AIB in payout Bonanza for mortgage defaulters

Zamboni

AIB have begun offering taxpayers money to people who fall into arrears on their property.
One lucky couple just got €150k in this new offer from the state owned bank.

The couple who can't be named for legal reasons (because they know the bank manager probably) are thrilled with the windfall and have been rubbing it in their prudent neighbours faces.

http://www.rte.ie/news/2014/0312/601666-aib-debt-writedown/

Avail of this offer now - stop paying your mortgage!

Terms and Conditions
This offer is not available if you were unfortunate enough to take out your mortgage with a bank that hasn't been taken over by the taxpayer.

everdead.ie

Zamboni wrote: »

AIB have begun offering taxpayers money to people who fall into arrears on their property.
One lucky couple just got €150k in this new offer from the state owned bank.

The couple who can't be named for legal reasons (because they know the bank manager probably) are thrilled with the windfall and have been rubbing it in their prudent neighbours faces.

http://www.rte.ie/news/2014/0312/601666-aib-debt-writedown/

Avail of this offer now - stop paying your mortgage!

Terms and Conditions
This offer is not available if you were unfortunate enough to not take out your mortgage with a bank that hasn't been taken over by the taxpayer.

In reality the bank is probably taking a pragmatic view a mortgage taken out for 400,000 on a house which may be valued at less than the 250,000 mortgage they now have to repay so they have determined the couple can repay 250,000 and they don't have to deal with selling the property for less than that.

A lucky couple though.

Have they had to give up the tracker mortgage?

How had this affected their credit rating?

What other restriction's have been put on them.

While it is lucky for them, I think banks are just getting real with the fact that they may never see the money form some mortgage's they advanced during the boom years.

RichardoKhan

The moral of this story.........next housing boom shoot for the moon. Get the semi d 4 bed or stand alone with one acre & just wait for the bust. Unjust & ridiculous.......would have been far better wiping 25/30% of value everyone's mortgages post 2001 or so.

everdead.ie

RichardoKhan wrote: »

The moral of this story.........next housing boom shoot for the moon. Get the semi d 4 bed or stand alone with one acre & just wait for the bust. Unjust & ridiculous.......would have been far better wiping 25/30% of value everyone's mortgages post 2001 or so.

That would bankrupt the bank completely....

keith16

I would also like some free money.

keeponhurling

I'm confused, is this bonanza presented by Marty Whelan or by Ronan Collins?

vicwatson

I don't know what a tracker mortgage is

P_1

Sensationalist much?

Right from my reading of things, as well as the mortgage, the couple concerned also owe quite a considerable amount on their credit cards. AIB would presumably make more from the interest on the credit cad debt than they would on the mortgage. It seems that given the finances concerned it is a case of one or the other being able to be paid back so AIB have taken the business decision to enable themselves get the interest on the credit card (which is the easier to recover and makes them the most money) rather then the mortgage.

Chips Lovell

And if AIB repossess the home and don't manage to sell it for more than they expect to recoup from the written down mortgage, it'll cost the taxpayer even more.

Tiddlypeeps

I don't understand the need for the write down. If the couple are still able to keep up some repayments then can't they just reduce the interest rate and lower the monthly repayments?

Edit: I'm not trying to claim it's not necessary, I'd just like someone to explain like I'm 5 why this is a thing because i don't get it.

smcgiff

Vladimir Kurtains wrote: »

And if AIB repossess the home and don't manage to sell it for more than they expect to recoup from the written down mortgage, it'll cost the taxpayer even more.

Let logic get in the way of a good rant much :P

smcgiff

Tiddlypeeps wrote: »

I don't understand the need for the write down. If the couple are still able to keep up some repayments then can't they just reduce the interest rate and lower the monthly repayments?

Edit: I'm not trying to claim it's not necessary, I'd just like someone to explain like I'm 5 why this is a thing because i don't get it.

Because with the capital amount so high, even at no interest rate they couldn't afford it.

Hermy

The way I see it when the crash happened the banks were immediately bailed out with taxpayers money which only served the banks.
I don't understand why it wasn't the banks customers (mortgage holders) who were bailed out which in turn would have bailed out the banks.
What good is it having solvent banks if all the banks customers are insolvent?
Of course my knowledge of finance and economics is limited so I'm sure there are plenty of problems with that solution too.

