Mortgage debt forgiveness is here, Dublin nurse gets €152k debt write-down

Rabidlamb

http://www.independent.ie/national-news/dublin-nurse-secures-152k-mortgage-debt-writedown-3093817.html

A DUBLIN nurse has secured a €152,000 write-down on her mortgage debt in one of the first recorded settlements of debt forgiveness by a major bank, it was reported today.

Laura White (35) agreed the deal with the Bank of Ireland on Monday, settling a case over the shortfall on the sale of a house she voluntarily surrendered three years ago, according to the Irish Times.

The deal means that instead of repaying the outstanding €170,000 owed, she will pay just €18,000 at a rate of €250 a month for six years.

Bank of Ireland subsidiary ICS took legal action against Ms White in 2010 relating to the €245,000 it lent her to buy the house in Coolock, Dublin.

She handed the house back to the bank as she was struggling to make the repayments and wanted to move to the west of Ireland.

The house was sold but left a shortfall of €170,000 on the mortgage owed.

Ms While thought the sale of the property would cover the debt. Her legal team argued that the house should have been sold more quickly before the property market plunged.

Right, they gave a €152k write off to a nurse who still had 30 years of work ahead of her.
She let her name & story go public which seems odd.
So hand back your keys, give us 18 grand & we're quits.
Awful big precedent to set.
Debt forgiveness is upon us whether we like it or not.

bobbysands81

Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks (For the record I think shareholders and employees also carry a large burden whilst the actual bank is getting off scot free).

TwoShedsJackson

bobbysands81 wrote: »

Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks (For the record I think shareholders and employees also carry a large burden whilst the actual bank is getting off scot free).

And who do you think is picking up the tab for this? Yes, it's the taxpayer, so I wouldn't get too excited just yet.

That's a disgrace, she wanted to move to the West of Ireland so she escapes her mortgage. Unreal, years of stable employment ahead of her too, strange one.

seamus

It's kind of irrelevant that she has 30 years work ahead of her because she was having difficulty meeting her mortgage repayments now. That's why the situation occurred in the first place.

The story is missing a lot of information. At her current ability to repay (presumably €250/month), it would take 55 years to repay the mortgage.
So for all intents and purposes she was bankrupt and if the bank secured any kind of judgement for the full amount, bankruptcy would be her next logical step. So perhaps the bank realised that 18k over 6 years was better than €10k over ten years (less legal costs) followed by a complete write-off. There's no indication if this write-off amount was come to by agreement or by judgment.

Again, it still doesn't point to any wide-scale writing down of mortgage debt except in extreme cases where someone is incapable of repaying.

Diarmuid

bobbysands81 wrote: »

Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks

You do realise that it's your self you are talking about? You own the banks, you're taking the hit

seamus

seamus wrote: »

............ At her current ability to repay (presumably €250/month), it would take 55 years to repay the mortgage..............

Why not pay €250/month for the next 30 years until she retires? I can appreciate how a nurse could struggle to repay a €250,000 mortgage, I would struggle with how €250/month longterm would be a struggle, an inconvenience yes, not a struggle.

The crux of this is she wanted to move to the West Of Ireland.

I cannot see how a nurse can be deemed incapable of paying the full mortgage, should have been restructured imo, tough sh1t on her wanting to move, rent the thing out if she was that intent on moving.

bobbysands81

TwoShedsJackson wrote: »

And who do you think is picking up the tab for this? Yes, it's the taxpayer, so I wouldn't get too excited just yet.

It's not this lady's fault that the banks monumentally screwed up and had to be taken into state ownership because they couldn't be trusted and acted with greed.

Just remember that banks will turn profitable again one day and all the losses of the last few years can be written off against future profits so they'll make back everything they've lost.

As long as folk are trying to engage with banks and pay back what they can afford then it's only right that the banks also take a financial hit for their crazy lending policies regardless if the taxpayer owns them or not.

bobbysands81

bobbysands81 wrote: »

...........

As long as folk are trying to engage with banks and pay back what they can afford then it's only right that the banks also take a financial hit for their crazy lending policies regardless if the taxpayer owns them or not.

So €250/month for 6 years is what a 35 year old can afford? You wouldn't imagine it conceptually possible for her to afford to pay that for say 10 to 15 years considering it's not much more than a modest car loan.

seamus

RoverJames wrote: »

Why not pay €250/month for the next 30 years until she retires? I can appreciate how a nurse could struggle to repay a €250,000 mortgage, I would struggle with how €250/month longterm would be a struggle, an inconvenience yes, not a struggle.

You could ask the same question of any bankruptcy proceeding - why allow someone to declare bankruptcy, why not take a part (however small) of their income for the rest of their life, so long as it doesn't cause them to struggle?

