No structural survey done for mortgaged property

gigino

If a person takes out a mortgage for a property / building, should not the mortgage provider have done a survey on the building concerned ? It was bought at auction during the boom, and the mortgage was approved without an independent valuation ( that is known of ) or a survey. As there are serious structural problems with the property, does the mortgagee have any comeback saying to the bank they should not have lent the money ? The property is now only worth approx. 10% ( or less ) of what was paid for it during the tiger era. Should the bank be forced to take some of the pain, as it lent an absurdly large amount of money without a structural survey ? The property is now derelict.
Thanks for reading.

Ray Palmer

Not really. The mortgage company are to do it to make sure the house is of value. It is more a case of them protecting themselves not you. You are still responsible for the mortgage and you should have got a survey done for yourself regardless of what the mortgage company wants.

It is and always has been your personal responsibility and no point blaming the mortgage company for your choice. They didn't pick the property nor suggest the value.

PhoenixParker

In my opinion sort of yes.

Valuing a property for a mortgage is a process independent of the banks.
The buyer pays for the valuation from an independent surveyor.
The valuations which were being provided during the peak years had no basis in reality and no professional credibility. They were utterly ridiculous and based on thin air. The valuers who undertook such valuations should be legally liable for giving poor professional advice*

That said, anybody who bought any property without a structural survey is an idiot. The valuation for a mortgage is not a structural survey and never has been. A structural survey is far beyond the scope of a valuation survey. While related, the value of a property and its structural condition are different things. The valuation guy has no need to get to the bottom of structural conditions to value a property and a property can still be valued without knowing all the details and problems. If the valuation is carried out properly he should see the structural problems and alter his valuation downwards appropriately, but he has no obligation to give further details to the purchaser. That's not the service you're buying from him, and they assume you have had a full structural survey to identify potential problems.

*Professional advice can be wrong, but the professional involved should be able to justify how they came to that conclusion based on codes of practice etc. Most of these guys clearly couldn't.

gigino

PhoenixParker wrote: »

The buyer pays for the valuation from an independent surveyor.

Unfortunately the buyer was on medication of at the time of purchase, did not know better and got carried away by the hype at the auction of the property. ( which was during those crazy boom tiger years ). He was not even "mortgage approved" before he "won" the property at auction, but went looking for the mortgage after "winning" the property. The first 2 banks turned him down but the 3rd bank gave him the money. Looking back on it the bank should never have given the mortgage, as it was many many times the persons annual income at the time. No valuation was ever carried out on the property to the best of the purchasers knowledge before he got the mortgage. Also no structural survey was ever done. Crazy times. However as the property is not now habitable and has serious structural problems, is very old etc ...has the purchaser any recourse other than to keep paying the mortgage interest, which is all he has been able to do since he bought the property during the boom ? Is there a regulator for mortgages...the person involved is not in to computers or googling etc but I thought I would ask here about it, as he is a friend and I feel sorry for him.

Do banks not normally insist on structural surveys and valuations ( I know they are seperate things ) being done before lending the money / granting the mortgage ....I thought they did, in which case this persons property may have slipped through the cracks due to sloppiness on the part of the bank etc ?

Treehouse72

As with so many other things property-related in Ireland, there's a moral hazard problem.

Like it or not, this chap was one of the people who was part of the property feeding frenzy. I make no value judgement on that, it is a statement of fact: he was one of the people that drove up prices so that ordinary families couldn't. As I say, that's not to say he wanted to do that, but that was the net result of his actions.

So, when we look at the moral hazard part of this there simply has to be some form of restitution for these mistakes. Anyone who was part of the wider bubble now looking for sympathy or come-back is morally not entitled to it.

On top of which, if there were no punishment for people making reckless purchase decisions at auctions or else there would be chaos. There needs to be personal responsibility. I say that in general terms and notwithstanding your friends medical problems, which might alter this specific case.

Ray Palmer

gigino wrote: »

Do banks not normally insist on structural surveys and valuations ( I know they are seperate things ) being done before lending the money / granting the mortgage ....I thought they did, in which case this persons property may have slipped through the cracks due to sloppiness on the part of the bank etc ?

No a valuation survey and that is only to protect themselves. They may have taken the auction as a valuation. The bank are wholly not responsible. The bank are in no position to make sure the buyer is acting responsibly outside of protecting themselves.
A valuation survey may have hinted to get a fully structural survey but that is not what the bank look for. It is really straight forward "buyer beware". To even suggest the bank are responsible is kind of irritating to me. A grown adult rushes into a purchase before even checking how much they can get and doesn't get a survey done then turns around and wants to blame the bank!?!? If he can find a legal means to shift the blame he will be creating a new precedent. Highly unlikely to be able to do this.

Before he signed the mortgage it was all explained and because it hasn't worked out they want to blame the bank? Yes the banks loaned recklessly but only in terms of stability the individual is still being held responsible for their own choices. Your friend was foolish but if the banks had refused he would have cursed the banks at the time. Committing to buy at an auction without loan approval is really high on the list of silly things to do and then not getting a survey on an old property makes it worse. The blame on the bank falls pretty short of the foolish things he did.

gigino

Ray Palmer wrote: »

Before he signed the mortgage it was all explained and because it hasn't worked out they want to blame the bank?

