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Mortgage debt forgiveness is here, Dublin nurse gets €152k debt write-down

  • 27-04-2012 9:11am
    #1
    Banned (with Prison Access) Posts: 2,202 ✭✭✭Rabidlamb


    http://www.independent.ie/national-news/dublin-nurse-secures-152k-mortgage-debt-writedown-3093817.html
    A DUBLIN nurse has secured a €152,000 write-down on her mortgage debt in one of the first recorded settlements of debt forgiveness by a major bank, it was reported today.

    Laura White (35) agreed the deal with the Bank of Ireland on Monday, settling a case over the shortfall on the sale of a house she voluntarily surrendered three years ago, according to the Irish Times.

    The deal means that instead of repaying the outstanding €170,000 owed, she will pay just €18,000 at a rate of €250 a month for six years.

    Bank of Ireland subsidiary ICS took legal action against Ms White in 2010 relating to the €245,000 it lent her to buy the house in Coolock, Dublin.

    She handed the house back to the bank as she was struggling to make the repayments and wanted to move to the west of Ireland.

    The house was sold but left a shortfall of €170,000 on the mortgage owed.

    Ms While thought the sale of the property would cover the debt. Her legal team argued that the house should have been sold more quickly before the property market plunged.

    Right, they gave a €152k write off to a nurse who still had 30 years of work ahead of her.
    She let her name & story go public which seems odd.
    So hand back your keys, give us 18 grand & we're quits.
    Awful big precedent to set.
    Debt forgiveness is upon us whether we like it or not.


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Comments

  • Registered Users Posts: 7,182 ✭✭✭bobbysands81


    Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks (For the record I think shareholders and employees also carry a large burden whilst the actual bank is getting off scot free).


  • Closed Accounts Posts: 9,438 ✭✭✭TwoShedsJackson


    Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks (For the record I think shareholders and employees also carry a large burden whilst the actual bank is getting off scot free).

    And who do you think is picking up the tab for this? Yes, it's the taxpayer, so I wouldn't get too excited just yet.


  • Posts: 23,339 ✭✭✭✭[Deleted User]


    That's a disgrace, she wanted to move to the West of Ireland so she escapes her mortgage. Unreal, years of stable employment ahead of her too, strange one.


  • Registered Users Posts: 68,317 ✭✭✭✭seamus


    It's kind of irrelevant that she has 30 years work ahead of her because she was having difficulty meeting her mortgage repayments now. That's why the situation occurred in the first place.

    The story is missing a lot of information. At her current ability to repay (presumably €250/month), it would take 55 years to repay the mortgage.
    So for all intents and purposes she was bankrupt and if the bank secured any kind of judgement for the full amount, bankruptcy would be her next logical step. So perhaps the bank realised that 18k over 6 years was better than €10k over ten years (less legal costs) followed by a complete write-off. There's no indication if this write-off amount was come to by agreement or by judgment.

    Again, it still doesn't point to any wide-scale writing down of mortgage debt except in extreme cases where someone is incapable of repaying.


  • Registered Users Posts: 3,981 ✭✭✭Diarmuid


    Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks
    You do realise that it's your self you are talking about? You own the banks, you're taking the hit


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  • Posts: 23,339 ✭✭✭✭[Deleted User]


    seamus wrote: »
    ............ At her current ability to repay (presumably €250/month), it would take 55 years to repay the mortgage..............

    Why not pay €250/month for the next 30 years until she retires? I can appreciate how a nurse could struggle to repay a €250,000 mortgage, I would struggle with how €250/month longterm would be a struggle, an inconvenience yes, not a struggle.

    The crux of this is she wanted to move to the West Of Ireland.

    I cannot see how a nurse can be deemed incapable of paying the full mortgage, should have been restructured imo, tough sh1t on her wanting to move, rent the thing out if she was that intent on moving.


  • Registered Users Posts: 7,182 ✭✭✭bobbysands81



    And who do you think is picking up the tab for this? Yes, it's the taxpayer, so I wouldn't get too excited just yet.

    It's not this lady's fault that the banks monumentally screwed up and had to be taken into state ownership because they couldn't be trusted and acted with greed.