Because we recognise that a creditor having an unsecured debt on an individual for the rest of their life is unreasonable regardless of how the debt came about. The lender has to shoulder some of the risk and take some of the loss when it goes wrong. This is why we have bankruptcy - to allow someone to declare, "**** lads, it's all gone wrong" and everyone involved in the transaction takes their hit and walks away.

It's unfortunate here that the lender involved happens to be part-owned by the state, but we can't change the rules when we feel like it.

Although there was no bankruptcy specifically involved here, any repayment period exceeding ten years would have meant that bankruptcy was the inevitable next step.

Does this indicate that there's a chance that this kind of thing could become widespread? Well yes, to a certain extent. But it's still not an easy get-out clause. Stress aside, you will have to move out of your home and pay a significant sum of money to the bank every month for 5 - 10 years, on top of any other payments (like rent) you have to make.

Bullseye1

If the banks were not privatised people would not be complaining about this write down. The banks need to be given a lesson they will never forget. Why should the lay person who borrowed only suffer and let the professional bankers away Scott free.

The bigger crime here is privatising the banks and giving the bank guarantee. They should have been allowed to fail.

seamus

seamus wrote: »

............ you will have to move out of your home and pay a significant sum of money to the bank every month for 5 - 10 years, on top of any other payments (like rent) you have to make.

But in this case the lady wanted to move out of the house as she wanted to move to the West of Ireland. €250/month is quite a small sum for a nurse to be fair.

Solair

The problem as I see it is that the banks actively sold and missold these mortgages to people who anyone with a basic maths ability should have been able to see could not pay them back.

They turned mortgage granting into a sales and commission-oriented operation and lent money to developers and individual home-buyers who could never pay it back.

This lashing of cash into the market drove prices up, drove the cost of putting a roof over your head up and forced a lot of people into either moving to utterly ridiculous locations i.e. Dublin's outer-outer-outer commuter belt (small villages in the midlands mostly) or, into borrowing ridiculous amounts of money.

Then banks are supposed to be the prudent, financial experts with a duty of care to ensure that they lend responsibly. They did anything but lend responsibly!

Banks employ economists, bankers supposedly spend years learning how to calculate mortgages, lend prudently and manage risk. Their sole purpose as organisations is to LEND PRUDENTLY and make a sensible profit. Instead they slashed cash at anyone who asked, regardless of their income, personal circumstances, business model etc. and the consequences have been dire for the entire country as we've ended up with bankrupt banks and all the losses they incurred.

I don't really think you can blame individuals for not being financial experts. People borrowed as much money as the could to house themselves and were absolutely gouged by developers and banks in the process.

In most cases banks and mortgage brokers told them how much they could borrow and in my opinion, the duty of care is on the bank/broker as a financial expert to ensure that amount was calculated correctly!

I don't think the consequences for the banks have been nearly harsh enough. Nobody seems to have been fired, let alone sued by shareholders / the state or heavily investigated by regulators or the Gardaí.

I don't understand why not and I am sick to death of this notion that individual mortgage holders are being blamed for this while a coven of large developers and bankers seem to have just gotten away with what is at best gross mismanagement of companies, banks, etc and at worst could be regarded as corrupt creaming off of vast profits at the expense of the state and banking organizations that were built over centuries in some cases!

What was created was a vast pyramid scheme where all the money was sucked out of the system by a few people at the top and a and when the system collapsed it left small mortgage holders, shareholders of the banks and most of all the state and the ECB holding the can for hundreds of billions of Euro of debts!

Where did all the borrowed money go ? It didn't just vanish into the ether, someone made huge money out of selling overpriced property to people who were borrowing money that they should never have access to in the first place.

Mortgages will have to be written off - they were utter nonsense to begin with!

seamus

RoverJames wrote: »

But in this case the lady wanted to move out of the house as she wanted to move to the West of Ireland. €250/month is quite a small sum for a nurse to be fair.

To be fair, you have no idea what her income is

She might not be full-time, she might not have a permanent position, and so forth.

The Irish Times has more relevant information on this:
http://www.irishtimes.com/newspaper/breaking/2012/0427/breaking16.html

Basic situation:
She couldn't make her mortgage repayments. Bank chased her in 2010, so she handed the house back to them voluntarily and they sold it.
Now they sought to get the balance from her, but she still couldn't afford to make the repayments.

So the bank agreed a repayment schedule based on the six year limit being proposed by the Government, and based on what she was able to afford over those six years. She is bound to make these repayments by order of the court. If she doesn't, the bank can secure a judgement against her for €120k. She is also banned from borrowing (this would include overdrafts and credit cards) for those six years.

You can't chase someone for an unsecured debt for the rest of their life, so you have a limited timeframe in which you can get money back from someone, and you can only take what they can afford to pay.

That's how this €18k figure was arrived at.