Many who know him says the bank should take some blame, that they should not have lent him 30 times his annual income - with interest only payments even back during the boom years - to buy a property , based on expectations of a compensation claim he was involved in at the time. His compensation claim for damages in a seperate (medical) matter did not cover the capital cost of the property as expected. And if the bank should have lent him the monent then surely it should have insisted on a structural survey being done, to protect everyone involved. The property is now derelict and worth less than 10% of the price paid during the boom.

Treehouse72 wrote: »

On top of which, if there were no punishment for people making reckless purchase decisions at auctions or else there would be chaos.

He has taken a lot of punishment as a result of bidding at that auction, believe me. The question is ; should the bank have lent him the money or not ? The bank lent almost 100% of the cost of the property.

Ray Palmer wrote: »

No a valuation survey and that is only to protect themselves. They may have taken the auction as a valuation. The bank are wholly not responsible.

Nobody is suggesting the bank is WHOLLY responsible but as I wondered earlier, if they were foolish enough to lend a crazy amount of money, without a proper survey or valuation, should it not bear some responsibility ? Surely someone in the bank slipped up - it certainly would not happen now anyway.

Ray Palmer wrote: »

Your friend was foolish but if the banks had refused he would have cursed the banks at the time.

Yes he was certainly foolish but was on anti-depressants at the time and got carried away in the frenzy of the auction for 30 seconds or a minute and paid more than he intented to. In the following weeks he went to different banks to borrow nearly all of the purchase price of the property ( his deposit having been taken within minutes of the hammer falling ) and the first 2 banks refused him. He did not curse them. He went to the 3rd bank and they ( foolishly ) lent him the money. He is a very honest sort of a person and has led a very frugal life since the boom , just to pay the interest on the mortgage, which as times is as much as his income. He is not married but his friends are genuinely concerned for him.

djmcr

Gigino, look at it from another perspective, if the bank loaned your friend money to buy a car and that car turned out to be a hunk of scrap would you expect the bank to be responsible

gigino

djmcr wrote: »

Gigino, look at it from another perspective, if the bank loaned your friend money to buy a car and that car turned out to be a hunk of scrap would you expect the bank to be responsible

yes, I would hold the bank partly responsible for the mess if
(A) the car was 30 times the persons annual salary ( like the property was / is )
(B) not good value for money / not useable. The first time my friend saw the inside of the property was after the loan had been arranged and he got the keys - he was that naieve. It was ( he thought ) a good location and he had just seen the outside of the property.

If someone went to a car auction and paid 500,000 for a ford and went to a bank the next week for the balance of the money to buy it, should the bank lend him € 480,000 ? ( albeit on an interest only basis, until the expected compo money came in , which never fully materialised )

Surely the bank he borrowed from should have had the same common sense checks in place which the other 2 banks had ?

astrofool

Structural survey is not required by the bank when purchasing a house, the bank sends a valuer, who values the house, but that's it. In the case of auction, even a valuer may not be required, as the market price was established in open auction.

Dades

The purchaser's bank are insisting on a structural survey of the house I'm currently selling - but only because the building is nearly 100 years old and does not have an official build date in the registry due to being originally part of a larger property.

Before this issue of a missing date arose the bank were happy to go with their own valuers report on the property.

Tellingly, this wasn't an issue in the heady days of 2004 when I bought the place.

OP, in your friends situation, the bank will no doubt have to take some kind of a hit on what they loaned out, but they sure as hell won't take any responsibility.

f9710145

Usually it's a purchaser's solicitor who recommends a structural survey. I know when we bought our current home the bank got someone to do a drive by valuation, i.e. yes the property does exist and is still standing. The bank's valuation is similar to the one made by the ea who is selling a house. The ea doesn't look into the structural elements of it when coming up with a price.
Did your friend not engage a solicitor either? If they did then it's the solicitor I would take issue with for not insisting on a survey and cautioning against such an undertaking.

Ray Palmer

gigino wrote: »

Many who know him says the bank should take some blame, that they should not have lent him 30 times his annual income - with interest only payments even back during the boom years - to buy a property , based on expectations of a compensation claim he was involved in at the time. His compensation claim for damages in a seperate (medical) matter did not cover the capital cost of the property as expected. And if the bank should have lent him the monent then surely it should have insisted on a structural survey being done, to protect everyone involved. The property is now derelict and worth less than 10% of the price paid during the boom.

They may feel that but that is not the way the law looks at it. The bank DO NOT insist on a structural survey. He should have. Completely and wholly is responsibility.

gigino wrote: »

He has taken a lot of punishment as a result of bidding at that auction, believe me. The question is ; should the bank have lent him the money or not ? The bank lent almost 100% of the cost of the property.

They assessed him as a risk. The answer is still they are not there to protect him from his own foolish decision. You are looking at this from the wrong view point and assuming the bank have more obligations than they actually have. It appears that at least he and probably the bank expected him to get a large payout. The bank most likely based that on the information he provided and the question comes how honest was he about this?

gigino wrote: »

Nobody is suggesting the bank is WHOLLY responsible but as I wondered earlier, if they were foolish enough to lend a crazy amount of money, without a proper survey or valuation, should it not bear some responsibility ? Surely someone in the bank slipped up - it certainly would not happen now anyway.