    Just remember that banks will turn profitable again one day and all the losses of the last few years can be written off against future profits so they'll make back everything they've lost.

    As long as folk are trying to engage with banks and pay back what they can afford then it's only right that the banks also take a financial hit for their crazy lending policies regardless if the taxpayer owns them or not.


  • Posts: 23,339 ✭✭✭✭[Deleted User]


    ...........

    As long as folk are trying to engage with banks and pay back what they can afford then it's only right that the banks also take a financial hit for their crazy lending policies regardless if the taxpayer owns them or not.

    So €250/month for 6 years is what a 35 year old can afford? You wouldn't imagine it conceptually possible for her to afford to pay that for say 10 to 15 years considering it's not much more than a modest car loan.


  • Registered Users Posts: 68,317 ✭✭✭✭seamus


    RoverJames wrote: »
    Why not pay €250/month for the next 30 years until she retires? I can appreciate how a nurse could struggle to repay a €250,000 mortgage, I would struggle with how €250/month longterm would be a struggle, an inconvenience yes, not a struggle.
    You could ask the same question of any bankruptcy proceeding - why allow someone to declare bankruptcy, why not take a part (however small) of their income for the rest of their life, so long as it doesn't cause them to struggle?

    Because we recognise that a creditor having an unsecured debt on an individual for the rest of their life is unreasonable regardless of how the debt came about. The lender has to shoulder some of the risk and take some of the loss when it goes wrong. This is why we have bankruptcy - to allow someone to declare, "**** lads, it's all gone wrong" and everyone involved in the transaction takes their hit and walks away.

    It's unfortunate here that the lender involved happens to be part-owned by the state, but we can't change the rules when we feel like it.

    Although there was no bankruptcy specifically involved here, any repayment period exceeding ten years would have meant that bankruptcy was the inevitable next step.

    Does this indicate that there's a chance that this kind of thing could become widespread? Well yes, to a certain extent. But it's still not an easy get-out clause. Stress aside, you will have to move out of your home and pay a significant sum of money to the bank every month for 5 - 10 years, on top of any other payments (like rent) you have to make.


  • Closed Accounts Posts: 5,731 ✭✭✭Bullseye1


    If the banks were not privatised people would not be complaining about this write down. The banks need to be given a lesson they will never forget. Why should the lay person who borrowed only suffer and let the professional bankers away Scott free.

    The bigger crime here is privatising the banks and giving the bank guarantee. They should have been allowed to fail.


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  • Posts: 23,339 ✭✭✭✭[Deleted User]


    seamus wrote: »
    ............ you will have to move out of your home and pay a significant sum of money to the bank every month for 5 - 10 years, on top of any other payments (like rent) you have to make.

    But in this case the lady wanted to move out of the house as she wanted to move to the West of Ireland. €250/month is quite a small sum for a nurse to be fair.


  • Closed Accounts Posts: 7,230 ✭✭✭Solair


    The problem as I see it is that the banks actively sold and missold these mortgages to people who anyone with a basic maths ability should have been able to see could not pay them back.

    They turned mortgage granting into a sales and commission-oriented operation and lent money to developers and individual home-buyers who could never pay it back.

    This lashing of cash into the market drove prices up, drove the cost of putting a roof over your head up and forced a lot of people into either moving to utterly ridiculous locations i.e. Dublin's outer-outer-outer commuter belt (small villages in the midlands mostly) or, into borrowing ridiculous amounts of money.

    Then banks are supposed to be the prudent, financial experts with a duty of care to ensure that they lend responsibly. They did anything but lend responsibly!

    Banks employ economists, bankers supposedly spend years learning how to calculate mortgages, lend prudently and manage risk. Their sole purpose as organisations is to LEND PRUDENTLY and make a sensible profit. Instead they slashed cash at anyone who asked, regardless of their income, personal circumstances, business model etc. and the consequences have been dire for the entire country as we've ended up with bankrupt banks and all the losses they incurred.

    I don't really think you can blame individuals for not being financial experts. People borrowed as much money as the could to house themselves and were absolutely gouged by developers and banks in the process.

