Borrow €400k from AIB and only pay back €250k

ArraMusha

I must ring AIB for a Mortgage later and get as big an amount as I can get, seeing as they're writing off big chunks.

Sure what would you be doing now paying a Mortgage or loan when Joe Bloggs next door who bought a jaysas mansion a few years ago and now has 150k wiped off, while Job Boobie is left in a phone box paying full whack.

Tiz like the talk a few years ago about developers, if ya owe them a few million your grand. Bite off all ya can, don't worry if ya cant swollie it, that's someone elses problem.

So no repo's and no moving the debtor to a smaller house with a reduced proportional mortgage, and no sale of their original house.

AIB are rewarding those who were not prudent, "is that the new thing now".


http://www.independent.ie/business/personal-finance/family-gets-to-keep-home-after-150k-debt-is-written-off-by-aib-30084311.html

Nino Brown

Yeah, not a bad donation from the taxpayer towards somebody's mortgage, it'd be nice if we all got that.

smcgiff

Was waiting for these type of comments. Boards.ie you never disappoint.

Penalty

Nino Brown wrote: »

Yeah, not a bad donation from the taxpayer towards somebody's mortgage, it'd be nice if we all got that.

+1

I do struggle to understand or agree with these deals.

On one hand I say yes people need to be helped out and it is a good thing.

Then I stop and say I took at a mortgage in the boom I'm paying it off why can't I get a contribution to my negative equity??

It's just annoying that the debt is reduced and they stay in the property while other people have given up all luxuries to try pay the mortgage in order to keep their house.

Obviously the family have experienced hardship etc but should they really be free to continue to live in the same house and effectively have no penalty.

username123

Must give them a ring myself - I was offered no such deal to cancel out some of my negative equity. Surely its discrimination if they refuse to give me the same deal they gave someone else?

OldNotWIse

smcgiff wrote: »

Was waiting for these type of comments. Boards.ie you never disappoint.

The only disappointment is that those who stupidly borrowed beyond their means are getting bailouts while the rest of us must keep paying.

keeponhurling

Don't really see why they don't carry forward to debt.

Does this mean that if they won the lottery tomorrow they still don't need to pay back the 150k?
Seems we Irish are some kind of a-la-carte capitalists.

This must be the biggest bargain on this thread ever!

Penny Tration

Ah sure, let's just take the houses from them and leave them homeless, probably costing the taxpayer even more to rehome them.

People made mistakes, big fcuking deal. I'd rather my taxes go towards housing somebody /keeping them in their home, than on the numerous people I know defrauding the social welfare.

dodzy

smcgiff wrote: »

Was waiting for these type of comments. Boards.ie you never disappoint.

You cannot deny that it is annoying for plenty of folk with a similar debt. €400K does not seem that extravagant ( regular 3 beds were fetching this not so long ago, and not in the typical "sought after" areas ).

Call me suspicious, but I just cant help feeling that perhaps the borrowers referred to in the OP knew somebody who managed to pull a string or two

D3PO

how about a bit of perspective here people and not an indignant rant ?

1) The couple have credit card and loan debts (most likely with AIB) both of which are unsecured both of which yield far more in interest (read profit) for AIB. Couple struggling could have stopped paying these and the bank would have no recourse on the debt. In such a situation its far more advisable for the bank to write down mortgage debt than havivng to write down auxilary debts

2) By doing so AIB have saved on possible legal fees & EA fees to repo and resell the property. After which the couple would have been left with an outstanding unsecured mortgage that again AIB would ahve no way of chasing if they didnt pay

3) By crystalising the loss this fixes the banks balance sheet a bit. Thats what they ultimately need to do so they canfunction correctly in future. Right now we all know the banks are disfunctional right now and as unpalatable as it may be to some certain measures need to be taken to correct the sector.

Look whilst granted this couple are getting a very good deal the fact is that the bank arent writing down 150k just to be nice they are doign it because its in their best interests. Given they are basically state owned I want them to make the right decisions as ultimately our money has gone ito getting them healthy again. Are the couple getting a good deal ? Yes but we need to look at things in a wider perspective.

