Mortgage written off by bank

SimonPRepublic

Did anyone see the article in the Sunday World yesterday regarding a couple who get their mortgage lender to write off over 50% of their mortgage?

The mortgage lender Stepstone (KBC are the bank) moved to repossess the house, but on the advice of their solicitor Anthony Joyce (disclosure he's a client of mine, but I genuinely think this will be of interest to a lot of people) they opposed the bank's repossession and put their house on the market. The house originally cost €300k and they sold it for only €140K but were able to get Stepstone to agree to take this sum and write-off the remaining €160k. So they're free of the mortgage and negative equity. Even if they'd handed the keys back they would still owe the bank the difference between what the bank sold it for and what their mortgage was.

For anyone who hasn't seen the article I will scan it in and post it.

S

dave1982

Do please.Banks have no issue upping our rate's.I hope this is a landmark case

SimonPRepublic

Will do. I think it's an important case. People need to be aware that they can take the banks on and win because the way these mortgages were sold left holes than be exploited by good solicitors. Plus, it makes sense for the banks to take the money from the sale rather repossess a property that they then have to sell themselves and incur legal fees chasing the remainder.

Incidentally the legal fees came off the money the homeowners received from the house.

BuffyBot

Please do not scan and post unless you have permission from the copyright holder to do so

dave1982

No newspaper scanning allowed?

ANXIOUS

It's not exactly a solution if they had to sell the house. They are back at square one.

DublinWriter

ANXIOUS wrote: »

It's not exactly a solution if they had to sell the house. They are back at square one.

At least they're not back at square minus one.

ANXIOUS

DublinWriter wrote: »

At least they're not back at square minus one.

They were never at that stage. No bank in ireland will reposess any house where people are making an honest attempt to pay it back. They basically rented an expensive house.

Monty Burnz

Bear in mind though that when one of the state owned banks (AIB, BOI, EBS, INBS) writes off a debt then it is the Irish taxpayer who picks up the loss. Thankfully in this case it was KBC (a private Belgian bank) who took a 160,000 euro hit, but if the taxpayer-owned banks start doing the same then the IMF nightmare hasn't even begun.

SimonPRepublic

They were in arrears, hence the repossession proceedings were started. But I'm sure banks would love us to keep paying our inflated mortgages. However, if they had just simply handed the keys back, and the lender had sold the property, then they would've still been liable for the remainder owed, so they would have lost their house and still had money owing. No they're free of the debt.

SimonPRepublic

BTW copyright is covered; I will post it on my site when I am back in the office.

SimonPRepublic

Here is a link to the article below on the case discussed above where the couple got the bank to write off over half their mortgage. In effect this amounts to the mortgage lender taking the hit on the negative equity as opposed to the couple being left to clear the balance.

http://www.republicpr.ie/2011/02/22/stopping-repossession-mortgage-written/

Rabidlamb

Monty Burnz wrote: »

Bear in mind though that when one of the state owned banks (AIB, BOI, EBS, INBS) writes off a debt then it is the Irish taxpayer who picks up the loss. Thankfully in this case it was KBC (a private Belgian bank) who took a 160,000 euro hit, but if the taxpayer-owned banks start doing the same then the IMF nightmare hasn't even begun.

So your saying if you were in their position & BOI offered you a write off you'd refuse it on moral grounds.
Would you fcuk.

JJJJNR

a landmark case if ever there was one.

amdublin

Yeah but how did they do it??

The article is a bit low on details tbh.

What i's weren't dotted and what t's weren't dotted

Seems like just one big ad for the solicitor if you ask me...

JJJJNR

Yeah I think your right, he's seeing a gap in the market, however the article is accurate if not KBC would be taking action. It might be worth investigation by mortgage holders who are in trouble with KBC and are under repossesion much like the people in the article.

Lets not forget the people in this case they must be counting their lucky stars, how many people would like to do this..? 44,000 mortgages in arrears in Ireland at the moment.

SimonPRepublic

amdublin wrote: »

Yeah but how did they do it??

The article is a bit low on details tbh.

What i's weren't dotted and what t's weren't dotted

Seems like just one big ad for the solicitor if you ask me...

I appreciate it doesn't give much detail, but that is the nature of tabloid journalism; they are more interested in the result than the details of the case.

