Advised a friend to walk away from their mortgage

Rabidlamb

Short story, a good friend bought a 2 bed apartment a few years ago & reckons she's in €150k negative equity.
Can only afford half the mortgage payment as she's split with the boyfriend & had a 15% pay cut on the back of a 10% cut last year.
The mortgage is in her name alone.

She could either struggle with this over the next 31 years of the mortgage or let it go now.
I tried to find her a viable alternative:
Interest Only = delaying the inevitable.
Single Lodger = still be well short of monthly mortgage payment.
Rent Whole Apartment = current rental would only yield just over half of mortgage.
Mabs = only renegotiate the debt, extends the problem further.

It boils down to the fact that she'll have no disposable income until she's into her 60's.
I've advised her to take the human approach & bail out now.
Ultimately the cost of this is ultimately borne by the tax payer but I still believe this to be her only course of action.
People will say that she signed for the 100% mortgage at 8 times her salary so tough.
That used to be my attitude too until it you see first hand what a mess it can make of a life.

What do people think, should she stay & pay her dues or give herself a second shot ?.

thewing

Time for a jingle mail methinks...

jackiebaron

Arson

My name is URL

Yeah, sure lets all walk away from our financial responsibilities. The country won't be long recovering that way /s

Rabidlamb

thewing wrote: »

Time for a jingle mail methinks...

Yep but I advised her to do it formally with her bank.
The quicker it's sold in this market the better for everyone.

Mr. Presentable

Rabidlamb wrote: »

Short story, a good friend bought a 2 bed apartment a few years ago & reckons she's in €150k negative equity.
Can only afford half the mortgage payment as she's split with the boyfriend & had a 15% pay cut on the back of a 10% cut last year.
The mortgage is in her name alone.

She could either struggle with this over the next 31 years of the mortgage or let it go now.
I tried to find her a viable alternative:
Interest Only = delaying the inevitable.
Single Lodger = still be well short of monthly mortgage payment.
Rent Whole Apartment = current rental would only yield just over half of mortgage.
Mabs = only renegotiate the debt, extends the problem further.

It boils down to the fact that she'll have no disposable income until she's into her 60's.
I've advised her to take the human approach & bail out now.
Ultimately the cost of this is ultimately borne by the tax payer but I still believe this to be her only course of action.
People will say that she signed for the 100% mortgage at 8 times her salary so tough.
That used to be my attitude too until it you see first hand what a mess it can make of a life.

What do people think, should she stay & pay her dues or give herself a second shot ?.

She can't get a second shot. No lender is ever going to give her money again, and she will always owe the outstanding amount on the mortgage.

Lumen

She needs a new boyfriend, obviously.

I know some people. What's she look like?

stovelid

I have no idea.

It's a pity that she can't pay off the mortgage with smug mirth about the misfortunes of others however, because you're going to see plenty of it right here in this thread.

January

thewing wrote: »

Time for a jingle mail methinks...

Jingle mail doesn't work in this country, after the bank sells it you are still liable for any money owed. So if the apartment is worth 300k and the bank sell for 150k she still owes 150k

Mr. Presentable

jackiebaron wrote: »

Arson

Apart from the fact you shouldn't be suggesting something illegal, insurance will only cover rebuild costs.

Rabidlamb

My name is URL wrote: »

Yeah, sure lets all walk away from our financial responsibilities. The country won't be long recovering that way /s

In this case the product was obviously mis-sold.
Hype & hysteria were generated to make it appear she had a chance at repaying.

Sykk

Throw her cat in the bin and then sue the neighbor for slander.

veritable

Rabidlamb wrote: »

Short story, a good friend bought a 2 bed apartment a few years ago & reckons she's in €150k negative equity.
Can only afford half the mortgage payment as she's split with the boyfriend & had a 15% pay cut on the back of a 10% cut last year.
The mortgage is in her name alone.

She could either struggle with this over the next 31 years of the mortgage or let it go now.
I tried to find her a viable alternative:
Interest Only = delaying the inevitable.
Single Lodger = still be well short of monthly mortgage payment.
Rent Whole Apartment = current rental would only yield just over half of mortgage.
Mabs = only renegotiate the debt, extends the problem further.

It boils down to the fact that she'll have no disposable income until she's into her 60's.
I've advised her to take the human approach & bail out now.
Ultimately the cost of this is ultimately borne by the tax payer but I still believe this to be her only course of action.
People will say that she signed for the 100% mortgage at 8 times her salary so tough.
That used to be my attitude too until it you see first hand what a mess it can make of a life.

What do people think, should she stay & pay her dues or give herself a second shot ?.

