What would happen if you defaulted on your mortgage?

realitykeeper · 16-11-2023 1:41pm #1

Supposing you had a mortgage and you defaulted on it due to illness, or because you or your spouse lost a job, what would happen? We know the main banks opperate to a different set of rules to the so called vulture funds and that is why banks tend to sell loss making loans to these funds than persue them themselves. But even if they do offload a mortgage to a vulture fund, does that mean the defaulter will lose the house? And, curiously enough, it is not just people who completely stop paying their mortgages that get their loan transferred to these vulture funds, sometimes it could be someone who missed a single payment years earlier and subsequently caught up on their payments.

Technical default can result in a loan being sold to a vulture fund years after the payments resume, as per the terms agreed. On the other end of the scale, there have been reports of people literally years in arrears, i.e. who haven`t paid anything on their mortgage for many years and are still living in their houses without any consequence. I think what happens when you default depends on your approach to the bank. If you were to send the bank manager a contemptuous scribble telling him to sing for his money, that would go against you. But, if you plead hardship and make it a real tearjerker, then you would probably be treated more favourably (obviously you would only do that if it was the case).

But my question is, does anyone who is genuine, ever actually lose their property if they default?

Glencarraig · 16-11-2023 4:08pm

Ask Catriona Carey for advice, she has plenty of experience in the matter.

realitykeeper · 16-11-2023 7:15pm

https://www.boards.ie/discussion/comment/121376061#Comment_121376061

Is she DJ`s missus?

Atlantic Dawn · 16-11-2023 7:21pm

Pretty much nothing for a good 10 years while you remain living in the house. That's why mortgage rates in Ireland are the highest in the EU, no new banks will enter the market with such low protections for their mortgages.

apache · 16-11-2023 7:47pm

Going through this at the moment and I'm very worried. Been out sick from work since before last Christmas. Am sending my certs in. Getting a partial payment now. I was getting full sick pay. I have only made partial monthly mortgage payments since I've been out. Have got a few solicitor's threatening letters. Have contacted MABS. I am worried.

realitykeeper · 16-11-2023 8:01pm

https://www.boards.ie/discussion/comment/121377066#Comment_121377066

I do understand your worry, anyone would. But I am not sure if you have to be as worried as those threatening solicitor`s letters might suggest. The government does not want house prices to fall. They will do anything to prevent that. That is why they do not want your house to go on the market. The courts and the banks are aware of this. In other words, I really think you need not worry about losing your home but I know that is easier said than done.

Glencarraig · 17-11-2023 11:25am

https://www.boards.ie/discussion/comment/121376938#Comment_121376938

Sister

musicfan1ie · 17-11-2023 11:55am

https://www.boards.ie/discussion/comment/121377066#Comment_121377066

Hi Apache - sorry to hear. Have you approached them to take a payment holiday? I went travelling for a year ages back and took a year off paying. It might relieve the pressure a bit.

realitykeeper · 17-11-2023 12:05pm

https://www.boards.ie/discussion/comment/121376961#Comment_121376961

So apache should be safe enough for the foreseeable future.

RichardAnd · 17-11-2023 12:34pm

Based on my experience of family members in a similar situation, you get to keep your house with occasional angry letters as the only consequence...

More seriously, there are a lot of road blocks in place to prevent a default. I have mortgage insurance that will cover the payments of the mortgage for a period if I am unable to do so. Beyond that, my bank has the option of payment holidays, and there are always agreements that can be reached.

Of course, if one ceases to pay altogether, and if they refused to work with the bank to make some arrangement, then the property can be repossessed. This is, however, very rare in Ireland.

apache · 17-11-2023 1:43pm

https://www.boards.ie/discussion/comment/121379200#Comment_121379200

I contacted MABS months ago but for whatever reason the paperwork is only going in now. I should hear back soon.

I've always paid my mortgage like clockwork for the past 18 years and I just feel overwhelmed at the whole situation and the bills mounting up. I would say I'm a bit obsessive of paying bills as soon as they come in. I have read what people have said here but at the end of the day the banks have a job to do. I don't think I will be able for work in the future and if I lose my apartment I know I would not be able to survive homeless. I don't have any support which makes things very difficult.

herbalplants · 17-11-2023 9:04pm

https://www.boards.ie/discussion/comment/121379714#Comment_121379714

So sorry to hear. Have you contacted the social welfare? There must be a help to pay your mortgage since you are unable to work. Something like HAP. They will want you in your home.