    In most cases banks and mortgage brokers told them how much they could borrow and in my opinion, the duty of care is on the bank/broker as a financial expert to ensure that amount was calculated correctly!

    I don't think the consequences for the banks have been nearly harsh enough. Nobody seems to have been fired, let alone sued by shareholders / the state or heavily investigated by regulators or the Gardaí.

    I don't understand why not and I am sick to death of this notion that individual mortgage holders are being blamed for this while a coven of large developers and bankers seem to have just gotten away with what is at best gross mismanagement of companies, banks, etc and at worst could be regarded as corrupt creaming off of vast profits at the expense of the state and banking organizations that were built over centuries in some cases!

    What was created was a vast pyramid scheme where all the money was sucked out of the system by a few people at the top and a and when the system collapsed it left small mortgage holders, shareholders of the banks and most of all the state and the ECB holding the can for hundreds of billions of Euro of debts!

    Where did all the borrowed money go ? It didn't just vanish into the ether, someone made huge money out of selling overpriced property to people who were borrowing money that they should never have access to in the first place.

    Mortgages will have to be written off - they were utter nonsense to begin with!


  • Registered Users Posts: 68,317 ✭✭✭✭seamus


    RoverJames wrote: »
    But in this case the lady wanted to move out of the house as she wanted to move to the West of Ireland. €250/month is quite a small sum for a nurse to be fair.
    To be fair, you have no idea what her income is :)

    She might not be full-time, she might not have a permanent position, and so forth.

    The Irish Times has more relevant information on this:
    http://www.irishtimes.com/newspaper/breaking/2012/0427/breaking16.html

    Basic situation:
    She couldn't make her mortgage repayments. Bank chased her in 2010, so she handed the house back to them voluntarily and they sold it.
    Now they sought to get the balance from her, but she still couldn't afford to make the repayments.

    So the bank agreed a repayment schedule based on the six year limit being proposed by the Government, and based on what she was able to afford over those six years. She is bound to make these repayments by order of the court. If she doesn't, the bank can secure a judgement against her for €120k. She is also banned from borrowing (this would include overdrafts and credit cards) for those six years.

    You can't chase someone for an unsecured debt for the rest of their life, so you have a limited timeframe in which you can get money back from someone, and you can only take what they can afford to pay.

    That's how this €18k figure was arrived at.


  • Posts: 0 [Deleted User]


    Bank of Ireland subsidiary ICS took legal action against Ms White in 2010 relating to the €245,000 it lent her to buy the house in Coolock, Dublin.

    She handed the house back to the bank as she was struggling to make the repayments and wanted to move to the west of Ireland.

    The house was sold but left a shortfall of €170,000 on the mortgage owed.

    What a stupid precedent to set. How is this woman a qualified nurse if she can't even understand the basics of a mortgage? Seriously.

    This is somebody who has squirmed out of a debt because essentially they "didn't feel like paying it." Somebody who wants mortgage forgiveness for families who are struggling and the like should most certainly not be applauding this woman.

    Put it this way, there won't be enough money to bail everyone out. It will probably turn out, just like most things in this country, to be a case of only the most ignorant and selfish need apply.


  • Closed Accounts Posts: 9,496 ✭✭✭Mr. Presentable


    And of course she doesn't have a house, nor the likelihood to buy one for the next who knows how long.


  • Registered Users Posts: 436 ✭✭Spiritofthekop


    As long as the keys to the house are handed back & the house is sold on in the current market at value for money price to the public & the person's who signed for the big loan's credit rating is stored so any future mortgage application be banned for 10/15 years & they must go through a severe stress test & a block on any future loans. I've no problem with it.


  • Posts: 0 [Deleted User]


    And of course she doesn't have a house, nor the likelihood to buy one for the next who knows how long.

    And we all know that not owning a house can be fatal.


  • Closed Accounts Posts: 5,064 ✭✭✭Gurgle


    Something smells a bit off here:
    The deal means that instead of repaying the outstanding €170,000 owed, she will pay just €18,000 at a rate of €250 a month for six years.

    Bank of Ireland subsidiary ICS took legal action against Ms White in 2010 relating to the €245,000 it lent her to buy the house in Coolock, Dublin.
    If she borrowed €245k and never made a repayment, then the house was sold for €75k? That's pretty damn cheap, even for Coolock in a recession.