From the little that was explained to me, it succeeded by a combination of challenging how the mortgage was granted and what steps were taken by the lender, plus a bit of common sense negotiation. By the latter point I mean that that most lenders would prefer to take back a cash sum rather than repossess a property that they that would then have to sell, which can be very uncertain for them and also lead to them paying fees on both the repossession and sale.

If you'd like more details Anthony is very approachable, I'm sure he would be happy to discuss it in more detail. However, each case will be different and therefore, alternative legal tactics or arguments may be used for other cases. He's made his name defending property investors, most notably those that bought overseas property, so he's pretty adept at finding holes to exploit.

amdublin

Finding holes is all very well but at some point people have to take responsibility for their own actions.

The bank did not hold a gun to my head to make me sign my mortgage contract.

Also, if I remember correctly it was I who sought a mortgage from them.

SimonPRepublic

That's true, but there was a lot of very expensive and clever propaganda around at the time to make you do exactly that (not from me I hasten to add). And if the lenders should've taken more care in considering the granting of your mortgage, and possibly should've refused you, or made mistakes in not confirming or checking all the information required, then then they may have erred and it may be possible to hold them accountable for their actions.

Let's face it, a lot of people were taken advantage of. The banks knew that holding the carrot of cheap money in people's faces would lead them to make rash decisions on their finances. They were just salesmen.

dudara

Republicpr.ie wrote: »

Let's face it, a lot of people were taken advantage of. The banks knew that holding the carrot of cheap money in people's faces would lead them to make rash decisions on their finances. They were just salesmen.

I know where you're coming from, but I still disagree with some of it. People willingly signed their names on mortgage agreements for many multiples of their incomes. There has to a significant proportion of responsibility born by people.

If a bank deliberately missold a mortgage, or knowingly lied, then I would say fair enough, but in most cases, the banks played on peoples greed, nothing illegal there.

amdublin

Republicpr.ie wrote: »

That's true, but there was a lot of very expensive and clever propaganda around at the time to make you do exactly that (not from me I hasten to add).

And sounds like you are now trying to generate a big load of propaganda for this Anthony fella.

Also, please don't patronise me saying I was taken advantage of because of a few fancy ads. I like to think I'm a little bit more intelligent than that thanks.

SimonPRepublic

dudara wrote: »

@republicpr.ie Can you please provide some more detail on the legal aspects of this case i.e. how the couple were able to deal with the bank and have the negative equity cleared.

Right now, this seems like a massive PR exercise for your client and it's not providing any real benefit to the readers here.

@Dudura, I'm not qualified to comment or know how it was done. I only know the outcome, which I thought was important to inform people. I have tried to be transparent in my relationship to legal firm. I'll get them to provide more details here.

SimonPRepublic

amdublin wrote: »

And sounds like you are now trying to generate a big load of propaganda for this Anthony fella.

Also, please don't patronise me saying I was taken advantage of because of a few fancy ads. I like to think I'm a little bit more intelligent than that thanks.

@amdublin, I wasn't being patronising and I'm sorry if it came across that way. I used the term propaganda purposely because it was much more than a 'few fancy ads' or simple PR.

JJJJNR

amdublin wrote: »

Finding holes is all very well but at some point people have to take responsibility for their own actions.

The bank did not hold a gun to my head to make me sign my mortgage contract.

Also, if I remember correctly it was I who sought a mortgage from them.

Who is your mortgage provider ? is it KBC ?

amdublin

JJJJNR wrote: »

Who is your mortgage provider ? is it KBC ?

No, not KBC. But the article seems veery general and in his first post republic.CPR has said he thinks a lot of people would be interested - implying not just KBC.

amdublin

Republicpr.ie wrote: »

@amdublin, I wasn't being patronising and I'm sorry if it came across that way. I used the term propaganda purposely because it was much more than a 'few fancy ads' or simple PR.

Apology accepted but I think you are spreading a fair bit of propaganda now yourself.

JimiTime

Appreciate the post OP. Don't mind the nay sayers, they love getting their knickers in a twist about guns to heads and how all of us in severe mortgage trouble were just greedy. nothing to do with simply buying a home or anything. Love some info on this. If something is not done about rising rates etc, I'll be looking at facing defaulting in about 2 - 3 years I'd say, so info like what you've given is very valuable. thanks for sharing.

amdublin

JimiTime wrote: »

Appreciate the post OP. Don't mind the nay sayers, they love getting their knickers in a twist about guns to heads and how all of us in severe mortgage trouble were just greedy. nothing to do with simply buying a home or anything. Love some info on this. If something is not done about rising rates etc, I'll be looking at facing defaulting in about 2 - 3 years I'd say, so info like what you've given is very valuable. thanks for sharing.

