Firsti we bail them out, then they shaft us over

RATM

For those of you who do know what a tracker mortgage is then there's bad news ahead. The banks are trying to get out of these agreement through the use of loopholes.

Full Article here http://www.irishtimes.com/newspaper/pricewatch/2010/0503/1224269584985.html

T HAS BEEN A turbulent time for homeowners. On top of collapsing house prices and negative equity, mortgage holders are also facing interest rate hikes. Last year people who were on fixed-rate mortgages were stuck paying the price of high interest rates while, more recently, those on variable rates have found themselves staring down the barrel of higher repayments.

Now, those with tracker mortgages are starting to look nervously at the terms and conditions of their loan documentation, fearful that banks may look for “get out of jail” clauses to rescind these attractive products.

“Banks are looking for every chance to get out of tracker mortgages,” says Frank Conway, a director with the Irish Mortgage Corporation. That sentiment is echoed by Karl Deeter, operations manager with Irish Mortgage Brokers, who says banks are starting to “either increase inducements or look for loopholes” to escape their trackers.

There is no doubting the attractiveness of trackers for homeowners – repayments on a €300,000 mortgage over 30 years cost €231 less a month on a tracker (ECB plus 0.75 per cent), compared to the standard variable rate (3.23 per cent). As Deeter notes, trackers offer a price promise, “something rare in this day and age”.

Bank of Scotland, which introduced tracker mortgages into Ireland, is offering borrowers more than €1,000 if they switch lenders and the expectations are that the other lenders may introduce similar incentives, or look to invoke a clause in borrowers’ contracts which would let them switch people on to more expensive rates.

The long and short of it is that they are going to shaft over people on tracker mortgages.

longhalloween

This was on Joe Duffy and all over the papers last week. The general consensus was that you'd be mad to switch off a tracker.

m5ex9oqjawdg2i

I am not surprised.

LD 50

Oh joy.

Banks trying to screw us over. That's a new one

orourkeda

RATM wrote: »

For those of you who do know what a tracker mortgage is then there's bad news ahead. The banks are trying to get out of these agreement through the use of loopholes.

Full Article here http://www.irishtimes.com/newspaper/pricewatch/2010/0503/1224269584985.html




The long and short of it is that they are going to shaft over people on tracker mortgages.

I dont understand APR

biko

Off topic posts will be removed, this thread is about banks (and screwing us over).

changes

I wouldn't shead to many tears if people are forced out of their tracker mortgages.

The banks being the money hungry beasts that they are not going to tolerate losses like that for long. If they don't get it from tracker customers then they will look to claw it back from the variable mortgage holders.

Biggins

Not the first time in the last couple of months that businesses are trying to escape from their side of legal obligations, they signed up for too with customers!

If the customers tried this, their assses would be slapped so fast into court, there would be burn marks on their asses as they were dragged in to the court room.

Eoin

Biggins wrote: »

If the customers tried this, their assses would be slapped so fast into court, there would be burn marks on their asses as they were dragged in to the court room.

Bollocks. If customers could exploit a legal loophole to save money, then we would too.

changes wrote:

The banks being the money hungry beasts that they are not going to tolerate losses like that for long. If they don't get it from tracker customers then they will look to claw it back from the variable mortgage holders.

They are clawing it back from the variable rate mortage holders right now, but that's what they've signed up to.

stepbar

There are a few banks that have a stupendous amount of customers on tracker rates, PTSB being one and BOSI another.

If consumers want tracker rates than either the rates paid to savers must come down or lending rates elsewhere must go up (or both). It's not sustainable.

Einhard

You can't blame the banks for trying! They're not forcing anybody to give up their tracker mortgages, and if a person is stupid enough to do so then I have no sympathy for them.

Overheal

Was there a good reason to bail them out or was it a case of "every other country is doing it"

Biggins

eoin wrote: »

Bollocks. If customers could exploit a legal loophole to save money, then we would too.

There is a difference between using a legal loop-hole and just saying the equivalent of "feck this, this contract we signed up to, is not working for us just because it no longer favours us!"

If someone tries to use a legal loophole, that's up to the rest of us/the state reps' to sort it out.
If someone wants to just dump their legal responsibilities just because what they signed up to don't agree with them any more, thats just plain unfair.

Not too understanding of what your trying to say. Who is the "we" you refer to?

Einhard

Biggins wrote: »

If someone tries to use a legal loophole, that's up to the rest of us/the state reps' to sort it out.
If someone wants to just dump their legal responsibilities just because what they signed up to don't agree with them any more, thats just plain unfair.