Diemos

Hermy wrote: »

What good is it having solvent banks if all the banks customers are insolvent?

Because most bank customers are perfectly solvent, and a number of those who are not paying their mortgages are dong so by choice not necessity.

JustAddWater

keeponhurling wrote: »

I'm confused, is this bonanza presented by Marty Whelan or by Ronan Collins?

Kathryn Thomas and bressie

touts

As I watch my tax go to pay off someone elses mortgage I wish them well but I feel very foolish at having paid my mortgage every month.

First they came to bail out the gambling german pension funds but I did not speak out because I was not a gambling german bond holder
Then they came to bail out the private Irish banks but I did not speak out because I was not a private Irish bank.
Then they came to bail out Quinn insurance but I did not speak out because I was not Quinn insurance.
Then they came to bail out the developers but I did not speak out because I was not a developer.
Then they came to bail out the credit unions but I did not speak out because I was not a credit union.
Then they came to bail out the HSE but I did not speak out because I was not HSE.
Then they came to bail out the people who did not pay their mortgage but I did not speak out because I was not a person who did not pay their mortgage.
Then I needed a bailout but there was no one left to bail me out.

Tiddlypeeps

smcgiff wrote: »

Because with the capital amount so high, even at no interest rate they couldn't afford it.

Why not just increase the term of the mortgage? It might mean pushing the term past retirement age, but so what, they still have a chance of recovering their money as apposed to just giving up on it completely.

tin79

touts wrote: »

As I watch my tax go to pay off someone elses mortgage I wish them well but I feel very foolish at having paid my mortgage every month.

First they came to bail out the gambling german pension funds but I did not speak out because I was not a gambling german bond holder
Then they came to bail out the private Irish banks but I did not speak out because I was not a private Irish bank.
Then they came to bail out Quinn insurance but I did not speak out because I was not Quinn insurance.
Then they came to bail out the developers but I did not speak out because I was not a developer.
Then they came to bail out the credit unions but I did not speak out because I was not a credit union.
Then they came to bail out the HSE but I did not speak out because I was not HSE.
Then they came to bail out the people who did not pay their mortgage but I did not speak out because I was not a person who did not pay their mortgage.
Then I needed a bailout but there was no one left to bail me out.

Cringeworthy

smcgiff

Tiddlypeeps wrote: »

Why not just increase the term of the mortgage? It might mean pushing the term past retirement age, but so what, they still have a chance of recovering their money as apposed to just giving up on it completely.

I think, possibly, that the bank may not be able to set up mortgages paying beyond retirement age. Ironically for prudence reasons. They may be forced, under their own(ECB) rules to take the hit, rather than kick the problem down the road.

The alternative is that it may have been more attractive for the couple to declare bankruptcy.

touts

tin79 wrote: »

Cringeworthy

The passive attitude of the Irish taxpayer who accepts everyone else getting bailed out while their taxes ramp up year after year after year is the real cringeworthy element. You just have to look through the international media to see disbelief that we are accepting all this.

dr.bollocko

I don't understand why mortgages are not getting foreclosed.

tin79

touts wrote: »

The passive attitude of the Irish taxpayer who accepts everyone else getting bailed out while their taxes ramp up year after year after year is the real cringeworthy element. You just have to look through the international media to see disbelief that we are accepting all this.

Yes all the Irish tax payers are so lazy. Except you who are so proactive as to come on an anonymous forum and copy a few lines from the socialist handbook while never quite grasping how good you actually have it.

everdead.ie

dr.bollocko wrote: »

I don't understand why mortgages are not getting foreclosed.

Loop hole in the law you basically can't reposes a family home/primary residence buy to lets are getting repossessed however.

I think mortgages after a new law in 2009 was passed can be repossessed as well now but the law can't be retrospectively applied.

OldNotWIse

tin79 wrote: »

Yes all the Irish tax payers are so lazy. Except you who are so proactive as to come on an anonymous forum and copy a few lines from the socialist handbook while never quite grasping how good you actually have it.

We are not lazy, we're just too busy working our as*es off so that we can be fleeced to pay off those who wont pay their debts. :pac:

Tiddlypeeps

dr.bollocko wrote: »

I don't understand why mortgages are not getting foreclosed.

