Mortgage - Ex partner No longer paying

mactheknife19

Maybe this needs to be moved to a Legal Discussion, although what I'm really trying to see if anyone knows of similar experiences......I suspect this is becoming more common.

So the background is; Sister bought a house with her then partner. Approx mortgage was 220k, remaining is 200k, and lets say value is 100k for ease of numbers. House bought in 2006, he left in 2009 and has not paid anything since. He moved back to his home country. Left other debts (credit cards, bank loans etc but none of those in joint name). He is now in the UK. From what we can understand he is on welfare in UK, no real home address. There is a child involved but no maintenance paid. There is contact with the child, but I think this is primarily drive by this guys father (grandfather). He allows him to use his home to contact and for visits (which the grandfather pays for). Sister does not want to break the bonds there.

So sister has been on reduced payments for about 22 months now. But on the last visit they said this was the last time. Her next review is next week. Full payment would move the payment from 600 to 900. On the last visit she asked if he could be taken off the mortgage as he has made no contribution in 3 years. He sent a letter recognising this, and stated that he will not be making any payments in the future. The bank reply was that based on her income she could not do that.........which is fine, but then how do they expect her to make the full payment.

My opinion is that she needs to start to strategically default. Even if they continue to allow reduced payments all its really doing is kicking the can down the road as little is coming of the capital. She needs to start paying her 50%, and lets it go into arrears. Keep the records that she is continuing to keep her commitment. If the bank repossess, sell and crystalize the debt at least she only owes 50% of that debt. Ultimately he will get off scot free as there is nothing for the bank to pursue with him.

As such I'm looking for any similar experiences. Saying she took out the mortgage she owes the debt is pointless. There is no value in going after him. She would take on the mortgage is a portion of his debt is written off. She understand that her credit rating will be damaged but can except that.

djimi

Would she not be better off considering renting the place out for a while and see if she can get a tenant to cover all or most of the mortgage payments? Its not exactly ideal but neither is committing fincancial hari kari...

mactheknife19

@djimi..................she'd get about 450 rent, but then would have to go off and rent somewhere similar........so no real change overall. Not sure if she'd make a great landlord anyway (think she would get screwed over)

Plus she want to stay in the apartment ( her work / his school) pay her debt, accept her portion of the negative equity.........but she just can't afford to do that for the other person.

ABajaninCork

If the mortgage was taken out in both names, then I'm afraid your sister is on the hook for the whole amount. Both parties are jointly and severally liable for the debt. That means the bank can go after either or both of them for the debt. They can also chase the partner in the UK for the money as he's still in the EU. Unlikely, but can happen.

In other words, she is not liable for 50%.

Is it possible to take in a lodger if she doesn't want to move?

mactheknife19

@ABajaninCork.............cant take a lodger as its a 2 Bed, and she had 1 child.
I understand the jointly / severly part but I guess this is why I was hoping to see if anyone had similar experiences as opposed to what a contract says. I suppose if you saw this through to court and my sister was able to show the evidence of her maintaining it to the best of her ability (unsupported by the other signee) then are the really going to apply 100% of outstanding debt to her.

They can pursue all they want, but blood and stone as they say. He actually said that all he will do is declare himself bankrupt in the UK ( he's UK national, living there now).

Zamboni

Force their hand.
Default on the property completely.
Allow a repossession.
Walk away and rent privately if possible/rent allowance or council housing as appropriate.
Someone will pick up the tab depending on who the mortgage lender was.
Your sister is poor. She needs to acknowledge that and it will set her free.

Big psychological problem in Ireland is people living under a facade that they are not poor. The pressure to sustain this facade is immense.

mactheknife19

@Zamboni

Force their hand. - Yes, I guess that is what she is trying to do. Make something happen. They keep wanting to kick the can. At the very least they should assign the property into her name.

Default on the property completely - No, she want to pay at least her debts
Allow a repossession - As above, but if this is to only way for the bank to act then she accepts that.

Walk away and rent privately if possible/rent allowance or council housing as appropriate.

Someone will pick up the tab depending on who the mortgage lender was.
Your sister is poor. She needs to acknowledge that and it will set her free.
- But she's not poor. There are poor people out there who can't afford to put food on the table. She has a average income and is willing to pay her debt to the best of her ability, and accept her negative equity. She just can't afford someone elses.

StillWaters

Yes a court really could assign the 100% debt to her.

If I were her sister I would advise her to pay interest only, the bank will be very slow to move in these circumstances, if at all. Why should she pay capital to the exes benefit? Sit tight and wait and see what the Personal Insolvency Act brings.

The bank might huff and puff a bit, but I really can't see them issuing any proceedings if interest payments are being met.

Zamboni

mactheknife19 wrote: »

@Zamboni

Force their hand. - Yes, I guess that is what she is trying to do. Make something happen. They keep wanting to kick the can. At the very least they should assign the property into her name.

Default on the property completely - No, she want to pay at least her debts
Allow a repossession - As above, but if this is to only way for the bank to act then she accepts that.

Walk away and rent privately if possible/rent allowance or council housing as appropriate.