Walk away and let the tax payer bear the cost? Who does she think she is?
She made a bad decision and she should suffer the consequences. It's her own fault and you want us to pay for her. Disgraceful.

starbelgrade

Rabidlamb wrote: »

I've advised her to take the human approach & bail out now.


What do people think, should she stay & pay her dues or give herself a second shot ?.

No matter what she does, she will have to pay her dues. There is no "Bail-out" option when it comes to mortgages in Ireland.

Her only option is to renegotiate the terms of the mortgage with the lending institution, which they will more than likely do.

The other alternative would be to stop paying altogether, wait till the moratorium runs out, then face the music in court at a later date. Not a nice option at all.

Look at it this way - if she can renegotiate the repayments to a level that she can afford for a few years (and it's in the bank's interests to do this too), she will at some later date be in a position to sell at a better price, cut her losses & run.

mecanoman

Chap i used to work with threw he's house keys back at the Bank Manager.

Security called and bundled out into the street.
Last heard its going down the long drawn legal route.
Ireland has one of the hardest bailout/bankruptcy systems in the world (for the working stiff that is)

But maybe your friend should contact these people
http://www.debtadvice.ie/pages/Bankruptcy-in-Ireland.html
or the maybe the A-Team.....if she can find them.

Dravokivich

Rabidlamb wrote: »

Short story, a good friend bought a 2 bed apartment a few years ago ... People will say that she signed for the 100% mortgage at 8 times her salary so tough.

...Alison?

SEPT 23 1989

Move to the UK,live there for a year and declare herself bankrupt

Bankruptsy only lasts for 2 years over there rather than 12 here

after the 2 years she can come back here debt free

worth looking into

mikemac

If the value of the apartment went up by 150k I'm sure she'd be delighted with herself. Possibly even laughing at people still renting who didn't take ridiculous mortgages.
Now it's down 150k so deal with it.

If she walks away she goes bankrupt.
Realy, no bank will touch her for 12 years and maybe longer.
May as well emigrate

Rabidlamb

Lumen wrote: »

She needs a new boyfriend, obviously.

I know some people. What's she look like?

5/10, that's why she's a "friend".
She could get a boyfriend in the UK & not be financially screwed.

anniehoo

Mr. Presentable wrote: »

She can't get a second shot. No lender is ever going to give her money again, and she will always owe the outstanding amount on the mortgage.

Yeh i agree. While walking into a bank and literally handing over the keys might seem like the way out, her credit rating will be shot to pieces and she'll never get a loan EVER again from anyone. As far as i know the whole debt is not wiped either.

www.askaboutmoney.com -->really good for advice

RoadKillTs

Shes fu*ked either way really. At the end of the day she took on the debt and has to live with it.

You can't just post back the keys like some do in the US. Doesn't work like that here.

If she walks away she still owes the debt and her credit report will be destroyed. She will do well to even get a over-draft in the future.


I understand where you are coming for OP, I would't like to see a friend in that situation either but you have to be realistic about these things.

listermint

Get online, Dating agencies are crying out for people at the moment. She can find herself a nice man and latch him into the mortgage.

BOOM problem solved.:cool:

bonerm

I STILL don't know what a tracker mortgage is.

mikemac

anniehoo wrote: »

www.askaboutmoney.com -->really good for advice

If you think you get smug answers here (though thread is going well) wait until you see the responses you'll get on that site.

And the moderators are the worst for putting people down!

Rabidlamb

veritable wrote: »

Walk away and let the tax payer bear the cost? Who does she think she is?
She made a bad decision and she should suffer the consequences. It's her own fault and you want us to pay for her. Disgraceful.

Drop in the ocean relative to the 10's of billions being put into the banks.
You obviously believe that the €150k that would be saved would go to building a new classroom in your local school.
Such mistakes shouldn't cost someone 30 years of financial freedom.

T-Square

Jingle mail and Leave the country?

How about we try to get jingle mail made legal in Ireland?
and fixed rate mortgages for the life of the mortgage too,
like in civilised parts of the world like France.

Lumen

Rabidlamb wrote: »

5/10, that's why she's a "friend".
She could get a boyfriend in the UK & not be financially screwed.

There are plenty more 5/10 fish in the sea.

Seriously though, Ireland is still in really deep financial poo. IMO things are only going to get worse (see latest credit downgrades) for the foreseeable future. There isn't going to be some magical uptick in the economy that makes all those €100k boxes worth €300k again.

If I was in that sort of untenable financial position and without kids, I would rather take back control of my life and leave it all behind i.e. by emigrate as orderly a fashion as possible.

Mr. Presentable

Maybe a combination of your solutions would work, OP.