I'm not saying I was greedy

I'm saying I wanted a thirty year mtg, I sought a thirty year mtg, I got a thirty year mtg. I take responsibility for this.

JimiTime

amdublin wrote: »

I'm not saying I was greedy

I'm saying I wanted a thirty year mtg, I sought a thirty year mtg, I got a thirty year mtg. I take responsibility for this.

Fair play to ye. I take responsibility myself. People like yourself however seem to relieve the bank and government of responsibility in all of this. I'm all for personal responsibility, but I'm afraid that however noble you find your stand, its quite simply untrue that the responsibility lies solely on the mortgage holder. Also, who's fault, responsibility it is etc is pretty unimportant in the scheme of the reality of the major issue facing the nation in relation to mortgage defaults. So whoever you want to blame, the reality is that there is a social catastrophe on its way. The whole blame game is a bit of a red herring tbh.

seamus

JJJJNR wrote: »

a landmark case if ever there was one.

Not really unfortunately. The agreement was made privately outside of the courtroom, so it's not an indication of any kind of precedent or trend.

It was a subprime mortgage. These lenders are not in it for the long haul. The intention is to lend to high-risk customers who typically pay their mortgage (or most of it) for a couple of years and then sell their property for a profit and move on. Stepstone (or whoever is backing them up) don't really want to know about long-term payments. They would be more interested in getting their money now and cutting their losses.

Normal banks, you are typically in it for the long haul would have a tendency to take the cash and then arrange a long-term payment plan for the balance of the mortgage. They are far less likely to cut and run unless you owe them insane amounts (like millions).

However it does paint a good picture for people who are completely screwed financially and/or borrowed way over what they could afford.

The Rooster wrote: »

But it'll depend on what the documentation says. I'm pretty sure I have heard of people who came off fixed and they did revert to tracker (on this forum I think), so don't give up on it.

Indeed, we took out our mortgage in 2008 with two years fixed. After the two years we reverted to a tracker rate, even though our bank had stopped offering trackers 12 months before that.
But in our case, this was the agreement beforehand. I imagine if we went for a new fixed period now we'd have to sign an agreement to switch to a SVR after the fixed period is up.

Monty Burnz

JimiTime wrote: »

So whoever you want to blame, the reality is that there is a social catastrophe on its way. The whole blame game is a bit of a red herring tbh.

The question is this - who do you want to make the losers in this social catastrophe? The people who borrowed or the people who didn't? I'd say natural justice suggests it should be the borrowers who bear the brunt of the consequences.

seamus

Monty Burnz wrote: »

I'd say natural justice suggests it should be the borrowers who bear the brunt of the consequences.

Why should the lenders go (effectively) scott free? When a bank makes a loan to someone, both entities are taking on a certain amount of risk. But when it goes tits up, all of the liability is placed on the borrower. Why should the lender not be required to shoulder a certain amount of loss for providing a bad loan?

Monty Burnz

seamus wrote: »

Why should the lenders go (effectively) scott free? When a bank makes a loan to someone, both entities are taking on a certain amount of risk. But when it goes tits up, all of the liability is placed on the borrower. Why should the lender not be required to shoulder a certain amount of loss for providing a bad loan?

The lenders did not get away with it, that is a myth. The banks are all bust, and those who owned the banks (the shareholders) have lost 99% of their money. The guys working in the banks who were responsible for lending policy should be sacked, as should the boards and senior executives, and the people who borrowed should pay up.

aero2k

Monty Burnz wrote: »

The question is this - who do you want to make the losers in this social catastrophe? The people who borrowed or the people who didn't? I'd say natural justice suggests it should be the borrowers who bear the brunt of the consequences.

You left out the people who loaned - they're making a gain, so perhaps natural justice would suggest that they should bear some risk.

seamus wrote: »

Why should the lender not be required to shoulder a certain amount of loss for providing a bad loan?

Why not indeed?