Tow · 17-11-2023 9:07pm

https://www.boards.ie/discussion/comment/121377066#Comment_121377066

I think you can apply to the community welfare officer (or what ever they are called now) to get the state to pay the interest part of your mortgage.

apache · 17-11-2023 9:41pm

https://www.boards.ie/discussion/comment/121381953#Comment_121381953

I don't think I'd qualify for anything as I'm getting a partial wage from the job every 2 weeks. Not enough to cover the mortgage.

I was just talking to someone who's house was sold to a vulture fund and they are in an awful way. I was hoping there was an option to sell it to the council and maybe rent off them. I know a few people who have done this.

I am thinking of early retirement on medical grounds if I get it. I'm glad now I continued sending my certs in and went to see the CMO.

BabysCoffee · 17-11-2023 9:56pm

https://www.boards.ie/discussion/comment/121377066#Comment_121377066

Sorry to hear about this Apache. Would you have a spare room that you could rent out in order to pay some of the mortgage perhaps?

realitykeeper · 17-11-2023 10:10pm

Vulture funds buy a lot of mortgages but it is very rare for anyone to lose their home. Try not to worry about it, it will probably never happen.

suvigirl · 24-11-2023 9:44pm

https://www.boards.ie/discussion/comment/121382229#Comment_121382229

My friend lost her home on 3rd November. The debt was sold to a vulture fund approx 10 years ago. Mortgage not paid since around 2010/2011.

The sheriff actually was in the way last year to repossess, but a TD intervened to put a hold on it.

Unknownability · 24-11-2023 9:51pm

https://www.boards.ie/discussion/comment/121413991#Comment_121413991

Sums up why we've the highest mortgage rates in Europe.

RichardAnd · 24-11-2023 10:53pm

https://www.boards.ie/discussion/comment/121413991#Comment_121413991

Did she pay nothing at all for the last 12 years?

herbalplants · 24-11-2023 11:09pm

https://www.boards.ie/discussion/comment/121414341#Comment_121414341

Yes I wanted to ask the same question?

RichardAnd · 24-11-2023 11:13pm

https://www.boards.ie/discussion/comment/121414514#Comment_121414514

It just reminds me of a family member who never bothered servicing a rather modest mortgage. Eventually, her mother bailed her out after a vulture fund bought the debt. They only took about 70% of what she owed as the house is rural and probably not worth much.

It's a good example why we are where we are in Ireland, I suppose.

suvigirl · 25-11-2023 1:28am

https://www.boards.ie/discussion/comment/121414341#Comment_121414341

Nothing.

Mrs OBumble · 25-11-2023 2:12am

https://www.boards.ie/discussion/comment/121382102#Comment_121382102

There is an option to sell and become a council /social-housing-body tenant in the same property.

People who have used it successfully don't usually talk about it, because they don't want the neighbours to know they're now tenants again. But it's used regularly. And if you don't meet the criteria for that, there are various other government schemes, too.

Ultimately the government don't want to have to deal with you being homeless. Especially in a scenario like this where it's 100% not your fault, and you are engaging with your lender.

Dav010 · 25-11-2023 12:12pm

https://www.boards.ie/discussion/comment/121415396#Comment_121415396

Though we know nothing about the circumstances, a person who makes no attempt to pay their mortgage should not be allowed to benefit from the property associated with that mortgage. 12 years rent free, what a deal that is.

RichardAnd · 25-11-2023 2:05pm

https://www.boards.ie/discussion/comment/121415396#Comment_121415396

I thought so. Likely, if she had tried to pay at least something, the bank never would have even tried to repossess the property.

I'm overpaying my mortgage and saving and investing on the side to build up enough to pay it off as early as possible. No holidays, very few indulgences and simple living. I really wonder why I bother sometimes.

L1011 · 25-11-2023 2:12pm

https://www.boards.ie/discussion/comment/121414016#Comment_121414016

We don't.

We did, but now have - temporarily - low end rates

suvigirl · 25-11-2023 5:58pm

https://www.boards.ie/discussion/comment/121416356#Comment_121416356

The bank sold off the mortgage many years ago, when they were dealing with them and trying to pay. Bank didn't even tell them they were selling the debt. It was sold in a big batch of mortgages to a vulture fund. No payments since they took over.

Buddy Bubs · 25-11-2023 6:04pm

If you moved into a house, lived rent and mortgage free for 12 years and maybe invested the mortgage payments instead, you'd have enough to buy a house in cash!