I don't think it's a matter of them using loopholes to evade their contractual responsibilities, more an attempt to buy their customers out of their tracker mortgages. It's up to each individual mortgage holder to decide whether they accept or not. I don't see anything particularly wrong with that as long as the offer is genuine and straightforward, and not designed to confuse the customer.

Biggins

Einhard wrote: »

I don't think it's a matter of them using loopholes to evade their contractual responsibilities, more an attempt to buy their customers out of their tracker mortgages. It's up to each individual mortgage holder to decide whether they accept or not. I don't see anything particularly wrong with that as long as the offer is genuine and straightforward, and not designed to confuse the customer.

Nor do I.
If the customers are wise enough to seek totally independent impartial advice, then the banks in fairness should be allowed to try and save money.
I wouldn't take that opportunity away from them. I would hope however that the money they would save/recuperate, would go to filling the ruddy big financial hole they party created earlier and not just use the regained finance to buck up someones end of term bonuses.

Eoin

Biggins wrote: »

There is a difference between using a legal loop-hole and just saying the equivalent of "feck this, this contract we signed up to, is not working for us just because it no longer favours us!"

If someone tries to use a legal loophole, that's up to the rest of us/the state reps' to sort it out.
If someone wants to just dump their legal responsibilities just because what they signed up to don't agree with them any more, thats just plain unfair.

Not too understanding of what your trying to say. Who is the "we" you refer to?

"We" was referring to the customers, as "we" obviously doesn't mean the banks. If they're dumping their legal responsibilities, then it's a breach of contract and that's not allowed. Suppose an individual found that they couldn't afford to pay their mortgage but found a loophole in the contract that allowed them some way out - that's exactly the same thing. I'm not saying it's fair what the banks are doing, but to suggest that somehow it's just the "fat cats screwing us over" sounds like more hysterical nonsense.

If they're just using marketing to entice short-sighted people away from a tracker mortgage, then it's even more of a non-story.

Biggins

I get what your saying Eoin.
One can only hope those that are in this position seek independent advice and not just rely on the salesmanship of a bank rep to tell the full truth.

Eoin

Yeah, I would hope that's all the story is about, and not that the banks are going through the contracts to see if they can get out of being tied into the ECB rate (which won't stay low for too long either). Someone getting a grand in cash to switch mortgages could see that being spent on extra repayments in a matter of months, so hopefully people know to stick with the trackers.

RATM

They appear to be already looking for ways to wriggle out of trackers. This is from the orginal article I posted

Nonetheless, speculation is mounting that the banks may step up their action on trackers. According to Deeter, the most likely action banks might take is on the loan-to-value (LTV) covenant inherent in many tracker contracts. If, for example, you got your tracker on the basis that you had an LTV of 80 per cent, whereby the mortgage represented only 80 per cent of the value of the property, the bank could look to switch you on to a higher rate. They would do this saying that because of the decline in house prices, your LTV may now be closer to 100 per cent, and so you might no longer qualify for the lower rate. “It won’t be fair, but it would be a fair argument that they could present,” says Deeter.

And don’t think that administrative issues could stop the banks from requesting new valuations of properties on their loan books. “If I was a banker, I’d say, we’ve looked at property prices in your area, we think they have declined by 40 per cent, we’ll give you three months to come back to us with a valuation,” says Deeter. “The banks will offset the work on to the individual.”

If the banks were to go down this route, homeowners would then have two options: either inject a lump-sum to pay down the mortgage to the required level and stay on the lower tracker rate, or be switched to another rate, which would probably be a tracker in a higher LTV band.

While Conway believes most tracker contracts are “very tight”, and thinks it unlikely banks could look to change their terms and conditions, he warns that homeowners might nonetheless “open up their own vulnerability”.

“Homeowners should remember that they needn’t provide the banks with any reasons,” warns Conway. For example, if you look to extend an interest-only period, the bank may only do so if you give up your tracker.

“The bank will say ‘we’ll renegotiate’ but will do so out of the tracker mortgage,” says Conway, citing the example of an investor who was given two options by the bank when he asked for an extension of an interest-only period: either switch to a fixed or variable rate and pay interest only, or stick with the tracker but pay both interest and capital.

Seems like the have methods of getting out of them but they may not stand up to the rigours of the law. Either way tracker holders should be aware of this and be prepared to hold tight.

Dean820

Sounds like what happened when I bailed my biker cousins out of jail.