This would put more houses on the market which would in turn lower property prices leaving them even more out of pocket.

tin79

Tiddlypeeps wrote: »

This would put more houses on the market which would in turn lower property prices leaving them even more out of pocket.

The main thing I have learned from the financial crisis is that everything anyone does is wrong. NAMA wrong, bailout wrong, repossession wrong, mortgage write off wrong, renting wrong, buying wrong.

Tough environment.

Lu Tze

Whatever happened to the debt for equity swaps which were being tabled a few months back. reduce mortgage by 150k, but bank get 30% stake in the house

dr.bollocko

Tiddlypeeps wrote: »

This would put more houses on the market which would in turn lower property prices leaving them even more out of pocket.

We are in the middle of an artificial price bubble in some places again because of lack of stock available though, right?

kjl

dr.bollocko wrote: »

We are in the middle of an artificial price bubble in some places again because of lack of stock available though, right?

I'm waiting for the bubble to pop before I buy my first place.

SEPT 23 1989

hopefully this couple can now spend their money in the real economy

uch

dr.bollocko

kjl wrote: »

I'm waiting for the bubble to pop before I buy my first place.

Me too.

touts

tin79 wrote: »

Yes all the Irish tax payers are so lazy. Except you who are so proactive as to come on an anonymous forum and copy a few lines from the socialist handbook while never quite grasping how good you actually have it.

You have to laugh when people come out and say things like the irish taxpayer doesn't grasp how good they actually have it. They never say who they are basing the comparison against but I suspect it is some vague combination of cherry picked elements of life in a random selection of impoverished nations. This is the sort of attitude that is ramming this country into the ground as it allows the government decide they have scope for more and more taxes and more and more service cuts.

Menas

We dont know the details of this couple but I would guess that they have no demonstrable way (now or ever) to pay back their debt and have been very frank and open in their dealing with their lender.

Many are strategically defaulting on their debts hoping to get a deal such as this and I reckon they will not get away with it. Landlords not paying mortgage but pocketing rent seems to be an issue at present for eg.

Zamboni

SEPT 23 1989 wrote: »

hopefully this couple can now spend their money in the real economy

As mentioned in another thread - it's a zero sum game.
That €150k will be taken out of our PAYE and will stop our spend in the economy.
There is no such thing as AIB anymore - it's us.

Tiddlypeeps

dr.bollocko wrote: »

We are in the middle of an artificial price bubble in some places again because of lack of stock available though, right?

It definitely seems so. It's just pushing the inevitable off for another day. Which could work out fine if the economy is in a better place when they do finally have to deal with the elephant in the room.

KyussBishop

This is the only way that many of the unsustainable mortgages can be resolved - there are a large amount of them being long-fingered into the future, that are going to require writeoffs - it's simply not possible now, that all of them will be paid.

There's a lot of private debt out there, with no presently sustainable way of being repaid (not unless we have a full-blown economic recovery - not this measly 'still 5-10+ years away from full employment' faux recovery; if we head into deflation, which we're at risk of now, that's not going to last long - and deflation will make debts even more unsustainable).

What matters now, is that this is done fairly - without banks fraudulently giving writeoff's to people with the right connections.
The most (practical and) fair way of doing this, would be a blanket debt-jubilee - but that's politically impossible, as it'd have to be agreed at an EU level - where nothing can ever be agreed upon, when it comes to economic recovery.

Chips Lovell

dr.bollocko wrote: »

I don't understand why mortgages are not getting foreclosed.

They are repossessing some homes. Numbers are listed in the Central Banks quarterly arrears and repossession statistics. But foreclosure is usually an option of last resort for the bank. It usually crystallises their loses in addition to being a total legal and administrative nightmare

everdead.ie wrote: »

Loop hole in the law you basically can't reposes a family home/primary residence buy to lets are getting repossessed however.

I think mortgages after a new law in 2009 was passed can be repossessed as well now but the law can't be retrospectively applied.

AFAIK the loophole created by the Dunne judgement was closed by legislation last year.

KyussBishop

kjl wrote: »

I'm waiting for the bubble to pop before I buy my first place.

There's no way of telling how long that bubble will last - could be decades - it's likely wealthy rentiers with a lot of cash at hand, snapping up houses, rather than the previous debt-based bubble.

It's advantageous for them to keep prices high, as it helps them keep rents high too, and they'll have the political support to do it as well, to stop prices falling, which avoids the banks acknowledging their insolvency.