OldNotWIse

Penalty wrote: »

+1

I do struggle to understand or agree with these deals.

On one hand I say yes people need to be helped out and it is a good thing.

Then I stop and say I took at a mortgage in the boom I'm paying it off why can't I get a contribution to my negative equity??

It's just annoying that the debt is reduced and they stay in the property while other people have given up all luxuries to try pay the mortgage in order to keep their house.

Obviously the family have experienced hardship etc but should they really be free to continue to live in the same house and effectively have no penalty.

IMO, no.

OldNotWIse

green_screen wrote: »

Ah sure, let's just take the houses from them and leave them homeless, probably costing the taxpayer even more to rehome them.

People made mistakes, big fcuking deal. I'd rather my taxes go towards housing somebody /keeping them in their home, than on the numerous people I know defrauding the social welfare.

You do realise those two categories are not mutually exclusive?

The_Conductor

It was an unusual case- its a dual income household, one private sector, one public sector, their net income is down over 40% and they've run up massive credit card bills (along with mortgage arrears of just under 40k.

The new mortgage is half the o/s balance (200k of a 400k balance), the arrears (40k) are warehoused, and if the house is sold in the future, there is a claw-back on 160k that has been written down.

The only difference between this and the other deals- is they are not being forced to sell the property- thats the only difference.

To be honest- the way its reported is more than a bit sensationalist.

smcgiff

dodzy wrote: »

You cannot deny that it is annoying for plenty of folk with a similar debt. €400K does not seem that extravagant ( regular 3 beds were fetching this not so long ago, and not in the typical "sought after" areas ).

Call me suspicious, but I just cant help feeling that perhaps the borrowers referred to in the OP knew somebody who managed to pull a string or two

What does seem crazy is that they were able to get a €400k mortgage on a house now valued at €100k, but it'd only be conspiracy theory to think they have someone to pull strings.

To the person above that said can they now get something deducted from their negative equity house. Possibly yes if they cannot afford due to loss of job, reduced earnings etc. No if they can afford to pay it. You are no worse off.

Which would you rather, get €150k off your mortgage and drop from €80k to €40k earnings per annum (these are my own figures, not related to this case) or maintain an €80k job?

D3PO

The_Conductor wrote: »

It was an unusual case- its a dual income household, one private sector, one public sector, their net income is down over 40% and they've run up massive credit card bills (along with mortgage arrears of just under 40k.

The new mortgage is half the o/s balance (200k of a 400k balance), the arrears (40k) are warehoused, and if the house is sold in the future, there is a claw-back on 160k that has been written down.

The only difference between this and the other deals- is they are not being forced to sell the property- thats the only difference.

To be honest- the way its reported is more than a bit sensationalist.

Exactly you can be garanteed there are clawback clauses, and clauses to address financial windfalls the mortgage holder may get (lotto, inheritance etc)

Papers job is to sensationalise things, the banks arent stupid they have things in place to ensure they dont get shafted.

OldNotWIse

username123 wrote: »

Must give them a ring myself - I was offered no such deal to cancel out some of my negative equity. Surely its discrimination if they refuse to give me the same deal they gave someone else?

I'm gonna call them myself. I quite fancy 150k and sure you know, fuuck it people make mistakes and I have made a few. Ireland only exists to financially reward those who take risks and allow their actions to be dictated by their own greed. I've some plastic debt here that needs seeing to and sure fuuck everyone else who is struggling to keep up with mortgage repayments and run a car and pay childcare. I want to be insulated from my own financial stupidity and recklessness so come on bank, pay up! :pac:

Penny Tration

OldNotWIse wrote: »

You do realise those two categories are not mutually exclusive?

Yes. My point is we cannot choose where our taxes go. I'm sure many of us, if given the choice, would like to choose where they go, but we don't.