Bank of Ireland subsidiary ICS took legal action against Ms White in 2010 relating to the €245,000 it lent her to buy the house in Coolock, Dublin.

She handed the house back to the bank as she was struggling to make the repayments and wanted to move to the west of Ireland.

The house was sold but left a shortfall of €170,000 on the mortgage owed.

What a stupid precedent to set. How is this woman a qualified nurse if she can't even understand the basics of a mortgage? Seriously.

This is somebody who has squirmed out of a debt because essentially they "didn't feel like paying it." Somebody who wants mortgage forgiveness for families who are struggling and the like should most certainly not be applauding this woman.

Put it this way, there won't be enough money to bail everyone out. It will probably turn out, just like most things in this country, to be a case of only the most ignorant and selfish need apply.

Mr. Presentable

And of course she doesn't have a house, nor the likelihood to buy one for the next who knows how long.

Spiritofthekop

As long as the keys to the house are handed back & the house is sold on in the current market at value for money price to the public & the person's who signed for the big loan's credit rating is stored so any future mortgage application be banned for 10/15 years & they must go through a severe stress test & a block on any future loans. I've no problem with it.

Mr. Presentable

Mr. Presentable wrote: »

And of course she doesn't have a house, nor the likelihood to buy one for the next who knows how long.

And we all know that not owning a house can be fatal.

Gurgle

Something smells a bit off here:

The deal means that instead of repaying the outstanding €170,000 owed, she will pay just €18,000 at a rate of €250 a month for six years.

Bank of Ireland subsidiary ICS took legal action against Ms White in 2010 relating to the €245,000 it lent her to buy the house in Coolock, Dublin.

If she borrowed €245k and never made a repayment, then the house was sold for €75k? That's pretty damn cheap, even for Coolock in a recession.

At auction?
Private sale?
To the bank manager's son / brother / mistress?

Or possibly the €170k 'shortfall' included penalties and (punitive) interest.

I'd like to see the real figures, i.e. what did she pay for the house, what did she repay off her mortgage and what did they actually sell the house for?

Then the €18k settlement could be considered in proper context.

Forest Demon

I am so sick of the government interfering in the property market. With the transfer of tracker mortgages to Anglo now and NAMA controlling the market and now debt forgiveness.

Wait and see that the only people that can grantee future income and get a right down will be public sector workers. Same situation as getting a mortgage at the moment.

Lets see how the private sector and self employed get on.

Are we ever going to know the true value of property in Ireland and will a home ever be an obtainable purchase for the private sector tax payer?

If houses where allowed to hit their true value then we it might be an incentive for low to middle earners to take a job and build a decent credit rating.

I am sick to death of listening to this rubbish about keeping people in their homes when its really about keeping the debt with them and off the governments books.

What about people who have no hope of getting a job or home due to the crap economy caused by reckless lending AND BORROWING?

Monty Burnz

bobbysands81 wrote: »

Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks (For the record I think shareholders and employees also carry a large burden whilst the actual bank is getting off scot free).

I'd suggest the banks' owners took the brunt of the poor decisions by their management teams, but to be fair they were responsible for the management they chose...

Monty Burnz

bobbysands81 wrote: »

Just remember that banks will turn profitable again one day and all the losses of the last few years can be written off against future profits so they'll make back everything they've lost.

Not really. Work out the net present value of the future (risky, uncertain) profits of the banks and set it against the recapitalisation cost - I think you'll find the state ends up as a loser. And if you are thinking of tax write-offs - where do you think that tax would be going were it not written off?

Thedogsgone

If I could get a 90% write down and the only punishment is a ban on borrowing for 6 years I would bite the banks hand off...

I'm struggling but have always managed the mortgage but I am giving serious consideration to stopping payments altogether after this precedent.

Monty Burnz

Solair wrote: »

The problem as I see it is that the banks actively sold and missold these mortgages to people who anyone with a basic maths ability should have been able to see could not pay them back.

How were they mis-sold exactly? You hear this a lot, but I've never heard anyone actually back it up.

Perhaps in future people should have to do a simple exam on personal finance and compound interest before they are entitled to borrow?

Rabidlamb

Thedogsgone wrote: »

If I could get a 90% write down and the only punishment is a ban on borrowing for 6 years I would bite the banks hand off...

I'm struggling but have always managed the mortgage but I am giving serious consideration to stopping payments altogether after this precedent.

Therein lies the rub.

Forest Demon

Thedogsgone wrote: »

If I could get a 90% write down and the only punishment is a ban on borrowing for 6 years I would bite the banks hand off...

I'm struggling but have always managed the mortgage but I am giving serious consideration to stopping payments altogether after this precedent.

But the government want to help you stay in your home :rolleyes:

Gurgle

Forest Demon wrote: »

What about people who have no hope of getting a job or home

'They' should be training at something that will give them a hope of getting a job.
There really isn't much benefit to spending their days on boards whinging about the public sector. It doesn't add anything to the CV.