They are barely lending now but that has little or no bearing. A valuation may not have caught any of the issues and again not for his protection that is for the bank.

gigino wrote: »

Yes he was certainly foolish but was on anti-depressants at the time and got carried away in the frenzy of the auction for 30 seconds or a minute and paid more than he intented to. In the following weeks he went to different banks to borrow nearly all of the purchase price of the property ( his deposit having been taken within minutes of the hammer falling ) and the first 2 banks refused him. He did not curse them. He went to the 3rd bank and they ( foolishly ) lent him the money. He is a very honest sort of a person and has led a very frugal life since the boom , just to pay the interest on the mortgage, which as times is as much as his income. He is not married but his friends are genuinely concerned for him.

Being on anti-depressants means very little and if anything would mean he was in a better frame of mind. You are making excuses for him and trying to hold the bank responsible. It doesn't work that way. It is possible to suggest he. His only line of defense could be they did not asses him correctly more so than they didn't insist on a valuation survey. They are under no obligation in any manner to get a structural survey but he certainly should have. Plus the details of what he was getting into would have been fully explained to him by the solicitor, if not then he has a case against his solicitor. But that will all be in black and white with his signature.

You appear to be mixing what appears to be a reasonable moral view with what the law will enforce. He should go and get proper financial advise from MABS. Agreeing with him as friends is no use if he doesn't get proper financial advise and may actually be a hindrance to him doing what he needs to do.

gigino

f9710145 wrote: »

Did your friend not engage a solicitor either? If they did then it's the solicitor I would take issue with for not insisting on a survey and cautioning against such an undertaking.

A solicitor was used by my friend of course, as he would not have been able to buy the house / do the legal work without one. At the time of the auction/ prior to the auction, my friend was assured by the solicitor of a large compensation settlement for a completely different matter ; otherwise he would not have bid at auction at all. The compo when it eventually came, fell far short of what was expected. I think as well the solicitor should have advised him to at least look at the inside of the property before the mortgage was completed. However if the solicitor recommended a structural survey, or even visual inspection of the property a week or two after the auction ...what then ? If the deal was not completed the purchaser would have lost his 5 figure sum he paid as deposit ( within minutes of the auction ending ) and he as called up to a table and was handed a pen and asked to sign forms within minutes of the auction ending - presumably he was then comitted to buying the property ? The solicitor got their percentage for dealing with the transaction. The auctioneers got their percentage, and the person in the bank probably got their bonus for selling the ( very high ) mortgage. As the building is approx a hundred years old should the bank not have been more careful before advancing the money ? My friend has had literally borrow money from family etc just to keep paying the interest payments, and has had no quality of life since the auction. He was on anti-depressants at the time of the auction + attending a consultant ; God only knows how he is coping now / why he has not ended it all. I really think RTE or someone should do a programme on the whole thing. The professionals involved will fob off the blame + the purchaser has taken all the pain. He should not have trusted the solicitor, but then he was a trusting type of person.

gigino

Ray Palmer wrote: »

The bank most likely based that on the information he provided and the question comes how honest was he about this?

he is totally honest but feels he was misled by his solicitor in that the claim for the compensation, and what he was led to believe he would get, was far higher than what he eventually got. I do not think a bank should give such a large loan based on what someone expects to get in compensation for a different matter anyway. Other banks would not and did not.

Should not banks evaluate the structural integrity and / or value of a property before advancing a mortgage ? eg,in a hypothetical situation if 2 fools get carried away on drugs and bid against each other up to say 30 million for a 300 year old ruin, should the bank not have checks in place before advancing 30 million to the successful bidder ?

Victor

I would suggest that the buyer should consult a new solicitor, if necessary bringing someone with them. However, I don't see them as being particularly successful.

Auctions are for the brave (and stupid). Once your bid is accepted, thats it, if you pull out, the vendor can successfully sue the bidder for any additional costs and the difference between the bid and any eventually sale price achieved (it tens to be taken from the deposit). All valuations and surveys should be complete before the auction, as you can't go back.

If the buyer was genuinely of such ill health that they couldn't properly look after their own affairs, there may be a case to answer, but whether that is a legal or moral one, I don't know.

gigino wrote: »

Should not banks evaluate the structural integrity and / or value of a property before advancing a mortgage ? eg,in a hypothetical situation if 2 fools get carried away on drugs and bid against each other up to say 30 million for a 300 year old ruin, should the bank not have checks in place before advancing 30 million to the successful bidder ?

It would be prudent, but the banks rely on borrowers getting their own professional advice.

astrofool wrote: »

Structural survey is not required by the bank when purchasing a house, the bank sends a valuer, who values the house, but that's it. In the case of auction, even a valuer may not be required, as the market price was established in open auction.

Valuations tend to be done by a valuer of the bidder's/buyer's choosing, but with qualifications acceptable to the lender.

PhoenixParker

He had bought the house for the specified price before he ever approached the banks or the solicitors. Blaming them for enabling him to follow through on the deal is a little ridiculous.

This mans best bet is to go bankrupt. He's a classic case of when bankruptcy is appropriate. That is the point at which the banks will share the pain.

djmcr

Tell your friend to look up the term "caveat emptor", and also the term " a fool and his money are easily parted". Sorry for being harsh but this person was taken for a ride and now you are looking for someone to take the can.

gigino

PhoenixParker wrote: »

He had bought the house for the specified price before he ever approached the banks or the solicitors.

It was not so much a specified price as such, the auction happened so fact and the auctioneer went from bidder to bidder and everyone was looking at the eventual purchaser, and he got caught up in the frenzy of the moment, and believing he was in for a large sum of compensation for another matter bid on the property, with the support of his solicitor, who profitted from it all. As said before , 2 banks turned him down for the loan ( inc his own bank, but a bank with less rigorous "checks" lent him the money on an interest only basis. Years later when it all went sour they want the capital repaid monthly, instead of in a lump sum by the compo as originally envisaged.

