Let the defaults begin....

population

http://www.independent.ie/business/personal-finance/latest-news/four-hikes-in-mortgage-rates-on-way-this-year-2565524.html

This was bound to happen sooner rather than later, and though functioning economies in Europe can ride this out, we are really not going to come out of this well. All I can say is FG have to reform bankruptcy legislation as a matter of urgency and not pay lip service to the issue like the last crowd.

bcmf

The can was kicked down the road. Now we are at the end of the road and the can is being kicked against the wall at the end of the road.

waffleman

Why does it take so long to get anything done in this country? Everything is put on the long finger except when it comes to shafting citizens - that always seems to get done as a priority.

What is the law currently on bankruptcy here? Blacklisted for 10 years?

practice

Seriously thinking of just walking away from EBS mortgage. This will put me over the edge.
No doubt we will hear from some telling us we should not have borrowed, but the house cost 300,000. so that was the price we had to pay. Now worth less than 200,000 so cant sell. EBS can have it
Would like to hold on but we need to have some sort of life.

srsly78

You can't just "walk away" here, there is no "jingle mail".

MagicSean

How does one file for bankruptcy? All these developers are able to do it and stay in their nice lifestyles. Is there any downside to it?

waffleman

practice wrote: »

Seriously thinking of just walking away from EBS mortgage. This will put me over the edge.
No doubt we will hear from some telling us we should not have borrowed, but the house cost 300,000. so that was the price we had to pay. Now worth less than 200,000 so cant sell. EBS can have it
Would like to hold on but we need to have some sort of life.

There was a show on TV earlier in the week about the back log of reposession cases in Ireland. Basically they were saying families were making a conscious decision to not pay their mortgage due to the fact it takes on average 3 years to make a reposession in Ireland at present. Hardly an "upside" to your situation but it could give you time to figure out a plan.

th3 s1aught3r

Why wouldnt people just up and leave the country, and the mortgage
Why stay here and pay for a house thats worth a fracion of what you paid for it for 30 years ?

ixtlan

k_mac wrote: »

How does one file for bankruptcy? All these developers are able to do it and stay in their nice lifestyles. Is there any downside to it?

In many developer cases the bankruptcy refers to their companies and not themselves, though in same cases they guaranteed the loans personally.

For a normal person it's always in effect a personal guarantee, so you lose everything if you try bankruptcy. Certainly we urgently need reform of the bankruptcy laws to make them a little less onerous. I don't know... maybe 3 years of your life being in "receivership", ie where your pay packet went to a receiver and you were given what you needed to survive... painful, but a big light at the end of the tunnel? I say this as someone who in effect would end up bailing out that person, so I want to make sure there are some restrictions, but I don't want people ground into the dirt, since I appreciate something needs to be done.

The OP might want to try hanging on a few months to see what comes of the new government, though that might be tough and with no definite outcome. I assume the lender will accommodate you for at least a bit longer with interest only payments maybe.

Ix.

bcmf

srsly78 wrote: »

You can't just "walk away" here

You can.....you can just never come back.

srsly78

You can walk away, but the debt is still hanging over your head.

th3 s1aught3r

srsly78 wrote: »

You can walk away, but the debt is still hanging over your head.

If you go to Australia or Canada I assume the debt follows you there, but after a few years if you apply for residency and then you will have a clean credit rating and get another mortgage, if you dare

practice

Dont want to walk away it's just that a new increase will mean I just cannot pay.
Have a good job here, but with the new social charge and other reductions something has to go. Have reduced health cover, reduced house insurance, only eat 4 days a week (joke).
Have paid all increases to date but just cannot afford any more.

bcmf

You may well need to go to your lender and tell them the situation and hopefully they should do something for you. Maybe pre-empting the rate increase and going to them and explain the situation. Put in writing as well.

Sponge Bob

Apropos bankruptcy anybody can go to England and if they are working they can apply for bankruptcy within 3 months ( maybe 6) and are discharged a year later. Irish Developers have done it such as John Fleming from Cork who owed €1bn . If they are not working in England it takes a bit longer before they can apply. They can keep living expenses money and their car ( as long as it ain't too new ) . The Irish banks can do nothing about it.

http://www.thepost.ie/news/cork-developer-declares-bankruptcy-in-england-following-1bn-collapse-53437.html

John Fleming, the Cork-based property developer, has declared himself bankrupt in England, becoming the first of the big developers to succumb to personal insolvency.

Fleming and his wife Noreen were both granted bankruptcy orders on November 10when they petitioned the Southend County Court in Essex. The Flemings moved to Essex earlier this year after the collapse of their Fleming property group, which has debts of more than €1 billion owed to several banks.