Both parents are working, they've fallen upon hard times. I'm sure they'd much rather be able to pay their mortgage.

zl1whqvjs75cdy

green_screen wrote: »

Ah sure, let's just take the houses from them and leave them homeless, probably costing the taxpayer even more to rehome them.

People made mistakes, big fcuking deal. I'd rather my taxes go towards housing somebody /keeping them in their home, than on the numerous people I know defrauding the social welfare.

Or you could, you know, sell the house and force them to downsize and, you know, live within their means. Crazy stuff I know.

Penny Tration

donkeyoaty0099 wrote: »

Or you could, you know, sell the house and force them to downsize and, you know, live within their means. Crazy stuff I know.

If they're in negative equity with credit card debt on top of that, how can they afford to downsize when they'll still owe money even after the house is sold?

OldNotWIse

green_screen wrote: »

Yes. My point is we cannot choose where our taxes go. I'm sure many of us, if given the choice, would like to choose where they go, but we don't.

Both parents are working, they've fallen upon hard times. I'm sure they'd much rather be able to pay their mortgage.

Oh well if they really really reeeeally want to pay it, I guess thats ok.... Thats like, you know...the same as paying...

The_Conductor

smcgiff wrote: »

What does seem crazy is that they were able to get a €400k mortgage on a house now valued at €100k, but it'd only be conspiracy theory to think they have someone to pull strings.

To the person above that said can they now get something deducted from their negative equity house. Possibly yes if they cannot afford due to loss of job, reduced earnings etc. No if they can afford to pay it. You are no worse off.

Which would you rather, get €150k off your mortgage and drop from €80k to €40k earnings per annum (these are my own figures, not related to this case) or maintain an €80k job?

Where did it say the property was now valued @ 100k?
What I heard was repayments and warehoused portion were in part designed to reflect 1) Repayment capacity and 2) a LTV of 90%. By my reckoning that means the current valuation on the property could be as high as 225-230k- which would represent a fall from peak price of just over 40% which for a house sounds plausible (if it were an apartment, it would be a different story).

This is also why there is the clawback built into the agreement on the 160k that has been written down- if/when the property is sold, subject to the listed criteria.

D3PO

green_screen wrote: »

Both parents are working, they've fallen upon hard times. I'm sure they'd much rather be able to pay their mortgage.

They also only have a primary property don't appear to ahve gone wild during the boom and are in trouble as a result of a 40% drop in income.

Now whilst Im annoyed they havent had the forsight to calculate into their affordability for this kind of scenario (like I did prior to getting my mortgage) I accept this couple dont match the usual stereotype of financially irresponsible couple during the boom.

strandroad

The_Conductor wrote: »

The only difference between this and the other deals- is they are not being forced to sell the property- thats the only difference.

That difference is crucial though...

D3PO

donkeyoaty0099 wrote: »

Or you could, you know, sell the house and force them to downsize and, you know, live within their means. Crazy stuff I know.

For all we know the house is a 3 bed. They have 2 children if one is a boy and one a girl what do they downsize too that is cheap enough for them to be able to afford the payments and NE they would carry over ......

perspective people

OldNotWIse

D3PO wrote: »

For all we know the house is a 3 bed. They have 2 children if one is a boy and one a girl what do they downsize too that is cheap enough for them to be able to afford the payments and NE they would carry over ......

perspective people

Might have been useful when they were borrowing 400 thousand...

username123

smcgiff wrote: »

Which would you rather, get €150k off your mortgage and drop from €80k to €40k earnings per annum (these are my own figures, not related to this case) or maintain an €80k job?

Id much rather the drop in mortgage debt tbh. Thats a permanent solution. My salary dropping would be a temporary situation.

Plus, 150k of mortgage debt costs a lot more than that over the term of the mortgage when you add in mortgage interest.