Interest Only
AND
Single Lodger

There's also the likelihood that her situation could improve over time. The neg equity thing is neither here nor there, the mortgage payment is what matters and needs addressing.

Could you not move in with her?

Rabidlamb

starbelgrade wrote: »

No matter what she does, she will have to pay her dues. There is no "Bail-out" option when it comes to mortgages in Ireland.

Her only option is to renegotiate the terms of the mortgage with the lending institution, which they will more than likely do.

The other alternative would be to stop paying altogether, wait till the moratorium runs out, then face the music in court at a later date. Not a nice option at all.

She's going for option 3, the leave the country option.
Last I heard they don't keep a list of debt defaulters at the airports either so she'll be free to come & go unless that changes.

Lumen

Mr. Presentable wrote: »

Could you not move in with her?

This could work, particularly if you remove all the light bulbs as an economy measure. 5/10 may as well be 10/10 when it's pitch dark.

My name is URL

Rabidlamb wrote: »

In this case the product was obviously mis-sold.
Hype & hysteria were generated to make it appear she had a chance at repaying.

Well Irish people have the uncanny ability to believe that everything is static.. when times were good most believed they would always be good, and now they're bad people think they'll never improve.

What can you do? Keep bailing people out every time there's a slump and then when the unexpected improvement comes, start handing out 100% mortgages to those who can't realistically afford them? People need some cop on, and that can't be given out on loan

Cookie_Monster

Sell the apartment and renegotiate the mortgage with the bank

The proceeds from the sale will not be near the full value of mortgage BUT if she agree to use the proceed to offset some (as much as possible) of it and renegotiate the rest the monthly payments will be much less than now. The question then is is new payment plus new rent payment less than current mortgage payment. If so then do it, if not then she's stuck with it.

Of course the bank may just laugh at that suggestion but it is a further option.

Renting it out fully means you can claim tax relief on interest paid on the mortgage too so may mean she is better off even if rent doesn't fully meet mortgage.

mikemac

veritable wrote: »

Walk away and let the tax payer bear the cost? Who does she think she is?
She made a bad decision and she should suffer the consequences. It's her own fault and you want us to pay for her. Disgraceful.

There are and were banks in Ireland giving mortgages who have nothing to do with NAMA and bailouts.

The OP didn't name the bank so don't assume taxpayers are involved here.

veritable

Rabidlamb wrote: »

Drop in the ocean relative to the 10's of billions being put into the banks.
You obviously believe that the €150k that would be saved would go to building a new classroom in your local school.
Such mistakes shouldn't cost someone 30 years of financial freedom.

What's your principle? Why should anybody take responsibility for anything then?
If this lady is incapable of taking responsibility for her decisions then she is a ward of the state and should be taken away.

Sergeant

SEPT 23 1989 wrote: »

Move to the UK,live there for a year and declare herself bankrupt

Bankruptsy only lasts for 2 years over there rather than 12 here

after the 2 years she can come back here debt free

worth looking into

She just arrives in the UK and declares herself bankrupt? On what? The Irish banks would still pursue her.

At the end of the day, there is such a thing as personal responsibility. If you buy an apartment and the value drops, then you shoulder that. If you own a business and it fails, then you deal with that, if you have 8 pints and drive home and knock someone down, then you deal with that.

But advising a friend to just stop dealing with the banks and running away from a debt is

1). Monumentally stupid advice as it is basically a life long exile from her home country.

2). A childish way to deal with adult responsibilities.

Off to MABS.

veritable

feelingstressed wrote: »

There are and were banks in Ireland giving mortgages who have nothing to do with NAMA and bailouts.

The OP didn't name the bank so don't assume taxpayers are involved here.

The OP said that it will be borne by the tax payer in his opening post.

monkeypants

It's a two bedroom apartment, why not rent out the room she's not living in? Lots of kids moving to Dublin for college, so now's the time to look at it.

And talk to the institution and see what the options are.

mecanoman

So much for "Grass roots in the Economy"

"Jobs from Europe" "Going forward" Ireland is f*cked.

http://gizmodo.com/assets/resources/2008/02/format-war-sinking-ship.jpg

Rabidlamb

Mr. Presentable wrote: »

Maybe a combination of your solutions would work, OP.

Interest Only
AND
Single Lodger

There's also the likelihood that her situation could improve over time. The neg equity thing is neither here nor there, the mortgage payment is what matters and needs addressing.

Could you not move in with her?