    At auction?
    Private sale?
    To the bank manager's son / brother / mistress?

    Or possibly the €170k 'shortfall' included penalties and (punitive) interest.

    I'd like to see the real figures, i.e. what did she pay for the house, what did she repay off her mortgage and what did they actually sell the house for?

    Then the €18k settlement could be considered in proper context.


  • Closed Accounts Posts: 632 ✭✭✭Forest Demon


    I am so sick of the government interfering in the property market. With the transfer of tracker mortgages to Anglo now and NAMA controlling the market and now debt forgiveness.

    Wait and see that the only people that can grantee future income and get a right down will be public sector workers. Same situation as getting a mortgage at the moment.

    Lets see how the private sector and self employed get on.

    Are we ever going to know the true value of property in Ireland and will a home ever be an obtainable purchase for the private sector tax payer?

    If houses where allowed to hit their true value then we it might be an incentive for low to middle earners to take a job and build a decent credit rating.

    I am sick to death of listening to this rubbish about keeping people in their homes when its really about keeping the debt with them and off the governments books.

    What about people who have no hope of getting a job or home due to the crap economy caused by reckless lending AND BORROWING?


  • Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks (For the record I think shareholders and employees also carry a large burden whilst the actual bank is getting off scot free).
    I'd suggest the banks' owners took the brunt of the poor decisions by their management teams, but to be fair they were responsible for the management they chose...


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  • Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Just remember that banks will turn profitable again one day and all the losses of the last few years can be written off against future profits so they'll make back everything they've lost.
    Not really. Work out the net present value of the future (risky, uncertain) profits of the banks and set it against the recapitalisation cost - I think you'll find the state ends up as a loser. And if you are thinking of tax write-offs - where do you think that tax would be going were it not written off?


  • Registered Users Posts: 145 ✭✭Thedogsgone


    If I could get a 90% write down and the only punishment is a ban on borrowing for 6 years I would bite the banks hand off...

    I'm struggling but have always managed the mortgage but I am giving serious consideration to stopping payments altogether after this precedent.


  • Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Solair wrote: »
    The problem as I see it is that the banks actively sold and missold these mortgages to people who anyone with a basic maths ability should have been able to see could not pay them back.
    How were they mis-sold exactly? You hear this a lot, but I've never heard anyone actually back it up.

    Perhaps in future people should have to do a simple exam on personal finance and compound interest before they are entitled to borrow?


  • Banned (with Prison Access) Posts: 2,202 ✭✭✭Rabidlamb


    If I could get a 90% write down and the only punishment is a ban on borrowing for 6 years I would bite the banks hand off...

    I'm struggling but have always managed the mortgage but I am giving serious consideration to stopping payments altogether after this precedent.

    Therein lies the rub.


  • Closed Accounts Posts: 632 ✭✭✭Forest Demon


    If I could get a 90% write down and the only punishment is a ban on borrowing for 6 years I would bite the banks hand off...

    I'm struggling but have always managed the mortgage but I am giving serious consideration to stopping payments altogether after this precedent.

    But the government want to help you stay in your home :rolleyes:


  • Closed Accounts Posts: 5,064 ✭✭✭Gurgle


    What about people who have no hope of getting a job or home
    'They' should be training at something that will give them a hope of getting a job.
    There really isn't much benefit to spending their days on boards whinging about the public sector. It doesn't add anything to the CV.


  • Closed Accounts Posts: 7,230 ✭✭✭Solair


    How were they mis-sold exactly? You here this a lot, but I've never heard anyone actually back it up.

    Perhaps in future people should have to do a simple exam on personal finance and compound interest before they are entitled to borrow?

    Well, assuming that the person coming into a bank did not lie and inflate their income, and the bank then lent them a mortgage which was too big for them to reasonably pay back, then the bank missold the mortgage.

    In any transaction like that, you have to assume that a normal person is absolutely not a financial expert. The bank however is supposed to be!

    If the bank was not doing its job, i.e. making sure that the mortgage they were selling was sustainable, then the majority of the fault rests with the bank, not the consumer.

