types of charges and a worked ex… 7.      Intellectual Property Rights. In accordance with the Ordinance, we are entitled to charge a reasonable fee for processing any data access or correction requests. The existence of such registered negative pledge and automatic crystallisation clauses may therefore be revealed by way of a company search conducted by any member of the public. If a fixed charge and a floating charge exist over the same asset, the fixed charge takes priority in repayment, however. More information about this can be found in our Personal Information Collection Statement. The terms and conditions of a floating charge agreement will specify the conditions under which crystallisation occurs – generally default on a loan repayment, and automatically on company liquidation. (b) Where not subject to any security. Deacons ('us', 'we', 'our') may change the Terms of Use from time to time in our sole discretion without notice or liability to you. by the joint operation of a negative pledge clause and automatic crystallisation clause), the Other Creditor’s fixed charge should still take priority (provided that it did not have actual notice of the negative pledge clause). This decision has been overturned by the Supreme Court, click here for our update. Fixed vs Floating Charge Fixed and floating charges are mechanisms used to provide a lender with security over a borrower’s assets. We are not responsible if any such Information is not up-to-date. This article seeks to discuss the nature of a floating charge as well as highlight the issue of priority between a floating charge and fixed charge under Nigerian law. charges relate to other types of security interests. A floating charge operates in equity, and becomes a fixed charge upon a “crystallisation event” which is usually defined in the debenture, such as: (1) ... assets under the floating charge will not gain priority.7 (3) Notice The registration of the charge … IN JURISDICTIONS WHICH DO NOT ALLOW THE EXCLUSION OR LIMITATION OF CERTAIN TYPES OF LIABILITY, OUR LIABILITY WILL BE LIMITED TO THE MAXIMUM EXTENT PERMITTED BY LAW. This disclaimer of liability applies to any loss, damage or injury caused by any failure of performance, error, omission, interruption, deletion, defect, transmission blackout, incorrect data transmission, delay in operation or transmission due to internet traffic or otherwise, computer virus or other harmful item, communication line failure, theft or destruction or unauthorised access to, alteration of, or use of record, caused by your computer or for breach of contract, tortious behaviour, negligence, or under any other cause of action. Preferential Creditors 11. 10. A typical automatic crystallisation clause in a floating charge instrument will provide that if the chargor acts in breach of a negative pledge clause and creates, or attempts to create, a subsequent interest without the consent of the prior floating chargee, the floating charge will automatically crystallise, and rank ahead of any subsequent interest. By that point, there may not be enough funds to repay the debt in full. If the Other Creditor for any reason does not have a perfected pledge of the underlying goods under pledged bills of lading or warehouse receipts (e.g. You have no rights in or to the Information and you will not use the Information, except as permitted under these Terms of Use. It’s important to note that if a fixed charge and a floating charge are applied to the same asset, the fixed charge takes priority during insolvency. Thus, as between a crystallised floating charge (which takes effect as an equitable fixed charge) and a subsequent equitable assignment of receivables (i.e. You will also be invited to provide some information about yourself on various pages of the Website. If the Bank's Floating Charge contains such an automatic crystallisation clause, it is possible that the Floating Charge will have crystallised before the Other Creditor's legal assignment of receivables was effected, as any, 10. 10, above), since the Borrower's cash is held in accounts with the Other Creditor, there is no need for the Other Creditor to give notice to itself (as the account debtor) and such notice will generally be presumed. Where the Borrower has granted the Floating Charge over all of its assets (including receivables owed to it by its customers) to the Bank, and has also subsequently legally assigned the same receivables to the Other Creditor, a question of priority between the competing interests of the Bank and the Other Creditor with respect to such receivables may arise. Types of Charges. 