When you take out a mortgage the bank accepts your house as security - in fact they force you to have the house valued and make you pay for the valuation. If that valuation later turns out to be wrong, who should bear the loss?

Better informed people than me may be able to confirm this, but I believe that in the US, when you take out a mortgage, the bank has no recourse over and above repossessing the house.

Monty Burnz

aero2k wrote: »

You left out the people who loaned - they're making a gain, so perhaps natural justice would suggest that they should bear some risk.

They do bear some risk. Tell the owners of the banks that that they bear no risk as they look at their worthless AIB, Anglo and BOI share certificates.

aero2k wrote: »

When you take out a mortgage the bank accepts your house as security - in fact they force you to have the house valued and make you pay for the valuation. If that valuation later turns out to be wrong, who should bear the loss?

The valuation is correct at the time it is made - otherwise, why would the purchaser be willing to pay that price? Do you expect the banks to look at their crystal balls and know what the house will be worth in 5 years? And, having lived through the bubble, the usual complaints that I heard were that the bank wouldn't lend people enough. I (almost never) heard someone say that the bank was offering them too much.

yawnstretch

I'm no expert but I hear two sides complaining that both share the responsibility... what about splitting the loss 50/50 between bank and mortgage owner?

Or is that too simplistic?

aero2k

Monty Burnz wrote: »

They do bear some risk. Tell the owners of the banks that that they bear no risk as they look at their worthless AIB, Anglo and BOI share certificates.

I was confining my comments to the context of home mortgages. If the bank can take your house, sell it, and still go after you for any shortfall then the only risk they have is their costs - which presumably they can seek to recover.

Monty Burnz wrote: »

The valuation is correct at the time it is made - otherwise, why would the purchaser be willing to pay that price? Do you expect the banks to look at their crystal balls and know what the house will be worth in 5 years? And, having lived through the bubble, the usual complaints that I heard were that the bank wouldn't lend people enough. I (almost never) heard someone say that the bank was offering them too much.

Prudent lending would imply something more sophisticated than a crystal ball, and for the entire period of the loan.

Life insurance companies don't have a crystal ball to see when someone is going to die, but somehow they manage to set premiums at an appropriate level to make a profit.

amber2

What if they need to borrow again in the future in this country a bureau check will show their credit history. Its all fine and well not to be lumbered with a mortgaged property in negative equity, but what if there comes a point when they need another one or even an overdraft, this will remain on their record for years to come.

Monty Burnz

aero2k wrote: »

I was confining my comments to the context of home mortgages. If the bank can take your house, sell it, and still go after you for any shortfall then the only risk they have is their costs - which presumably they can seek to recover.

That was the system that people signed up for when they asked the banks for money. Now, non-recourse loans may or may not be a good idea in future, but you can't introduce them retrospectively. And as I've stated, banks are taking on a risk when they grant a mortgage - the risk is that they won't recover the amount that they have lent. I think you will agree that that risk is being realised in spades these days.

aero2k

Monty,

I reckon we agree on more than we disagree on. I wasn't advocating introducing anything retrospectively, just that risk-sharing is done differently elsewhere.

I fully agree that the risk of default is being realised in spades these days - which just proves that the banks got their risk assessment and bad-debt provisions catastrophically wrong. Shareholders and taxpayers are paying for these mistakes (or negligence if you prefer), just as the defaulters are paying for their bad judgement by losing their homes. The only ones who haven't paid so far are those who made the poor lending decisions.

Monty Burnz

aero2k wrote: »

The only ones who haven't paid so far are those who made the poor lending decisions.

Indeed. How many of those responsible are still in well-paid, comfortable jobs is one of the greatest injustices of the whole affair.

Blackjack

yawnstretch wrote: »

I'm no expert but I hear two sides complaining that both share the responsibility... what about splitting the loss 50/50 between bank and mortgage owner?

Or is that too simplistic?

Yes, considerably.

The banks purpose for extending the loan wasn't to invest in the property, but to extend Capital it had and expect a return on that Loan - not the investment in the property.

If I was to lend you money, and you back a horse that comes last - do you expect me to write off the loan because you backed a bad horse?.

If you were to promise me a Majority share in the potential upside of winning, then I would be somewhat responsible.
If I agreed with you a rate upfront that you knew you would have to pay, regardless of the outcome of the horserace, then the liability should be yours.