Victor wrote: »

It would be prudent, but the banks rely on borrowers getting their own professional advice

The bank did not in this case, or at least the buyer did not get proper advice.

Victor wrote: »

.Valuations tend to be done by a valuer of the bidder's/buyer's choosing, but with qualifications acceptable to the lender.

No such valuation was done, and in fact the purchaser was discouraged / not even allowed inspect the inside of the building until the mortgage was completed.
Ten years before the boom no bank would have loan even 10% of the price lent to my friend, against this property. Nowadays no bank would lend even a tenth of the money like that....the property is on the market but is derelict and cannot even achieve 10% of the price paid in the boom. Maybe 5% would be realistic. Should'nt the bank take some of the pain now for behaving irresponsibly ? What amazes me is why the purchaser has not (yet) topped himself or someone else, I know it is causing major stress, and a break up in a relationship. His family paid a couple of grand for another solicitor to look at the matter but want more for baristers opinions, and there is a fear they may be throwing more and more good money after bad. Life savings and an inheritance and a compo settlement has already gone in to the property, and its still in huge negative equity.
If the 3rd bank had the same lending policies as the first 2 banks he would not have got the mortgage.

The_Conductor

Gigino-

Your friend bought the property at auction- without having so much as approval in principal in place before bidding- mistake no.1

Your friend did not conduct a survey, structural or otherwise of the property- mistake no.2

Your friend has/had no idea of what a fair market value for the property was- as they never had a valuation done. Mistake no. 3

Your friend went to multiple lending institutions until they found one willing (or stupid enough) to lend him the money- mistake no.4

Your friend relied on the fact that the lending institution did no further checks as some sort of retrospective guarantee as to the veracity of the sale and the state of the property- mistake no. 5

Your friend relied on an insurance claim to fund the property, which when it came to pass, was not what he/she expected- mistake no.6

Your friend has now left the property vacant and its become derelict- mistake no.7

Your friend is trying to blame antidepressants for the whole saga- good luck to him on this one........

1. All sales at auction are final- you cannot presume that its simply part of the process of buying a property- you are buying a property there and then.

2. It is up to the buyer to conduct a survey of the property- you can bring a surveyor with you to any properties being sold at auction no problem whatsoever- hell one of the recent Alsop properties had 5 or 6 different surveyors wandering around it on a fine Tuesday afternoon.

3. Your friend 'got caught up in the heat of the moment' at the auction and bid more than he should have done. Tough. Thats why most people who are buying at auction have someone bid on their behalf- with an absolute maximum they are willing to go, which does not get breached.

4. His own bank wouldn't lend him the money- so he kept knocking on doors until he found someone who would? Really? Should this not have set alarm bells ringing from on high? And the loan when he did get it- was interest only and based on the fact that he was going to repay the capital as a single lumpsum? I don't mean to sound harsh- but it was more than antidepressants that he should have been on......

5. Why the hell would a lending institution do further checks- when he presented himself at the door with *his* property as a fait accompli? He bought the property at auction- without funding in situ, and then went looking for money? He was damn lucky- or unlucky as the case may be- that they did give him the money. A more favourable turn of events would be that he was turned down by everyone, sued by the seller, and had a lien put on his compensation claim- which would mean he could potentially have lost whatever compensation he might (hypothetically) have gotten anyway.......

6. He relied on an insurance claim to fund the purchase- and got an interest only loan with an agreement that the mortgage would be cleared by capital repayment when this settlement came in? Thats not a mortgage- thats a bridging loan- and the only way the settlement would be acceptable as an asset in this case- is if it was presented to the lending institution as such.

7. The property is now vacant and derelict? Why? What the hell good is it allowing it decay and sink into the ground? These last few winters have been cruel to property- if this property is not kept in good order- it has zero value.

As an aside to those suggesting this is a case where he should declare bankruptcy and cut his losses- check out bankruptcy law, it applies to unsecured debt- in this case, despite the tenuous nature of the loan, it is classified as a securitised loan.

Your friend *needs* professional advice on the whole mess. He also needs to get his head the hell out from the sand and stop playing the blame game. He took unreasonable risks, he took a total gamble- and he lost. He has to accept responsibility for his own actions. Wildly pointing the finger trying to blame someone- is stupid.

As for the comments about how he should never have been allowed borrow so much money- sure its x times his annual salary. Sorry. The way you've told us his finances were- this was not a regular mortgage he was after- it was bridging finance, plain and simple- and bridging finance would normally be structured on an interest only basis, with a lumpsum repayment on the realisation of an asset (the compensation claim in this case). Should the compensation claim have been sold to the bank as an asset? In hindsight- of course it shouldn't- but that was a crazy decision that your friend made.

The knux of this problem- your friend decided to go to an auction and buy a house without any money in his bank account or the agreement of anyone to lend him money- and only afterwards went knocking on doors until he found someone willing to lend him the money...........

Quit playing the blame game- get proper professional advice, and I'm not altogether sure that its a good idea to try to blame his frame of mind- it might have unintended consequences.

Ray Palmer

OP you have been informed, your belief and indignation are just wrong. I am irritated and the fact that being on medication to solve a problem is an indication that the person has a problem at the time. It solves a problem not meaning there is a problem.