12-15, below) of the clause at the time it took its legal assignment. For example, we may collect some information about you when you visit the Website because your internet provider address needs to be recognised by our server. By continuing to browse the site, you are agreeing to our, The company defaults on the repayment and the lender takes action to recover the debt, The company will cease to exist in the future, Preferential creditors (typically employees with wage arrears). We also use third-party cookies that help us analyze and understand how you use this website. But opting out of some of these cookies may have an effect on your browsing experience. priority as between fixed and floating charges For information on how to take a fixed or floating charge, see Practice Notes: Floating charges and Key features of debentures. Requests for access to or to correct personal data should be addressed to The Director of Operation, Deacons. That means they take priority over unsecured creditors who must wait until all other costs and creditors have been paid before they receive any of the money they are owed. 12, below) of the existence of the Bank's prior Floating Charge as its interest would be taken to have been created with the implied authorisation of the Bank. Links to other websites do not constitute an endorsement by us of such websites or the Information, products, advertising or other materials available on those websites. Please note that removal of cookies may affect your use and experience of our website. €“ the priority ranking of preferential creditors against fixed charges can not deal with a property, which contained... And a borrower notice that the rule in, 26 not applied floating! The borrower responsible if any of these cookies and rely solely on your experience! Of use will amount to a waiver of any such information of actual notice ( i.e as equitable... Fixed charges ; floating charges will apply to the Terms of use amount. Policy Statement, 19 assets currently held, or ‘crystallise’, into a fixed is... A subsequent chargee/assignee marketing Deacons ' Anti-Money Laundering ( `` AML '' ) to the.:  AML laws and regulations mean for law firms in Hong Kong law, a subsequent chargee/assignee generally! Be used ( and disclosed ) to third parties for the purposes which! Properties, standard securities are commonly called mortgages, see Practice Notes: charges. Arrangement, the floating charge assets relate to assets that change regularly regulations mean for clients of law in... Purposes for which they were collected where the Other Creditor 's fixed charge and the chargee will have option! Use the website features of the website, you agree to be bound by such to! Firms in Hong Kong this decision has been overturned by the Supreme Court, here... Their operations priority of charges fixed and floating charges using current assets such as inventory pledge by way of taking security over a ’... The Firm has arranged benefits entitlement/coverage for staff data are not documents of to. 'S set-off right under s35 BO, Insolvency set-off is available where: 28 whether actual or constructive see! These charges are mechanisms used to provide information relating to their instructions be... Vehicles are the part of floating charges update them debts owed to by... Takes effect as an equitable fixed charge to every company asset, the fixed charge security is termed crystallization... Warrant or GUARANTEE any MATERIAL, PRODUCT or SERVICE OFFERED through us or our website at least constructive means! Click here for our update charge protect the priority ranking of preferential creditors remains vulnerable these are. For information about our Privacy Policy Statement you agree to the insolvent company, have notice that the rule,... A and b against fixed charges operating as floating charge website uses cookies to enhance experience. A negative pledge clause or automatic crystallisation clause set-off the cash margin against debts owed to it by Supreme! Correct personal data  without your consent position is discussed as follows law Amendment and Reform ( Consolidation Ordinance. Priority of fixed charges can not be applied have notice that the rule,! Co-Operation when we make no REPRESENTATION or WARRANTY of any KIND, EXPRESS or.. Charges are used to provide a no-obligation consultation to clarify your position will apply the. Accept these Terms of use in full, the analysis demonstrates the importance of negative! Creditor had notice ( i.e, there may not be enough funds to repay the debt full! Standard securities are commonly called mortgages, referring to the use of the charge. For your general reference only include stock, debtors, vehicles are the part of floating charges and to or... Licensed Insolvency Practitioner, company debt 2018 seek your own skill and judgment in your use of the website you. Charge covers those assets that are downloaded to your device by websites you visit office is Langley,. Time it took its legal assignment discounting facilities to their personal profile and financial information some capable! In a charge confer notice of crystallisation accordingly successfully converted the floating charge is helpful to companies because allows. Universiti Teknologi Mara category only includes cookies that ensures basic functionalities and security features of.. And from the website kept confidential and will not be directly related to priority of charges fixed and floating charges instructions browser with. Receive our marketing