Solair

Monty Burnz wrote: »

How were they mis-sold exactly? You here this a lot, but I've never heard anyone actually back it up.

Perhaps in future people should have to do a simple exam on personal finance and compound interest before they are entitled to borrow?

Well, assuming that the person coming into a bank did not lie and inflate their income, and the bank then lent them a mortgage which was too big for them to reasonably pay back, then the bank missold the mortgage.

In any transaction like that, you have to assume that a normal person is absolutely not a financial expert. The bank however is supposed to be!

If the bank was not doing its job, i.e. making sure that the mortgage they were selling was sustainable, then the majority of the fault rests with the bank, not the consumer.

Business lending to property developers is another story entirely, as you would expect a property developer, particularly the larger ones, to have some business sense and understanding of the market.

The problem,as I see it, is that there was a close relationship in Ireland between the banks, the major developers and the policy makers.

So, the whole thing turned into a pyramid scheme where by the banks were financing the developments based on notional and unrealistic bubble selling prices which they were creating themselves by relaxing lending rules to consumers.

Meanwhile, the state was turning a blind eye to all this as it was getting huge tax revenues on property transactions - all of which was borrowed money!

So basically everything comes back to the banks being utterly reckless with what they were doing and creating a totally unsustainable property market based on cheap money borrowed on the international financial markets.

Even the IMF agrees that a hell of a lot of this will have to be written off, both at the consumer end of the market and also the development loans. They were bad loans, end of story.

The problem is that the ECB & EU seem to be determined to ensure that the banks that idiotically lent to our idiotic banks don't have to write anything off even if it means driving the Irish state into poverty.

Also, the Fiscal Compact Treaty will have zero impact on the Irish situation (and probably not on the Spanish situation either) as the problems there were not the same as Greece, i.e. not created by lavish state spending. They were created by completely out of control bank lending to the property sector which has now landed in the lap of the the Irish and Spanish tax payers.

Austerity budgets are just basically just diverting more and more resources into paying down bad loans made by idiotic, now nationalised, banks.

We absolutely need a huge write down of debt at the banks, and that has to be passed onto the consumers who were missold mortgages and more importantly to the tax payer.

Crippling the state and crippling mortgage holders who were basically conned into biting off more than they can chew, might satisfy some kind of Victorian / German fetish for moral rectitude and moral hazard prevention, but it will drive this economy back to the 19th century, never mind the 1950s.

They need to let the markets take their course. As it stands we are just propping up a totally unsustainable model by state interference.

Banks would normally have to write-off debts like this and they would probably fold and go bankrupt too themselves.

We are in a situation where the ECB/EU and Irish Government are driving forward on this model that is fixing absolutely nothing and is just pouring vast amounts of tax payers money into rescuing banks that are so broken that they shouldn't be rescued.

The system needs to take its losses!

Also, I think this is grossly unfair on banks that were prudent lenders. There are banks in the Eurozone and the EU which are quite well run and did not engage in this kind of nonsense. Why are they being denied market share ? If Bank of Ireland, AIB, Anglo, Dexia, RBS, Hypo Real Estate, Soc Gen, Credit Agricole or whoever made bad decisions, then they should suffer the consequences of those and banks that made correct decisions should prosper and take their market share.

What we are witnessing is absolutely VAST state aid to badly run companies.

We seem to be throwing away the whole idea of a single EU market when it comes to banking.

Also, this isn't capitalism and it isn't socialism either. I'm not quite sure what it is, but it's destroying not only Ireland but Europe too!

Monty Burnz

Solair wrote: »

Well, assuming that the person coming into a bank did not lie and inflate their income, and the bank then lent them a mortgage which was too big for them to reasonably pay back, then the bank missold the mortgage.

Because the bank has a crystal ball that can forecast job losses? Or health problems?

Solair wrote: »

We absolutely need a huge write down of debt at the banks, and that has to be passed onto the consumers who were missold mortgages and more importantly to the tax payer.

I have a sneaking suspicion that you haven't thought this through properly. Who bears the cost of the debt write-downs?

Snakeblood

Solair wrote: »

We absolutely need a huge write down of debt at the banks, and that has to be passed onto the consumers who were missold mortgages and more importantly to the tax payer.

The tax payer is the bank. How can the tax payer write down a debt to the tax payer?

Gurgle

Solair wrote: »

everything comes back to the banks being utterly reckless with what they were doing

It takes two to tango.

The bank official is not responsible for your personal financial decisions, you are.

They deserve the blame for the banks failing, but not for people committing to payments they can't afford.

EricPraline

Solair wrote: »

In any transaction like that, you have to assume that a normal person is absolutely not a financial expert. The bank however is supposed to be!