That just means she'll be 64 instead of 63 or whatever when her mortgage is up.
The lodger idea was a floater for a while but she would still be short & living with a lodger probably well into her 40's.
Better to get out now.

veritable

mecanoman wrote: »

So much for "Grass roots in the Economy"

"Jobs from Europe" "Going forward" Ireland is f*cked.

http://gizmodo.com/assets/resources/2008/02/format-war-sinking-ship.jpg

Where's all the jobs we were promised from the Lisbon treaty? What a load of b*ll*x

sbsquarepants

Rabidlamb wrote: »

In this case the product was obviously mis-sold.
Hype & hysteria were generated to make it appear she had a chance at repaying.

Mis-bought don't you mean?

Dravokivich

Rabidlamb wrote: »

Drop in the ocean relative to the 10's of billions being put into the banks.
You obviously believe that the €150k that would be saved would go to building a new classroom in your local school.
Such mistakes shouldn't cost someone 30 years of financial freedom.

1) That is a petty sense of reasoning and no excuse.

2) Her responsibility for it, no one elses.

Lumen

What are the actual consequences of being declared bankrupt in Ireland?

Presumably the bank has no rights over future assets, so you just have a really really bad credit rating. Who cares? Credit is entirely unnecessary.

I think I'd rather have a decade or two without credit cards and a mortgage rather than a decade or two of eating mashed potatoes.

ntlbell

Rabidlamb wrote: »

That just means she'll be 64 instead of 63 or whatever when her mortgage is up.
The lodger idea was a floater for a while but she would still be short & living with a lodger probably well into her 40's.
Better to get out now.

ah so because she doesn't want to live with a lodger into her 40's the general public should pick up the tab? I see.

RoadKillTs

Mis-bought don't you mean?

It's both really. Selling someone a 100% mortgage on 8 times their salary is prity wreckless.

Slydice

From what I know, you end up owing the money regardless of whether you keep the house of not.

I think in America you can just give the banks back the keys but not here.

not sure though...

How does the bankruptcy plan you mentioned work?

Gummy Panda

At least she bought the place to live in.

I remember 4 years ago a friend of a friend was saying his 19/20 year old sister was going to buy an apartment with her SSIA fund and the parents are guarantee. Her plan was to buy the apartment, rent it to polish people whom rent would pay the mortgage then flip it when the value went up. Somehow she got the mortgage (I assume parents did and had her name on it as well) and was queuing up to buy an apartment from the plans in Santry. Crazy times they were!

Hopefully your mate can work something out without having to bail out on the property.

George Orwell 1982

Unfortunately in Ireland when you hand back the keys the banks can still pursue you for any loss they make when they sell the house.

She would be best off defaulting and then emigrating.

Wertz

What's the real difference in her handing the keys back now, or the bank moving to repossess in 12-18 months time? Either way she still ends up with the remaining debt after the property is sold on...but in 12-18 months, she may have paid over more money to the bank during that time and the property may well be worth less than what it is now...so she may end up in even deeper debt than if she ditches now...

On the wider issue, what happens if a lot of punters out there are faced with this as their only option? What happens when banks end up with a load of repo property that then enters an already deflated market and further pushes down prices and that goes on to further damage their loan books/assets?

What a f*ckin' mess.

Alternative AH reply: Tell her I'll give her three fiddy for it.

stovelid

Rent out the whole apartment and cover the shortfall. Perhaps in combination with a temporary interest-free arrangement with the bank,as Mr Presentable suggested. Remember the price of renting has gone down so she'll be making a saving on the rent she'll pay elsewhere.

In a few years, her situation may well have changed: a new partner, job or otherwise and she can reassess then.

While I think that people shouldn't run from their debts, and nobody was forced into extortionate mortgages, I find it hard to take pleasure in the travails of people who just wanted to buy a home, however misguided. In fact, I know a number of people who have magically forgotten the fact that they themselves very nearly bought property during the boom - but couldn't/didn't for a variety of reasons including mortgage refusals and relationship breakups - who have now become smug oracles on the subject of restraint in such matters.

Rabidlamb

Sergeant wrote: »

She just arrives in the UK and declares herself bankrupt? On what? The Irish banks would still pursue her.

But advising a friend to just stop dealing with the banks and running away from a debt is

1). Monumentally stupid advice as it is basically a life long exile from her home country.

2). A childish way to deal with adult responsibilities.

Off to MABS.

Irish banks wont pursue jack sh*t & you know it.
They are looking to lay off staff no set up special debt hunter departments.
Currently there's nothing to stop her visiting Ireland whenever she see's fit.
Even if she was lifted no judge would hold her pending trial.


The government may have to look at ways at preventing people like her from becoming life long criminals to the state.

I take your MABS advice however, if nothing else it will put a stay on proceedings.