ResearchWill

You say your friend was on medication, depending on what and why, was he legally capable of entering into any of these contracts. Can't enforce a debt against a lunatic, my advice get a good solicitor, good medical people and see if there is anyone on the line.

Dades

gigino wrote: »

Should'nt the bank take some of the pain now for behaving irresponsibly ?

The bank will take some of the pain, as by the sound of it most of the money they lent out will probably never be paid back. As stated, it will probably involve bankrupting your friend, but there are no winners in this tragedy.

What you are asking essentially is does you friend have any get-out clause because the bank was also stupid? The answer to that question is no - as it is for every other unfortunate who bought property in the bubble and it now struggling to pay back a mortgage much bigger than the value of their property.

Ray Palmer

ResearchWill wrote: »

You say your friend was on medication, depending on what and why, was he legally capable of entering into any of these contracts. Can't enforce a debt against a lunatic, my advice get a good solicitor, good medical people and see if there is anyone on the line.

Being on anti-depressant does not make you a lunatic or give you any out for legal documents.

gigino

Dades wrote: »

What you are asking essentially is does you friend have any get-out clause because the bank was also stupid?

Correct. Does he have to take all the pain / loss , when the particular bank in question which lent him the money was also foolish / made a mistake. Lending him 30 times his annual salary, on a 100-year old property he was not even allowed inside to inspect before purchase, in retrospect was also foolish.

Ray Palmer wrote: »

Being on anti-depressant does not make you a lunatic or give you any out for legal documents.

The purchaser was attending a phychiatrist , and was prescribed lithium as well as anti-depressants, that year when he got carried away at auction and bought the property. His medical consultant whom he attended for many sessions, and who proscribed the medication, could verify that. However, he acknowledges he is partly to blame for the mess, and he has lost a lot of money as a result, but the question is, how much of a hit , if any, should the particular bank suffer for also being foolish ? He has had the property on the market for many years with no offers. As regards letting it out, when he bought it it was barely habitable, and there are many newly built properties around it which are vacant, so nobody would want to move in to a 100 year old wreck which has structural problems, is very seriously in need of modernisation etc. Had he got the compensation for the seperate matter his solicitor had assured him he would get ( a claim was even submitted for the higher amount ), then he could have modernised the property.

smccarrick wrote: »

The knux of this problem- your friend decided to go to an auction and buy a house without any money in his bank account or the agreement of anyone to lend him money- and only afterwards went knocking on doors until he found someone willing to lend him the money...........

He actually had money in his bank account - a five figure sum as said previously i.e. between € 9999 and € 100,000 ). He lost this within minutes of the hammer falling at auction. While he had not the agreement of anyone to lend him the balance of the money needed to purchase the property, his solicitor had assured him it would not be a problem to borrow the money, and neither was it.
If only the 3rd bank had the same lending policies in place as the first 2 banks. Or the same as all banks 5 years before that, or all banks 5 years after that.

smccarrick wrote: »

Your friend *needs* professional advice on the whole mess. .

As said before " His family paid a couple of grand for another solicitor to look at the matter but want more for baristers opinions, and there is a fear they may be throwing more and more good money after bad". He has already borrowed money from his family to enable him to pay the interest + other bills, when rates went higher several years ago.

ResearchWill

Ray Palmer wrote: »

Being on anti-depressant does not make you a lunatic or give you any out for legal documents.

While I agree with you I have not met the person referred to, but a few things make me think, the guy bought a house sight unseen for 30 times his salary, he never performed any survey on the property, he had an accident and was under the care of a doctor and getting medication. Now adding all these together I am just wondering was he capable legally of entering into any contract at the time. More than likely he was but my advice is to get good legal advice and medical advice. It may just give him another stick to beat the lender with, and share the pain around.

gigino

gigino wrote: »

Correct. Does he have to take all the pain / loss , when the particular bank in question which lent him the money was also foolish / made a mistake. Lending him 30 times his annual salary, on a 100-year old property he was not even allowed inside to inspect before purchase, in retrospect was also foolish.




The purchaser was attending a phychiatrist , and was prescribed lithium as well as anti-depressants, that year when he got carried away at auction and bought the property. His medical consultant whom he attended for many sessions, and who proscribed the medication, could verify that. However, he acknowledges he is partly to blame for the mess, and he has lost a lot of money as a result, but the question is, how much of a hit , if any, should the particular bank suffer for also being foolish ? He has had the property on the market for many years with no offers. As regards letting it out, when he bought it it was barely habitable, and there are many newly built properties around it which are vacant, so nobody would want to move in to a 100 year old wreck which has structural problems, is very seriously in need of modernisation etc. Had he got the compensation for the seperate matter his solicitor had assured him he would get ( a claim was even submitted for the higher amount ), then he could have modernised the property.


He actually had money in his bank account - a five figure sum as said previously i.e. between € 9999 and € 100,000 ). He lost this within minutes of the hammer falling at auction. While he had not the agreement of anyone to lend him the balance of the money needed to purchase the property, his solicitor had assured him it would not be a problem to borrow the money, and neither was it.
If only the 3rd bank had the same lending policies in place as the first 2 banks. Or the same as all banks 5 years before that, or all banks 5 years after that.

smccarrick wrote: »

Your friend *needs* professional advice on the whole mess. .