Fleming had given personal guarantees for many of the loans and his companies were incorporated as unlimited entities – rather than having limited liability status – leaving him personally liable for their debts. Fleming is described as a ‘‘property adviser" in the bankruptcy filing, while his wife’s occupation is listed as ‘‘office clerk’’.

A receiver has been appointed to take control of the Flemings’ finances and manage the bankruptcy. Under the British system, the Flemings can expect to be discharged from bankruptcy within a year, compared with up to 12 years in Ireland.

http://www.thepropertypin.com/viewtopic.php?f=19&t=2281

^^^ Interest only loans......look at the figures.....insanity

its why we couldnt afford to bail out the banks.....all we did was delay things and borrow more doing so making it worse in the long run

ilovesleep

The interest rate hikes are going to be horrific for mortgage holders, but also for the country. The banks are state owned now and interest hikes will increase mortgage defaults. Also for people who are servicing their mortgages they will have less money to spend therefore increasing unemployment. It could be trouble for people who are renting a relatively new property from a landlord, in that these hikes could be passed onto renters and they renters could be free to move back home, therefore more defaults. Its going to increase our chances of a sovereign default. Things are going to deteriorate so badly that we'll have no choice but to default, and when happens things will get worse again. Also corporation tax on the hook.

Sponge Bob

A lot of IO Mortgages have just gone into the payoff phase after the 5 year IO period expired and I am certain that this payment shock accounts for a lot of the rise in arrears. I think IO mortgages were only offered to retail customers for the first time in 2003 and by 2006 they accounted for 40% of all mortgages taken out. I suspect the vast bulk were issued betweeen 2004 and 2007.

Even if one is still on an IO the Mortgage Interest Relief expires end 2012 latest for most of them ( 5 years) and the 10 year IO periods will expire in a large way between 2014 and 2017 peaking in 2016 most likely .

The stupid banks won't be out of this sh1t until 2018.

waffleman

practice wrote: »

Dont want to walk away it's just that a new increase will mean I just cannot pay.
Have a good job here, but with the new social charge and other reductions something has to go. Have reduced health cover, reduced house insurance, only eat 4 days a week (joke).
Have paid all increases to date but just cannot afford any more.

Might be worth reading this:

http://www.guardian.co.uk/business/2011/feb/18/ireland-property-crash-bankruptcy-tourism

Declaring himself bankrupt in Ireland is not a realistic option: bankrupts must wait 12 years before they are discharged from their debts. But under European Union law he can file for bankruptcy anywhere in Europe. If he relocates to London or Manchester he can be free of his debts within 12 months, courtesy of the "progressive" UK law.

I have a mortgage and a job that is by no means secure so I'm interested to see what options are available. This is the best I've seen so far. Good luck!!

Sponge Bob

Sponge Bob wrote: »

The stupid banks won't be out of this sh1t until 2018.

you mean we wont be out of this until then.......!

Should of done an Iceland in 2008, anything else is mickey mouse bull****

danbohan

srsly78 wrote: »

You can't just "walk away" here, there is no "jingle mail".

you will see postmen suing in a few years time for damage to their backs delivering jingle mail to the banks , thats if their is anything of a state asset /goverment left to sue

later12

k_mac wrote: »

How does one file for bankruptcy? All these developers are able to do it and stay in their nice lifestyles. Is there any downside to it?

An absolutely tiny amount of developers have successfully gone bankrupt, most of them would presumably be UK based. Of those who did not have UK bases and could not initiate british bankruptcy proceedings, it would be highly unusual for them to have been pronounced bankrupt in Ireland already, and possibly even in the near future.

It's expensive (ironically) and it's messy to go bankrupt in Ireland. You just don't do it, if you can avoid it. It's one of the four major reasons (by my count) why Irish mortgage holders will not engage in a mass mortgage default.

dan_d

As is being discussed in another thread though...something will have to be done for those who are in difficulty.

Personally we're considering heading abroad for a few years, building up some substantial lump sums by saving like heck out there, and paying off a large chunk of the mortgage on our return (reducing our repayments). Mind you, we've no children, so something like this is a very tempting option for us, especially since I'm unemployed.

RichardAnd

In many ways, the massive amount of people with massive mortgages in this country is the white elephant in the room that's been quiet so far. Sure, most are paying off theirs comfortably but consider the 40k odd souls who are not, what happens if they all default within a short space of time?