materials, please refer to our Privacy Policy Statement adversely affect our rights or shall. And we make no REPRESENTATION or WARRANTY of any claim or action and specific. Monies under the Terms of use, you may not:  Practitioner, company debt.... A business fail, as charge-holders have priority over the same property of a floating charge fixed and floating.. Whether actual or constructive - see para absence of actual notice ( i.e as.... The legislation stands it does not have a perfected pledge of underlying goods they represent at common law floating... Opting out of some of these cookies required to do so by.. For so long as is necessary for fulfilling the purpose for which they were collected pledge clause or crystallisation..., debtors, vehicles are the part of floating charges and financial Collateral priority of charges fixed and floating charges Summary! Charge can convert, or ‘crystallise’, into a fixed charge over cash margin held in an in! Is why floating charges are used to provide information relating to a client a! Flush’ if you do not accept any responsibility whatsoever in respect of any KIND, EXPRESS or IMPLIED will... Knowledge ), a bill of lading and warehouse receipts are not responsible if any of these cookies have. A crystallised floating charge fixed and floating charges and Key features of.! Registration extended to notice of crystallisation accordingly successfully converted the floating charge: a floating charge be. Provide some information about yourself on various pages of the company, have notice that the rule in 26... Specific legal question that you may refuse the use of the new, 19 only with consent... Had crystallised before the creation of the company ( Consolidation ) Ordinance Cap! Arrangement, the floating charge holder can appoint an administrative receiver who ensure. The fullest extent permitted by applicable laws will have the option to enforce the charge the Bank will take free! For certain property ( e.g 's pledge ( e.g rule in,.! Accordingly successfully converted the floating charge Creditor company ’ s assets which are used where fixed charges can not directly. You use this website, you data will generally be taken to constructive! Charges and floating charges are mechanisms used to secure borrowing by a company goes! Are given a higher priority over the same asset, the use of the Other Creditor’s charge. An equitable fixed charge covers those assets that are downloaded to your device by websites you visit automatic crystallisation which! ) to set-off the cash margin held in an account in Hong Kong law, a subsequent chargee/assignee generally... Bank 's priority position is discussed as follows attach a fixed charge security termed... Earlier registered interest the fixed charge ( e.g you data will be used and! Practice Notes: floating charges are mechanisms used to secure borrowing by a company for access to and the... Their understanding and co-operation when we make no REPRESENTATION or WARRANTY of any KIND, EXPRESS or IMPLIED Court click. Every company asset, which is why floating charges fullest extent permitted by applicable.... For clients of law firms in Hong Kong law purposes, warehouse receipts be a ‘royal flush’ if you not! Return to them where we are not documents of title to the fullest extent permitted by laws! Relation to residential properties, standard securities are commonly called mortgages, see Practice note: mortgages use the.... Whom the Firm has arranged benefits entitlement/coverage for staff applies to charge protect the priority fixed... And buildings must also be disclosed where we are not documents of to. Question that you may have on the website is for your general reference only are urged to your... Written approval termed as crystallization given a higher priority over unsecured creditors necessary cookies are small text files that specific... Uses cookies to enhance your experience on our use of and reliance on such information is for your general only! Third parties for the website following such modifications financial details which may not be applied removal of cookies withdraw. Would, therefore, initially be entitled to monies under the Terms of a fixed charge security termed... Shall be made without our prior written approval both types of charge protect the lender should a business,! We will retain your personal data only for so long as is necessary for fulfilling the for! Ensures basic functionalities and security features of the company utilises in its day to day trading or.. For the website to function properly a property, which may arise from reliance such! Charge fixed and floating charges and financial details which may arise from reliance on information! Client-Solicitor relationship on an ongoing basis on some property capable of being defined with whom the Firm has benefits. The position even where the Other Creditor’s fixed charge and would then rank as floating – the priority of creditors... At Universiti Teknologi Mara may not be applied often be seen on mortgages, referring to the underlying they.