As said before " His family paid a couple of grand for another solicitor to look at the matter but want more for baristers opinions, and there is a fear they may be throwing more and more good money after bad". He has already borrowed money from his family to pay interest on the loan.

astrofool

The bank will take the hit when your friend declares bankruptcy, until then your friend can keep on trying to pay the debt that he owes. He could also try and negotiate with the bank on a payment plan, but this is only likely to happen if your friend has a regular source of income.

Coriolanus

As said above, the only risk a bank is open to is possibly taking the hit when someone declares bankruptcy.
If he's in that bad a way that he can't even keep up the interest payments, then he just have to declare. It's a particularly crappy system in Ireland as compared to some other countries but they're the cards we hav.e

The_Conductor

Ok- so they don't want to pay for a professional opinion- as they feel its tossing good money after bad......?
What are you doing here?
Certainly our opinions aren't costing you anything- however, we're not acting in a professional capacity here, and any opinions we offer that you disagree with (which seem to be pretty universal in nature), you toss to one side- to doggedly pursue the notion that someone else has to be to blame for the actions of your friend.

Unfortunately the very concept of people taking responsibility for their own actions- seems to evaporated- some things are unforseeable, some accidents are genuine accidents, some windfalls are windfalls.......

Had the property bubble continued to inflate- and your friend was sitting on a tidy sum- you'd be patting him on the back congratulating him for his astuteness- however as the winds blew the other direction- its all a game of- how can I spread the blame, how can I make someone else responsible for what happened...........

Your friend may have had bad advice from his original solicitor- however he compounded this with his own actions- I'm really sorry, there is no other way of putting it..........

With respect of the lack of a structural survey- and the other happenings- we are rehashing and reheating the same arguments and the same rebuttals, over and over again.

You know what the majority of the posters in this forum think. If you want a professional opinion- pay for it, like everyone else. If you do not want a professional opinion- play a waiting game and accept the inevitable- a foreclosure on the property, the firesale of the property and the registering of a judgement against your friend.

Legally the second option- a foreclosure and a firesale- along with the registering of a judgement- would in my opinion (as a casual observer), be preferable if he were to subsequently declare bankruptcy, as bankruptcy proceedings only cover unsecured debt, and a registered judgement, is unsecured. Next you need to explore- do you want an Irish bankruptcy, or a UK bankruptcy- and make sure you fit the criterion for such a declaration (such as residency rules for a UK declaration for example).

You really can't expect professional advice here- if you want a professional opinion- go and accept that its going to cost you more cold hard cash......

lomb

Where is this derelict house located that has dropped 90+% in value? I thought houses were only down 50%?
Anyway as said above bankruptcy seems to be the way forward whether UK or Irish. It needs to be sold by the bank so the security is released for this to happen. Probably not paying the interest seems to be the way forward to force their hand?
Your friend probably paid a little over the odds when buying at THAT time. Someone had to have bid close to him to achieve the price paid. So that is what it was worth rightly or wrongly.

gigino

smccarrick wrote: »

Ok- so they don't want to pay for a professional opinion

As said before , his family paid a couple of grand for another solicitor to look at the matter but ( the solicitor ) wants more for baristers study / opinions. The legal system could soak up tens of thousands of euro, and who would they sue ( original solicitor, bank or who ) ?? .... ...so there would be no guarantee of getting any of that money back. The purchaser - not unreasonably -feels the "suits" have made enough out of the family as it is.

smccarrick wrote: »

What are you doing here?

I am only a friend of the purchaser, concerned for his health + well being. He and his family are decent people but not in to computers or internet ....if he was, he may not have been so foolish as to bid for the property in the first place. I was just wondering should the particular bank in question not share some of the pain/ loss - say 20 or 30% - as they failed to ensure a survey or even visual inspection of the inside of the house was carried out ?

Nevore wrote: »

As said above, the only risk a bank is open to is possibly taking the hit when someone declares bankruptcy.

Did I not read something in the papers a month or two ago about one of the ( foreign owned I think ) banks taking a small hit (maybe 10% of the value) if certain people quietly paid off their tracker loans in full now, as they ( the banks ) are losing money on such loans + just want out ?
e.g in certain cases, if the bank is owed a million on a property in massive negative equity, and there is a tracker mortgage / very low interest mortgage in place ( which is losing money for the bank ) , the bank will cut its losses by taking 900k cash to clear the loan ? Partial debt forgiveness - so in that case the bank is taking a hit without someone declaring bankruptcy, but for the bank it makes financial sense at this stage ( to get shot of the whole problem rather than continuing to lend to the purchaser at 2% or whatever ).

lomb wrote: »

Where is this derelict house located that has dropped 90+% in value?

I do not want to identify the exact location as I do not want to run the risk of identifying my friend / what I have said about him etc, but suffice to say its in a rural town which developed rapidly during the boom, but which is not feeling the pinch of the recession , to say the least. The property is about a hundred years old + derelict now .....its horrible and depressing inside ...the purchaser got a horrible surprise when he saw it for the first time after the mortgage had been arranged...it would not be worth doing up / modernising as close by in the town there are countless "far nicer" apartments / houses built in the boom, which are still empty / never occupied.

lomb wrote: »

Your friend probably paid a little over the odds when buying at THAT time. Someone had to have bid close to him to achieve the price paid. So that is what it was worth rightly or wrongly.