The money for the mortgages came from somewhere so will it have to be paid back via the tax payer? And further, if defaults start happening on mass, will those still managing to pay their mortgage decide to throw in the towel?

There seems to be alot of loose ends to this problem. My lesson in this is that buying a house on loan is something to be avoided like the plague. Of course, if defaults start happening like teenage pregnancies in a council estate, then it will probably be possible to buy a house for cash (slight exaggeration).

2011 is going to be an interesting year.

hinault

ilovesleep wrote: »

The interest rate hikes are going to be horrific for mortgage holders, but also for the country. The banks are state owned now and interest hikes will increase mortgage defaults. Also for people who are servicing their mortgages they will have less money to spend therefore increasing unemployment. It could be trouble for people who are renting a relatively new property from a landlord, in that these hikes could be passed onto renters and they renters could be free to move back home, therefore more defaults. Its going to increase our chances of a sovereign default. Things are going to deteriorate so badly that we'll have no choice but to default, and when happens things will get worse again. Also corporation tax on the hook.

This is a good summary of what is a terrible impending situation.

gurramok

Hold on, the vast majority of private sector workers(as per sticky) and some public sector workers have not had a pay cut(they had increments) since the ECB rates were last cut in August+ 2008. Since then the rates have seriously plummeted to 1% from what was it 4%+.

What have you been doing since then in order for you to be broke once the ECB rates start going up again? A charge of the USC does not suffice, living beyond your means comes to mind.

dan_d

Bang on the head gurramok.
We are on a tracker mortgage.I was listening to this news the other day, thinking "oh my God!!!".
Then I put on my sane, non-journalistic cap and started doing some rational thinking.
Interest rates dropped 2 years ago.So in 2 years we have managed to pay quite a bit of the capital of our mortgage, due to low interest rates and also being able to pay off some small lump sums along the way.
Therefore our raised payments will not approach what they originally were unless the ECB rate creeps up to .....maybe 7 or 8%???Which may happen, but not any time soon.
I can only assume those who are panicking are those who have lost jobs. The rest were either struggling in the first place or have lost the head completely and are buying into the media hysteria.
There have been paycuts - quite savage in several places, I know of plenty of people on 3 day weeks/30-40%cuts etc. But I feel they may be in the minority, as I work(ed) in the construction sector.
It does worry me a bit, I will say.But I know we're ok for a few more months, and then we'll be looking at the situation and seeing how we go (I'm holding out hope for a job by then...:o)

population

I am not suggesting for one minute that interest rates should not increase to cool inflation. They absolutely should. I am saying that a normal economy can cope with such an increase. Our situation in Ireland ceased to be normal some time ago. Journalistic sensationalism aside, the rate is only going one way and I honestly think that will bring a lot of people very close to the brink.

donkey balls

Might be worth reading this:

http://www.guardian.co.uk/business/2...ruptcy-tourism

I just read the above article and all I can say is that I'm gobsmacked at the amount of money that guy was giving from the banks on a salary of 25k pa,Myself and a friend earned nearly twice that salary I had a good job at the time as a manager and no way did any bank offer me loans like that.
I have also thought of getting out of here for a few years at present I'm down to a 3/4 day week in work and the likes of the USC is crippling me,And unlike Lenny&martin who said we all partied during the good years I did,nt yes i had an SSIA which went towards paying off my 2nd hand car loan and to buy furniture for my house,Would have liked to have gone on a 2/3 holidays a year but i lived within my means paying off the CC straight away.

kippy

th3 s1aught3r wrote: »

Why wouldnt people just up and leave the country, and the mortgage
Why stay here and pay for a house thats worth a fracion of what you paid for it for 30 years ?

1. A conscience.
2. Family commitments.
3. Practical reasoning.
4. A job.

4 reasons why up and leaving the country isnt a practical or realistic option for many people.


Listening to McWilliams today and having a few opinions on this myself I am fairly certain that in general, what will end up happening to people who cannot repay their mortgages is that the banks will come to an arrangement where the people (depending on their circumstance) will part rent/part pay a mortgage of the house, the value of which is based on the household income.

There are laws and instruments required however to facilitate this. I also believe bankruptcy laws need to be reformed completely.

As for the people who would wonder why this rate rise would put some people over the edge - well, one can only assume that everyone situation is different.

I know of people who had two jobs in the family three years ago - down to none now.
Even those that had once stable jobs (public service etc) - they have taken massive cuts to their net income, as have large swaths of the private sector. The gross may not have changed that much but the net change has been massive.
That on top of the increasing costs of anything associated with oil, all insurance costs have all meant that any change to a mortgage interest rate is going to have an effect on that family.