    Business lending to property developers is another story entirely, as you would expect a property developer, particularly the larger ones, to have some business sense and understanding of the market.

    The problem,as I see it, is that there was a close relationship in Ireland between the banks, the major developers and the policy makers.

    So, the whole thing turned into a pyramid scheme where by the banks were financing the developments based on notional and unrealistic bubble selling prices which they were creating themselves by relaxing lending rules to consumers.

    Meanwhile, the state was turning a blind eye to all this as it was getting huge tax revenues on property transactions - all of which was borrowed money!

    So basically everything comes back to the banks being utterly reckless with what they were doing and creating a totally unsustainable property market based on cheap money borrowed on the international financial markets.

    Even the IMF agrees that a hell of a lot of this will have to be written off, both at the consumer end of the market and also the development loans. They were bad loans, end of story.

    The problem is that the ECB & EU seem to be determined to ensure that the banks that idiotically lent to our idiotic banks don't have to write anything off even if it means driving the Irish state into poverty.

    Also, the Fiscal Compact Treaty will have zero impact on the Irish situation (and probably not on the Spanish situation either) as the problems there were not the same as Greece, i.e. not created by lavish state spending. They were created by completely out of control bank lending to the property sector which has now landed in the lap of the the Irish and Spanish tax payers.

    Austerity budgets are just basically just diverting more and more resources into paying down bad loans made by idiotic, now nationalised, banks.

    We absolutely need a huge write down of debt at the banks, and that has to be passed onto the consumers who were missold mortgages and more importantly to the tax payer.

    Crippling the state and crippling mortgage holders who were basically conned into biting off more than they can chew, might satisfy some kind of Victorian / German fetish for moral rectitude and moral hazard prevention, but it will drive this economy back to the 19th century, never mind the 1950s.

    They need to let the markets take their course. As it stands we are just propping up a totally unsustainable model by state interference.

    Banks would normally have to write-off debts like this and they would probably fold and go bankrupt too themselves.

    We are in a situation where the ECB/EU and Irish Government are driving forward on this model that is fixing absolutely nothing and is just pouring vast amounts of tax payers money into rescuing banks that are so broken that they shouldn't be rescued.

    The system needs to take its losses!

    Also, I think this is grossly unfair on banks that were prudent lenders. There are banks in the Eurozone and the EU which are quite well run and did not engage in this kind of nonsense. Why are they being denied market share ? If Bank of Ireland, AIB, Anglo, Dexia, RBS, Hypo Real Estate, Soc Gen, Credit Agricole or whoever made bad decisions, then they should suffer the consequences of those and banks that made correct decisions should prosper and take their market share.

    What we are witnessing is absolutely VAST state aid to badly run companies.

    We seem to be throwing away the whole idea of a single EU market when it comes to banking.

    Also, this isn't capitalism and it isn't socialism either. I'm not quite sure what it is, but it's destroying not only Ireland but Europe too!


  • Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    Solair wrote: »
    Well, assuming that the person coming into a bank did not lie and inflate their income, and the bank then lent them a mortgage which was too big for them to reasonably pay back, then the bank missold the mortgage.
    Because the bank has a crystal ball that can forecast job losses? Or health problems? :confused:
    Solair wrote: »
    We absolutely need a huge write down of debt at the banks, and that has to be passed onto the consumers who were missold mortgages and more importantly to the tax payer.
    I have a sneaking suspicion that you haven't thought this through properly. Who bears the cost of the debt write-downs?


  • Registered Users Posts: 4,466 ✭✭✭Snakeblood


    Solair wrote: »

    We absolutely need a huge write down of debt at the banks, and that has to be passed onto the consumers who were missold mortgages and more importantly to the tax payer.

    The tax payer is the bank. How can the tax payer write down a debt to the tax payer?


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  • Closed Accounts Posts: 5,064 ✭✭✭Gurgle


    Solair wrote: »
    everything comes back to the banks being utterly reckless with what they were doing
    It takes two to tango.

    The bank official is not responsible for your personal financial decisions, you are.

    They deserve the blame for the banks failing, but not for people committing to payments they can't afford.


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