It's a damning indictment of the level of numeracy of the average Irish person if they are incapable (or unwilling) to reasonably estimate whether or not they can afford their single largest monthly outlay. Is this person, who has completed the Leaving Cert and a degree, unable to perform simple budgeting?

As has been said here before, it seems that many people spent more time planning holidays than they did researching a property purchase. Is that the fault of the banks?

In relation to this particular case, I'm not sure how much of a precedent it sets. There may be a very specific set of circumstances. This line in the IT stands out:

Her lawyers argued the property should have been sold more quickly, before the market fell further, though there was a dispute over when it was surrendered.

Solair

If the debts are unsustainable what exactly do you propose to do ?
Starve people? Lock them up perhaps in stocks on O'Connell Street ?

All that not allowing the debts to be written off / written down is doing is preventing economic recovery as these people are left with no disposable income and no prospects or, worse case scenario they will flee the loans entirely and just disappear abroad.

At EU level, the problem is that a) if the regulation hadn't been so poorly thought through this situation would never have happened in the first place.

b) The ECB in particular does not seem to be able to face the reality that the Euro is not the Deutsche Mark - its value has to reflect a basket of countries, some of which are currently basket cases. If it continues to refuse to monetise the debts, the situation is going to just get worse and worse as the countries and banking systems exposed to these debts will simply never be able to pay them down anyway.

As it stands in Ireland for example, banks are starving businesses and consumers of normal sustainable lending streams i.e. cutting flexible credit, etc which is killing the economy.

Nothing seems to add up and there appears to be absolutely no overarching policy it's all still blind panic and bickering about moral hazards which the Eurozone slowly drifts ever closer to a huge cliff.

Also, the tax payer only bears the costs of writing off these debts because the ECB and Irish Government decided that the best way to approach this was market interference and nationalizing bankrupt banks...

The tax payer should absolutely not be absorbing this debt.

Also with regard to the Euro's value. The Eurozone is one of the world's largest single economic blocs and does most of its trade with itself, so for most things the value of the currency is irrelevant as it is internal trade much like the US does.
Not only that, but when it comes to energy imports, the EU's members impose vast tax on those. So, if you devalue the Euro by a quite a few % by quantitative easing, the net result would be EU exports to China etc get cheaper, imports from the far east get a bit more expensive (helping EU companies), the price of energy would increase a bit, which could be counteracted by just reducing some of the energy taxes and the consumer market / business community wouldn't actually face that much of an adjustment.

I don't think the EU has gotten beyond thinking like a small country.

Forest Demon

Gurgle wrote: »

'They' should be training at something that will give them a hope of getting a job.
There really isn't much benefit to spending their days on boards whinging about the public sector. It doesn't add anything to the CV.

My points are valid. I don't appreciate your response. Since when did contributing your opinion on a forum become whinging. And you a mod. tut tut.

Are you typing it from your civil service job in between a games of solitaire?

I have a diploma in IT, degree in Engineering, a Masters and 17 years experience. But you are right, its more training I need so I have applied to FAS for a saddle making internship as there is a growing market for private sector workers to be rode in Ireland at the moment.

Maybe I should go and train to be a nurse or teacher or guard? Wait a second, we cant afford to employ any more of those.

Solair

EricPraline wrote: »

It's a damning indictment of the level of numeracy of the average Irish person if they are incapable (or unwilling) to reasonably estimate whether or not they can afford their single largest monthly outlay. Is this person, who has completed the Leaving Cert and a degree, unable to perform simple budgeting?

As has been said here before, it seems that many people spent more time planning holidays than they did researching a property purchase. Is that the fault of the banks?

In relation to this particular case, I'm not sure how much of a precedent it sets. There may be a very specific set of circumstances. This line in the IT stands out:

That is *EXACTLY* what happens when banks take the controls off lending. It is what happened in the United States, in the UK and in plenty of other markets that have been through these kinds of credit bubbles.

The average consumer is absolutely not financially astute and there is plenty of psychological research out there that would show that people are extremely poor at evaluating risk, long term probability etc etc.
That is why most sensible countries have pretty serious controls of bank lending policies and why, historically, banks were very careful, conservative and prudent about what they lent. They went absolutely insane in the late 90s and through the 00s.

There was also a problem in Ireland where people had become quite used to high inflation. That was true in Spain too.
Our parents generation bought houses they couldn't afford then inflation took care of their mortgages i.e. they bought a house for £24,000 in 1978 and that loan was laughably small by 1999.
So, that also entered into a lot of people's notions of how the market operated and membership of the Eurozone changed that game's rules drastically as we entered a situation where inflation behaved more like France and Germany.

Monty Burnz

Solair wrote: »

If the debts are unsustainable what exactly do you propose to do ?
Starve people? Lock them up perhaps in stocks on O'Connell Street ?