In this particular case I am interested to see that one of the couple is in a public sector job so probably has a gold plated pension on top of having a mortgage debt write off - whereas poor plebs like me just have wait until such a time as we earn enough to continue paying into a pension fund.

strandroad

D3PO wrote: »

Now whilst Im annoyed they havent had the forsight to calculate into their affordability for this kind of scenario (like I did prior to getting my mortgage) I accept this couple dont match the usual stereotype of financially irresponsible couple during the boom.

With multiple loans and large CC debt?

REXER

smcgiff wrote: »

Was waiting for these type of comments. Boards.ie you never disappoint.

Now that didn't take long at all!

whomitconcerns

D3PO wrote: »

For all we know the house is a 3 bed. They have 2 children if one is a boy and one a girl what do they downsize too that is cheap enough for them to be able to afford the payments and NE they would carry over ......

perspective people

with all due respect to the people involved...surely its not the end of the world if the boy and girl had to share a room in a downsized house....least of their worries..

smcgiff

The_Conductor wrote: »

Where did it say the property was now valued @ 100k?

On Morning Ireland this morning. The reporter said the remaining mortgage, which they could afford to pay, was still twice what the house was worth on the open market.

Robert McGrath

green_screen wrote: »

If they're in negative equity with credit card debt on top of that, how can they afford to downsize when they'll still owe money even after the house is sold?

Rent

smcgiff

username123 wrote: »

Id much rather the drop in mortgage debt tbh. Thats a permanent solution. My salary dropping would be a temporary situation.

That's a gamble I'd prefer not to take, and I'm in a fairly recession proof friendly industry.

It's like people getting €150k redundancy but lose their good job and have to settle for less. They're usually not too pleased.

D3PO

whomitconcerns wrote: »

with all due respect to the people involved...surely its not the end of the world if the boy and girl had to share a room in a downsized house....least of their worries..

sure putem somehere with an outside toilet whilst your at it.

This isnt the 1950's whilst Im a big cheerleader for cutting down on frivolity if you cannot afford it. I think its fair to give people a certain level of dignity too.

Lets look at the other option.

AIB do nothing, arrears grow become unsustainable. Couple either go bankrupt or go into a PIA bank loses out much more than they are with this deal.

Taxpayer ultimatly lose out more on that deal as we basically own AIB and on top of which we end up housing the family aswell.

The solution is the best of a bad situation. Its not a silver bullet but each individual case has to be taken on its merits or (least demerits as the case may be)

The_Conductor

Robert McGrath wrote: »

Rent

Renting could very conceivably cost them significantly more than the adjusted mortgage payments.

ted1

smcgiff wrote: »

On Morning Ireland this morning. The reporter said the remaining mortgage, which they could afford to pay, was still twice what the house was worth on the open market.

any idea what type of mortgage they had?

someone on tracker with a mortgage of 400k over 30 years paying a rate of 1.5% is paying over 30 years has a monthly payment of €1,380

someone who takes out a mortgage today on a house worth 250k is paying a rate of 4.79% over 30 years is paying €1,310

there's not really much difference. can the person who paid 250k today as they rented for the past few years get a rebate from the government for what they paid in rent??

smcgiff

ted1 wrote: »

any idea what type of mortgage they had?

No idea, I don't think it was mentioned on Morning Ireland.

ted1 wrote: »

can the person who paid 250k today as they rented for the past few years get a rebate from the government for what they paid in rent??

I think you know the answer to that

Zamboni

Their next door neighbours who bought at the same time and never missed a payment now ironically owe more to AIB than they do.

The other next door neighbours who are renting have been waiting for a year for a house in the neighbourhood to come up for sale. They would have paid €30k over market price for that house.

smcgiff

Zamboni wrote: »

Their next door neighbours who bought at the same time and never missed a payment now ironically owe more to AIB than they do.

The other next door neighbours who are renting have been waiting for a year for a house in the neighbourhood to come up for sale.

You made that up, didn't you.

Zamboni

smcgiff wrote: »

You made that up, didn't you.