ForstalDave

My main issue with this is that it may encourage more people to not pay there mortgage thinking that they will get the same deal, This could end up costing AIB alot more in the long run

anncoates

Presume the bank just weighed up getting a reduced but steady amount paid off the mortgage long term against the hassle of foreclosing the house and trying to sell it at a loss, as well as seeing that loss actually realized on their balances immediately.

I doubt any institution - especially a bank - just writes off debt out of sheer benevolence.

smcgiff

ForstalDave wrote: »

My main issue with this is that it may encourage more people to not pay there mortgage thinking that they will get the same deal, This could end up costing AIB alot more in the long run

I'm very surprised there wasn't an "embarrassment" clause to ensure this wasn't leaked.

username123

smcgiff wrote: »

I think, possibly, that the bank may not be able to set up mortgages paying beyond retirement age.

My father in laws mortgage well exceeds his retirement age. How any bank thought someone would or could continue paying the mortgage into their 80s is beyond me.

smcgiff

username123 wrote: »

My father in laws mortgage well exceeds his retirement age. How any bank thought someone would or could continue paying the mortgage into their 80s is beyond me.

The life assurance cost can't be pretty either

anncoates

ForstalDave wrote: »

This could end up costing AIB alot more in the long run

Like I said, they probably just balanced it all and went for their best chance of getting something.

You put the people out of their house and sell it and they're still liable for negative equity plus exorbitant rent as they now have no family home. So rent + negative equity means the chance of the bank getting the negative equity owed is even worse. If the guy goes bankrupt they get fuck all.

They probably just weighed it up and thought getting 250k (plus interest) is as good as they could hope for at the time.

I would assume if the house is sold above a certain price, the bank can claw back the written off balance as well.

ForstalDave

anncoates wrote: »

Like I said, they probably just balanced it all and went for their best chance of getting something.

My statement was in regards to that this sets a precedent and may cause ore people to default in the hope of getting "a deal" which would cost AIB more in the long run

KyussBishop

username123 wrote: »

My father in laws mortgage well exceeds his retirement age. How any bank thought someone would or could continue paying the mortgage into their 80s is beyond me.

Given the sheer breadth of reckless lending by banks, it's likely they never expected it all to be paid off, but was done to enrich property developer friends, and bank CEO's/management (though salaries/bonuses/perks etc.), and to enrich other friends in related financial sectors.

Today, one of the fastest ways for a wide array of people to get rich, is to profit off of a fraudulent economic bubble - and property is the most profitable of all, because of how much economic activity it generates.

The more unsustainable the bubble, the more useless the property and locations of that property (since that allows more to be built and wildly changes the on-paper valuation of the land/property, based on the initial investment), the more false short-term 'profits' can be put down in the books, and the higher the payments/perks people can justify for themselves; the property doesn't even need to be useful, it can just be an excuse for funnelling huge amounts of money into useless efforts, that people can skim profits from.

Then when it all goes to shít, they can just walk away from it and let the rest of society pay for the mess; so yes, unsustainable mortgages are a feature, not a bug.

anncoates

ForstalDave wrote: »

My statement was in regards to that this sets a precedent and may cause ore people to default in the hope of getting "a deal" which would cost AIB more in the long run

That's just conjecture.

I'd assume insinuations as rapacious as banks are hardly writing off debt willy-nilly.

Not saying this about you personally, but it's a good job nobody in here is tasked with dealing with the shitheap the country find itself in re: mortgages. The fact of the matter is that it exists and isn't going to go away. Merely fulminating about it isn't going to change that.

anncoates

dr.bollocko wrote: »

I don't understand why mortgages are not getting foreclosed.

Presumably all but a minuscule amount would never cover the outstanding mortgage if sold at them moment.

Eight Ball

Bottom line is look at your wage slip and then look at the tax paid part, that money is funding this couple and the many more that are to follow for their inability to pay THEIR debts. I work full time and my wife part time and would have loved to be able to send our daughter on the school trip this year but just cant afford it. I'd love to change the car but can't afford it. Maybe a meal out once a month but no. It's not just these people either it's the long term scroungers on the dole (and I don't mean the newly unemployed) and the fat pensions for PS that we can't afford.

You really wonder why to bother even working sometimes you really do.