All that not allowing the debts to be written off / written down is doing is preventing economic recovery as these people are left with no disposable income and no prospects or, worse case scenario they will flee the loans entirely and just disappear abroad.

If you can't pay the debt, you go bankrupt. It's pretty simple - you say goodbye to your assets, say goodbye to your debts, and start again. Bankruptcy right now is ridiculously tough, but hopefully in a few months the reforms will come through and this will be a good option for those who can't pay. Those who won't pay will find it unattractive.

Solair wrote: »

Also, the tax payer only bears the costs of writing off these debts because the ECB and Irish Government decided that the best way to approach this was market interference and nationalizing bankrupt banks...

The tax payer should absolutely not be absorbing this debt.

Right right right, there's no point in going on about 'shoulda woulda coulda' stuff - the banks largely belong to the taxpayer. That's the situation today so we need to deal with it.

Forest Demon

Monty Burnz wrote: »

If you can't pay the debt, you go bankrupt. It's pretty simple - you say goodbye to your assets, say goodbye to your debts, and start again. Bankruptcy right now is ridiculously tough, but hopefully in a few months the reforms will come through and this will be a good option for those who can't pay. Those who won't pay will find it unattractive.

Right right right, there's no point in going on about 'shoulda woulda coulda' stuff - the banks largely belong to the taxpayer. That's the situation today so we need to deal with it.

Completely agree. The sooner the better they change the bankruptcy laws. Let people pay a price for their mistakes and move on. Its the only realistic way forward. The tax payer is picking up the bill anyway.

Solair

Monty Burnz wrote: »

If you can't pay the debt, you go bankrupt. It's pretty simple - you say goodbye to your assets, say goodbye to your debts, and start again. Bankruptcy right now is ridiculously tough, but hopefully in a few months the reforms will come through and this will be a good option for those who can't pay. Those who won't pay will find it unattractive.

Right right right, there's no point in going on about 'shoulda woulda coulda' stuff - the banks largely belong to the taxpayer. That's the situation today so we need to deal with it.

Unfortunately, I don't think that we are capable of dealing with it as a nation, a community of European nations, as a banking system or as an economy. The European Commission and ECB are basically showing themselves to be utterly incompetent, incapable of reacting to the crisis as it develops, incapable of identifying what the problem actually is and totally out of touch with reality and the Irish Government is locked into a situation that is totally unsustainable thanks to the previous administration's knee-jerk approach to dealing with the crisis in the first place.

I would predict that the wheels will eventually fall off. I don't know how that will pan out, but we are currently lurching from one minor crisis to another and the whole thing is being held together with the financial equivalent of chewing gum, glue and sellotape.

Something very big has to change and it has to change soon. If it doesn't, it will be changed for us by outside forces of economic reality.

Spiritofthekop

No problem with this in severe case's as long as...

They hand back the keys of the house & assets bought from top ups etc and they are banned from signing for any other loans or mortgages in this country for 15/20 years so they then can go out & rent & save some money like the rest of us did.

Lantus

Just to be clear as I'm not an expert in these matters...

Bank of Ireland lent a quarter of a million euro's to a person who it later transpires can only afford around €250 per calendar month in repayments.

I appreciate that as many have pointed out there are a lot of nuances here that the story does not tell but surely this in itself is the root cause of the problem.

If you asked a bank today for this money they would say off you go and without a smile. But at the time these 'financial experts' were all so punch drunk on the mortgage market they gave vast sums to any old person that had decided to cash in the never ending gravy property train.

People have a level of responsibility to take in what they borrow but it is the banks that asses each case and using their financial skill make the decisions. The banks need to give the money to the applicant, ultimatley they are resonsible for their actions. All people do is ask for it and hope....

Zamboni

This nurse is on Newstalk 106 right now with Eddie Hobbs and Jonathon Healy.

riclad

THIS is a nurse,she should be smart enough to know, i borrowed x amount,i have to pay x amount per month,can i afford it .I hear nurse,s wages are pretty good.
IF she work that out,i would,nt trust her to hand out medication.You need a good education and leaving cert to become a nurse.
I dont think the banks can afford to do this with everyone whos having trouble paying a mortgage.
I didn,t know 3 bed houses are going for 70k, so who would buy a 1bed apartment ,if i can buy a house for 70k?
IF a nurse cant pay a mortgage god help the people on lower wages who dont have strong unions to protect them.

Monty Burnz

Lantus wrote: »

Just to be clear as I'm not an expert in these matters...

Bank of Ireland lent a quarter of a million euro's to a person who it later transpires can only afford around €250 per calendar month in repayments.

She was earning 70k at the time - 3.5 times earnings. Then she quit to go to a job she preferred paying 50k.

I don't know where the €250 per month figure comes from. Probably a comfy figure for her to pay after her rent, and living expenses.