Yes - to illustrate a perfectly reasonable point. Everyone else is being f*cked over to accommodate this crap.

smcgiff

Zamboni wrote: »

Yes - to illustrate a perfectly reasonable point. Everyone else is being f*cked over to accommodate this crap.

Their next door neighbour can afford to pay their mortgage because they deal in drugs*














* not actually true, just illustrating a point

ArraMusha

Zamboni wrote: »

Their next door neighbours who bought at the same time and never missed a payment now ironically owe more to AIB than they do.

The other next door neighbours who are renting have been waiting for a year for a house in the neighbourhood to come up for sale. They would have paid €30k over market price for that house.

Ya it comes back to what I posted above ..."Bite off all ya can, don't worry if ya cant swollie it, that's someone elses problem"

The 'someone else' being the taxpaying (gombeen) neighbours, who are repaying their mortgage or those looking to buy.

ted1

smcgiff wrote: »

I think you know the answer to that

I don't, I used to think that if someone takes a loan they had to pay the agreed amount back or face losing the time the loan is secured against.

so anything is possible.

OldNotWIse

The_Conductor wrote: »

Renting could very conceivably cost them significantly more than the adjusted mortgage payments.

Yet it was a good enough option for some people who couldnt afford to jump onto the property ladder like lunatics and mortgage their own as*es off...

smcgiff

ted1 wrote: »

I don't, I used to think that if someone takes a loan they had to pay the agreed amount back or face losing the time the loan is secured against.

so anything is possible.

If the asset against which the loan is secured against is worth more than the loan, then that will happen.

It wasn't foreseen that the assets would depreciate so badly.

In this case the loan as agreed with the couple is twice the value of the asset.

What was the alternative, bankruptcy and the bank gets nothing?

The_Conductor

Cop-on guys, if you want to go down the road of wild speculation and conspiracy theories- we have a wonderful forum, especially for that.........

ronan45

Hmmmm I have been paying AIB diligently for years...:eek:

Time for some strategic defaulting me thinks!

Wouldnt mind splashing out this year

strandroad

The_Conductor wrote: »

Renting could very conceivably cost them significantly more than the adjusted mortgage payments.

Unless they rent somewhere else, or downsize, or both.

minotour

I could probably argue a similar situation to these people, very similar demographics however its possible we earn more. So all i need to do is run up some ridiculous credit cards debts in scale to our earnings then we get a write down on our mortgage?

Its rewarding failure end of story.........and if it turns out they pulled strings then heads should fookin roll!

username123

smcgiff wrote: »

It's like people getting €150k redundancy but lose their good job and have to settle for less. They're usually not too pleased.

No, but there is nothing stopping that person upskilling or retraining and continuing to look for a better job. It doesnt give the ages of the couple in the article, but if they are in their 30s or 40s they have between 25-35 years of working life left - so there is time for earning power to increase.

I am sure the case is more that the public sector worker doesnt want to give up their gold plated pension and take their chances in the private sector.

Plus the value of their property may well go up over the next 20 years meaning that having just had a write off, they can sell for a profit down the road.

I am not against mortgage forgiveness btw, but I think all people should be treated equally. If they get debt forgiveness, so should I.

ted1

smcgiff wrote: »

If the asset against which the loan is secured against is worth more than the loan, then that will happen.

It wasn't foreseen that the assets would depreciate so badly.

In this case the loan as agreed with the couple is twice the value of the asset.

What was the alternative, bankruptcy and the bank gets nothing?

the current price has no bearing what so ever on ones ability to pay. as highlighted in my previous post some one paying 250k in todays market has the same repayments as someone who bought in the tiger era.

username123

smcgiff wrote: »

In this case the loan as agreed with the couple is twice the value of the asset.

My mortgage is currently worth twice my property and my income has been slashed. But because I am living a much reduced lifestyle in other ways (no holidays, no extravagances) I am not being forgiven.

Perhaps I should borrow 20k and go on a credit card spree in a foreign country then come back and hold my hand out for some debt forgiveness.