Someone will pick up the tab depending on who the mortgage lender was.
Your sister is poor. She needs to acknowledge that and it will set her free.
- But she's not poor. There are poor people out there who can't afford to put food on the table. She has a average income and is willing to pay her debt to the best of her ability, and accept her negative equity. She just can't afford someone elses.

She is hopelessly insolvent as you have described.
Just because she has an income does not mean she is not poor.
It is quite clear that the ex has zero intention or capability to pay anything further.

StillWaters

I would also advise her to bring someone into the review meeting with her. Only paying 50% is not to her benefit, as it's less tha interest only and the Bank will act, capitalising arrears in the process. If she wants to stay in the house, she will have to pay at least the interest.

The bank probably won't agree at the meeting, but I'd go ahead anyway.

djimi

mactheknife19 wrote: »

At the very least they should assign the property into her name.

They will not do that; she would need to take out a new mortgage to effectively buy her partner out.

mactheknife19 wrote: »

- But she's not poor. There are poor people out there who can't afford to put food on the table. She has a average income and is willing to pay her debt to the best of her ability, and accept her negative equity. She just can't afford someone elses.

There is no point in talking about her debt as if she is only responsible for part of it. The situation that she is in is that she is responsible for 100% of the debt. The fact that her partner has walked out and is accepting no responsibility unfortunately does not change this.

The bottom line is that she now has a €900 a month or whatever mortgage that she presumably cannot afford to pay on her current income. She needs to do whatever it takes in order to resolve that issue. Work with the bank; from what I can gather their preference is not to repossess unless they have exhausted all other options.

mactheknife19

Zamboni wrote: »

She is hopelessly insolvent as you have described.
Just because she has an income does not mean she is not poor.
It is quite clear that the ex has zero intention or capability to pay anything further.

yes, she has no capability to pay anything further. So she is paying 650 pm (roughly 300 Capital /350 Interest.........so the ex is benefiting from capital payment). So maybe the bank steps down and says she can continue again on that agreement for another 6 months. But that resolves nothing. At some stage the capital will need to be repaid (in a ever decressing time frame if I'm not mistaken). So as Zamboni says is it time to force their hand by defaulting.

mactheknife19

djimi wrote: »

She needs to do whatever it takes in order to resolve that issue. Work with the bank; from what I can gather their preference is not to repossess unless they have exhausted all other options.

But working with the bank just seems to be making a reduced payment or Interest Only. Nothing resolved

mactheknife19

StillWaters wrote: »

I would also advise her to bring someone into the review meeting with her. Only paying 50% is not to her benefit, as it's less tha interest only and the Bank will act, capitalising arrears in the process. If she wants to stay in the house, she will have to pay at least the interest.

The bank probably won't agree at the meeting, but I'd go ahead anyway.

so if you direct debit set up to take the mortgage what would you need to do so it would only take out the interest only amount.

I'm going to go into the meeting myself with her. Then would you be best advised using a solicitor or using the like of New Beginings.

djimi

mactheknife19 wrote: »

But working with the bank just seems to be making a reduced payment or Interest Only. Nothing resolved

Its a better option than defaulting on a mortgage tbf. I know it doesnt resolve things long term, but if it were me and the options were pay interest only for a while or default, then Id sooner pay interest only and see what options become available in that time. If nothing changes in the mean time then she will end up defaulting anyway, but you never know what measures will be introduced to help people in serious NE over the next year or so.

StillWaters

mactheknife19 wrote: »

so if you direct debit set up to take the mortgage what would you need to do so it would only take out the interest only amount.

I'm going to go into the meeting myself with her. Then would you be best advised using a solicitor or using the like of New Beginings.

Set up either dd or standing order for the interest only. Her mortgage statement should say what that amount is. It's good you are going in with her. Those meetings can be intimidating. Just use the broken record technique, saying IO is all she can/will pay until the Bank come up with a resolution. There is no need for a solicitor or new beginnings, although a new scheme was announced offering free advice to those in difficulty. Keepingyourhome.ie
Wishing her luck, and she is fortunate to have a brother like you looking out for her.

Rasmus

Why can't she sell it? She has enough evidence surely to prove desertion in order to sell it without her former partner's signature?

djimi

Rasmus wrote: »

Why can't she sell it? She has enough evidence surely to prove desertion in order to sell it without her former partner's signature?

By the sounds of it the place is in the guts of €100k negative equity. Selling it is not going to be an option.

Rasmus

djimi wrote: »

By the sounds of it the place is in the guts of €100k negative equity. Selling it is not going to be an option.

Ah, got it.

mactheknife19

Rasmus wrote: »

Why can't she sell it? She has enough evidence surely to prove desertion in order to sell it without her former partner's signature?

A djimi says its in NE so I assume the bank wont allow. If they would she would and then come to arrangement to repay her portion of the difference.

The ex-partner himself is actually quite willing to sign anything that the bank want him to (i.e. pass it all into her name / sell it). What he wont do is repay anything. He's not concerned about a bank trying to pursue him as he has nothing to give. In fact if the signature required him to fly to Dublin or use a Solicitor it would probably fall on her to fund it.