Lantus wrote: »

People have a level of responsibility to take in what they borrow but it is the banks that asses each case and using their financial skill make the decisions. The banks need to give the money to the applicant, ultimatley they are resonsible for their actions. All people do is ask for it and hope....

Sounds to me like the bank did nothing wrong at all in this case.

Solair

This is exactly the problem - people are incredibly naive about financial products and long term risk.

Most people just see the monthly payment at the interest rate they sign up to and hope they can make those payments and, especially at the top of the market, were just desperate to get onto the property ladder and accommodate themselves.

A lot of people are also vastly over-optimistic about their economic prospects. That's good in so far as it means people are generally ambitious, but it is not necessarily reflective of reality or prudent.

Human psychology does not do prudent decision-making very well. That is why strict financial regulation is in place to prevent markets from going crazy. Stock markets go nuts based on whims, housing markets, you name it.. once something becomes accepted practice, people all jump on the band wagon.

Also, never under-estimate the heard instinct in humans. We do make decisions by ourselves sometimes, but for a lot of issues in life, we group-think. That is what our brains are evolved to do because in a lot of situations it works well.

If a lot of people think something's correct, we tend to just accept the group's view. For a lot of things this works well, but for some things it's massively dangerous e.g. it can result in market bubbles, election of extremist organisations e.g. the Nazi party's electoral success in Germany before WWII being the most terrifying example, or the formation of cult-like views.

It is very hard to shift people's opinions when lots of people are telling them that something's correct.

In Ireland, the accepted reality was that you HAD to get on the property ladder and that prices could only increase. That's how all bubbles operate and that is exactly why you need serious and prudent regulation to prevent them and why banks are supposed to be doing their job by managing people's ability to access crazy levels of financing.

Throwing money at consumers without any notion of how they are going to ever pay it back is totally unreasonable and financial suicide and I do think the banks (and ultimately by the looks of it the entire system) will just have to accept that that is what happened. Thus, these write-downs are going to have to happen.

riclad wrote: »

THIS is a nurse,she should be smart enough to know, i borrowed x amount,i have to pay x amount per month,can i afford it .I hear nurse,s wages are pretty good.
IF she work that out,i would,nt trust her to hand out medication.You need a good education and leaving cert to become a nurse.
I dont think the banks can afford to do this with everyone whos having trouble paying a mortgage.
I didn,t know 3 bed houses are going for 70k, so who would buy a 1bed apartment ,if i can buy a house for 70k?
IF a nurse cant pay a mortgage god help the people on lower wages who dont have strong unions to protect them.

She's a *nurse* - she makes medical decisions, looks after patients, knows about diseases, illnesses, is probably a very caring, nice person, very people-focused, and has all sorts of great positive things to contribute etc etc.

However, she is not a trained actuary, banker, economist or financial expert.

I would not go to a bank with a broken leg, or to get an injection! Nor, would I expect a nurse to be a financial expert.

Gurgle

Forest Demon wrote: »

My points are valid.

Arguable at best.

Forest Demon wrote: »

I don't appreciate your response. Since when did contributing your opinion on a forum become whinging. And you a mod. tut tut.

Since 2008, all misinformed opinions based on rabble rousing media reports which claim that all public sector workers have it better than private sector are classified as whinging.
(I'm not a mod here.)

Forest Demon wrote: »

Are you typing it from your civil service job in between a games of solitaire?

Nope, typing it from my private sector job while the squishy bit at the back of my brain tries to figure out whether code or silicon is to blame for my current bug.

Forest Demon wrote: »

I have a diploma in IT, degree in Engineering, a Masters and 17 years experience.

Similarly, I've an M.Eng and 14 years experience. I'm in a good job with decent money, approx 20% more than I'd get e.g. teaching in a secondary school.

If you're unemployed then there is something seriously wrong. There are jobs out there, is it an issue of not offering what you previously earned?

Forest Demon wrote: »

But you are right, its more training I need so I have applied to FAS for a saddle making internship as there is a growing market for private sector workers to be rode in Ireland at the moment.

Are you dissin' saddlers?
They're well trained professionals you know, and can earn good money.

Forest Demon wrote: »

Maybe I should go and train to be a nurse or teacher or guard? Wait a second, we cant afford to employ any more of those.

Whinging again, see above.

Monty Burnz

Solair wrote: »

She's a *nurse* - she makes medical decisions, looks after patients, knows about diseases, illnesses, is probably a very caring, nice person, very people-focused, and has all sorts of great positive things to contribute etc etc.

However, she is not a trained actuary, banker, economist or financial expert.

I would not go to a bank with a broken leg, or to get an injection! Nor, would I expect a nurse to be a financial expert.

If she has the intelligence to take people's lives in her hands, she has the intelligence to ask herself 'is it feasible for me to pay €800 to €1200 per month for the next 30 years'. It's really not rocket science, is it?