He paid a lot over the odds...he did not realise at the time when bidding that the other bidder was an adjoining property owner who wanted the property / site for development. Surely the bank should have valued it properly - or at least told him to look at the inside of the house - before selling him the mortgage ?

Victor

gigino wrote: »

No such valuation was done, and in fact the purchaser was discouraged / not even allowed inspect the inside of the building until the mortgage was completed.

I can't honestly believe anyone would do this when selling or buying. Can you imagine - "Here mister, I've a bar of gold in this bag. €50 only. But you can't look in the bag."?

lomb wrote: »

Where is this derelict house located that has dropped 90+% in value? I thought houses were only down 50%?

It may be that it was never worth what was paid for it on the open market.

gigino

Victor wrote: »

I can't honestly believe anyone would do this when selling or buying.

The purchaser was on anti-depressants + attending a phychiatrist on a regular basis ...he bought it at auction having only seen the outside of the building - he guessed he would spend a bit of money doing up the inside anyway but the auctioneer had assured him it was a good building inside, and the solicitor ( who profitted from the legal work ) had assured him he would get a big lump of money ( for a seperate compensation claim ) to redecorate the inside of the building etc. When he bid at the auction he could not really back out, and he got some shock when he saw the inside of the property once he got the keys + the mortgage had being arranged.

Do not forget these were celtic tiger crazy times - probably some other fools probably bought property off plans abroad without seeng the country , never mind the inside of the property.

Victor wrote: »

It may be that it was never worth what was paid for it on the open market.

In which case the bank should not have lent the money ? An interesting case.

Incidentally the auctioneer has admitted ( when the purchaser first tried to sell the property some years ago ) the price paid at auction was a "bit strong" ! Maybe it would not have been "as strong" if he did not hype up the property / area / market as much, but that was his job I suppose, he was acting for the seller.

lomb

He never even saw inside the house??
Thats completely nuts frankly.
What kind of financial position is he in other asset wise to clear what percentage of the loan? Debt forgiveness is probably a waste of time. The thing to do is allow them to sell the place by stopping all repayment of the loan and then allowing registering a judgement against him. Bankruptcy isnt as bad as it sounds, people in this country dont know how good they have it even potentially bankrupt ones! The government provides a living wage to every man woman and child that far exceeds any life standard that 4/5 of the world have. I suppose if he has any assets or freecash he should probably dispose of them somehow prior to bankruptcy but thats another matter.

The_Conductor

We really are going round and round in circles here.........

If you're looking for professional advice- you are going to have to pay for it.
If you want to continue this thread- I am going to move it to the legal forum.

Please advise.

It's an intriguing story. I am in no way a supporter of mass debt forgiveness, but lets just say that if this were me I would most certainly be pushing the whole "Wasn't mentally fit enough to enter into such a contract" angle and perhaps he may be able to scare the bank into taking what he has given them already and perhaps the value of the house as it stands as opposed to the chance of them being ordered to pay that money back to the "mentally unwell man".

ResearchWill

Rojomcdojo wrote: »

It's an intriguing story. I am in no way a supporter of mass debt forgiveness, but lets just say that if this were me I would most certainly be pushing the whole "Wasn't mentally fit enough to enter into such a contract" angle and perhaps he may be able to scare the bank into taking what he has given them already and perhaps the value of the house as it stands as opposed to the chance of them being ordered to pay that money back to the "mentally unwell man".

I would totally agree.

ionapaul

It is very clear what he needs to do - declare bankruptcy. That's what it is there for, if he will never be able to pay back the full amount he has borrowed + interest. No need for all the back and forth really, is there?

gigino

ionapaul wrote: »

It is very clear what he needs to do - declare bankruptcy.

Its a bit tough on him if he does, as he has worked hard all his life, and sunk his life savings, the medical compensation ( from a seperate matter ) and money from his parents in to the project - which means he has lost many hundreds of thousands. I am in no way a supporter of mass debt forgiveness , but if the particular bank in question acted irresponsibly in giving him such a large loan ( when other banks would not), without even a structural survey, valuation or evaluated plan to pay it back, should the bank not take some pain directly - now ?

Ray Palmer

gigino wrote: »

Its a bit tough on him if he does, as he has worked hard all his life, and sunk his life savings, the medical compensation ( from a seperate matter ) and money from his parents in to the project - which means he has lost many hundreds of thousands. I am in no way a supporter of mass debt forgiveness , but if the particular bank in question acted irresponsibly in giving him such a large loan ( when other banks would not), without even a structural survey, valuation or evaluated plan to pay it back, should the bank not take some pain directly - now ?

It has been explained NO. The bank is not responsible in any legal way as far as anybody here knows. If you want to keep this line of determination you need to get some legal advise from somebody who agrees.

People have been very clear that they do not believe the bank is responsible. So additional legal advise is what you need. You seem to think somebody is going to pop up with some magic solution. It isn't going to happen and if it does happen you will still need legal advise.

To be very clear I do not believe the bank acted irresponsibly in the manner you are suggesting. The survey is still not to protect your friend and it is not a loop hole you can use in the way you think.

What line of was the solicitor going for?

ionapaul

gigino wrote: »

Its a bit tough on him if he does, as he has worked hard all his life, and sunk his life savings, the medical compensation ( from a seperate matter ) and money from his parents in to the project - which means he has lost many hundreds of thousands. I am in no way a supporter of mass debt forgiveness , but if the particular bank in question acted irresponsibly in giving him such a large loan ( when other banks would not), without even a structural survey, valuation or evaluated plan to pay it back, should the bank not take some pain directly - now ?