Can you explain the difficulty in asking oneself that question?

riclad

How does someone who,s working full time become bankrupt ,is that possible ?maybe she,s not working ,and is planning to move in with her parents ,in the west.
i, presume the bank went easy on her ,cos shes not working fulltime ,or her income was reduced.

Solair

Monty Burnz wrote: »

If she has the intelligence to take people's lives in her hands, she has the intelligence to ask herself 'is it feasible for me to pay €800 to €1200 per month for the next 30 years'. It's really not rocket science, is it?

Can you explain the difficulty in asking oneself that question?

Unfortunately, that is just not how people operate and I will say it for the 10th time, that is why banks are supposed to be prudent lenders and that is why states are supposed to have proper regulations in place to protect consumers from themselves in some cases.

When someone applies for a mortgage they give a vast amount of detail about their income, financial situation, assets, earning potential, insurance situation, even life expectancy to the bank. They ask for a LOT of information.

The bank is supposed to make an assessment of how much they will be able to lend you, based on the information that you supplied.

We have no idea what this nurse's circumstances are, perhaps they changed drastically, maybe her hours were cut, who knows?!

If the bank is grossly over-optimistic and grants you a huge loan that is too big for you to be able to pay back, and they are supposedly the financial experts, then the majority of the blame rests with the bank as they had a duty of care to carry out a proper assessment of your financial position and were provided with all the facts they asked for.

While it would be wonderful if we were all financially-astute and all made perfect decisions and were great at assessing financial risk, the reality is that most people are really REALLY bad at that kind of thing and tend to take an over-optimistic view of the markets (especially during a bubble).

The Irish banks failed and failed SPECTACULARLY ! This was quite simply because they were totally incapable of assessing risk and lent way too much money to almost everything they touched.

Monty Burnz

Solair, you haven't answered the question - why do you need to be an actuary or accountant to ask yourself 'can I pay this sum every month'?

I can understand why you want to avoid this simple and obvious point, because you are trying to place the blame for bad borrowing on the banks.

Solair

Monty Burnz wrote: »

Solair, you haven't answered the question - why do you need to be an actuary or accountant to ask yourself 'can I pay this sum every month'?

I can understand why you want to avoid this simple and obvious point, because you are trying to place the blame for bad borrowing on the banks.

The problem is that in most cases where mortgages have went horribly wrong the person was able to pay the mortgage when they took it out. However, people being optimists by nature, did not factor in what they might do should their income reduce. The boom looked totally sustainable to the average person who did not see behind the smoke and mirrors.

In many cases, Irish banks played to this optimistic view of the world and lent money to people based on their maximum possible income. I know of cases where banks and brokers encouraged people to include things like bonuses, commission, etc in their applications and while the banks were fully aware these were not steady income streams, calculated the loan amounts based on them anyway.

In other cases, people's partners may have lost jobs, a lot of people have had pretty serious hours / wage cuts too.

A normally regulated banking system factors these kind of things into a mortgage and does not lend to the level that people will be unable to pay should they face minor financial setbacks. However, in Ireland that was absolutely not the case in the latter years of the boom and the banks lent totally irresponsibly.

It is the banks' duty to point out the risks and to be aware of them. Our banks' did none of that during the boom.

They were out of line with their more prudent counterparts in other EU countries and way out of line with what had been their own normal lending practices only a few years earlier too. I mean, reality and human psychology did not change, only the banks lending policies did.

Dempo1

bobbysands81 wrote: »

Great news, delighted for her. Hopefully many similar stories to come as it seems that mortgage holders are taking the brunt of very poor decisions made by management within banks (For the record I think shareholders and employees also carry a large burden whilst the actual bank is getting off scot free).

Could not agree more, of course expect some reactions of horror from quarters not affected however the bank in this case had little option but to face reality. The nurse, whom I might add went on morning Ireland this morning to explain her situation did everything anyone could do in this situation ultimately selling the property but with a hefty balance left owing. Given the debt was near impossible to manage let alone service a compromised was reached and it would seem a logic and practical solution. The banks in the current and indeed its looking like the long term situation have no mechanisms to recoup either mortgage or personal debt. The district courts are not granting installment orders, Massive amounts of judgments being registered with not a hope in hell of them ever being satisfied. In the situation the nurse clearly had no means by way a judgment could be registered.

I do not subscribe to debt forgiveness in its definitive meaning however begrudgers need to wake up and have a strong coffee, the Mortgage debt crisis is about to implode but more alarming is the personal debt crisis, some, any compromises are required whether people like it or not. It is clear a large percentage of Irish society are struggling and yes, even those lucky enough to still be in employment. The Economy is stagnant, absolutely no movement partially aided by consumers not having a red cent left at the end of the month.