The bank will take a lot of pain when he declares bankruptcy, don't worry! It's fair to think they won't get anywhere near 100% of the amount on their books for the mortgage back if the property is worth less than 10% of the price it achieved at auction.

Even if they reduced the mortgage by 10% now, could he possibly repay it, interest plus capital? If so, he's not really in such a bad spot after all. Though, why would he want to repay it, if he's left with something worth <10% of the money he's put in at the end of the process? Surely it is better for him, over the long run, to go to Britain and declare bankruptcy now? I posted two months ago about my (then) landlord doing the same thing, he borrowed €1m+ for a property currently valued about €500K; he declared bankruptcy in May in Britain, something that was the best move available to him to be honest! He'd never be able to get out from under the unsustainable debt, it takes a brave and smart man to realize this I think, and throw in the towel.

f9710145

Was reading through my mprtgage approval documentation the other day and came to a paragraph which mentioned the bank getting a valuation done. It speicified that this was NOT a structural survey, and that it is recommended that the purchaser get one done themselves.

gigino

f9710145 wrote: »

Was reading through my mprtgage approval documentation the other day and came to a paragraph which mentioned the bank getting a valuation done.

In this case the bank seemingly did not get a valuation done.

Neither did it get or see that a structural survey was done. If a bank was lending a million for a supercar, would it not get a valuation or see it had a guarantee or see that it mad a NCT / DOE or whatever ? Why should one bank(er) who acted irresponsibly get away with it when more prudent banks did not make this loan, at perhaps 30 times the persons annual salary? f

gigino

Ray Palmer wrote: »

The survey is still not to protect your friend

If one had been done it would have protected the bank as well as my friend. It was sloppiness on the part of the particular bank in question lending so much without a survey or valuation - they would not lend a 20th as much now for the same property I am sure. Something wrong there.

The_Conductor

gigino wrote: »

In this case the bank seemingly did not get a valuation done.

Why would they- he had already bought the property at auction. A valuation was irrelevant.

gigino wrote: »

Neither did it get or see that a structural survey was done.

Ditto- he already had bought the property. It was a fait accompli.

gigino wrote: »

If a bank was lending a million for a supercar, would it not get a valuation or see it had a guarantee or see that it mad a NCT / DOE or whatever ?

No it wouldn't.
You described the loan as a form of bridging finance- where the capital was due to be repaid by lumpsum on realisation of an asset.
The bank behaved pretty much as you expect them to in the circumstances.

gigino wrote: »

Why should one bank(er) who acted irresponsibly get away with it when more prudent banks did not make this loan, at perhaps 30 times the persons annual salary? f

His annual salary had absolutely nothing to do with this. From the little you've told us- this loan was not advanced by the bank as a conventional mortgage. It was a bridging loan, plain and simple. It has nothing whatsoever to do with his salary. The first couple of lending institutions likely baulked at the asset (the insurance claim) not at his salary.

You really are going round and round in circles here.......

Dades

gigino wrote: »

Why should one bank(er) who acted irresponsibly get away with it when more prudent banks did not make this loan, at perhaps 30 times the persons annual salary? f

Who is getting away with what?

For his part in the debacle your friend will probably have to declare bankruptcy, and for their part the bank will never recoup most of the money they loaned out.

There are no winners or get out clauses for your friend OR the bank.

Ray Palmer

gigino wrote: »

If one had been done it would have protected the bank as well as my friend. It was sloppiness on the part of the particular bank in question lending so much without a survey or valuation - they would not lend a 20th as much now for the same property I am sure. Something wrong there.

It might not have. It has been stated it would not have been a structural survey. His plans to do he property up may have qualified for the loan.

Your defense and claim on the bank are simply not valid no matter how much you protest. What you "think" (you can't be sure) is irrelevant.

The bank may possibly have broken their own policy not a legal requirement. It is not a valid legal defense. What are you going to do if this goes to a judge and he simply dismisses these claims? He isn't going to argue with you. You have been repeated told and had it explained why this is not valid. Do you understand that people just don't agree with you and no matter how you word it and come up with a scenario?

You are not finding out anything here you are ignoring the answer.

djmcr

Ray Palmer wrote: »

you are ignoring the answer.

I think he knows the answer but is desperately clinging on for some bit of hope of a way out other than bankruptcy

gigino

"In this case the bank seemingly did not get a valuation done."

smccarrick wrote: »

Why would they- he had already bought the property at auction. A valuation was irrelevant.

A valuation would have been very relevant, because if it was properly valued or a structural survey done, the bank in question would have behaved as the other banks approached ; they would not have lent the money. There was no onus on a "new bank to the purchaser" , with whom he had no track record, to fund his crazy purchase. Thats why a valuation / structural survey should have been done. If it was done , it would have protected the bank - which is now losing / will lose on it, and in turn is having to be bailed out by the taxpayer. All because the banker behaved recklessly. My friend + his family also lost a lost of money ( many hundreds of thousands ) on the whole episode because the bank in question - for a few years - did not behave as one would have expected a bank - here or abroad - to.

The_Conductor

You really are desperately trying to play the blame game.
The short and simple is- we are not financial professionals.
We do not know all the details.
From the limited that we do know, we are suggesting that your friend declare bankruptcy.

You can go around the houses as much as you like- and you certainly are going around and around- but we're not getting anywhere......