repossessions, what happens then?

roozer · 06-08-2013 10:13pm #1

I see the banks are going to start repossessing houses in certain cases.

What will happen then, will the banks persue these individuals for the balance between the sale of the house and the money owed?

AltAccount · 06-08-2013 10:20pm

Depends on the bank and the amount of the shortfall. But generally, yes, it'll become an unsecured loan.

Jose1 · 06-08-2013 10:33pm

IMO this is a sure sign that property prices have bottomed out. Why else would they risk the headache of having real property on their books?

It's no secret that right now the banks are sending out Estate Agents to value these properties. As and when they repossess they will simply subtract house values from monies owed, plus fees of course, and then set about recouping the remaining cash via the courts. It's a win, win for the banks as they balance their books and replenish ailing cash reserves.

Banks don't give a s*** about their customers, good or bad. Proof of this is obvious when you see so many closing down and many of the rest kitted out with machines to do the work of tellers while the Government once again look the other way.

A cunning Plan. Only problem is - You can't get blood from a stone!

AltAccount · 06-08-2013 10:37pm

Jose1 wrote: »

IMO this is a sure sign that property prices have bottomed out. Why else would they risk the headache of having real property on their books?

a) because the CBI has given them targets to get a percentage of their books in sustainable deals or begin legal proceedings

b) because the Dunne ruling has been lifted and now they have a larger selection of properties that they can move legally on, and so therefore are

Edit: Stats for 2012 say Court Orders for repossession are down since their peak in 2010. Does anyone have stats for 2013 year to date, or is there any source for the supposition that banks are repossessing more homes?
http://www.thejournal.ie/courts-service-repossession-statistics-2012-816520-Mar2013/

From my points above, more homes will be repossessed, some because the banks want to, and some because they're forced to, but does anyone have any facts to discuss here?

cursai · 06-08-2013 10:39pm

Tis only natural. Whoever thinks banks are cuddly care bears are being silly. those were adverts ye watched not testimonials.

bbsrs · 06-08-2013 10:43pm

Off topic a bit but was discussing this earlier with friends and a question popped up no one had an answer for , maybe someone here can answer. If the bank sell a repossessed house could somebody buy the house and let the person that lost the house live in it.for instance if a wealthy parent bought the house for a fraction of the mortgage debt and left their son or daughter rent it from them , is that legally possible?
Edit, just to add eventually the house could be willed to the sor or daughter who by the then should be released from bankruptsy. Would that also be legally possible?

AltAccount · 06-08-2013 10:48pm

bbsrs wrote: »

Off topic a bit but was discussing this earlier with friends and a question popped up no one had an answer for , maybe someone here can answer. If the bank sell a repossessed house could somebody buy the house and let the person that lost the house live in it.for instance if a wealthy parent bought the house for a fraction of the mortgage debt and left their son or daughter rent it from them , is that legally possible?

Of course, why would the bank care who rents or lives in the house, as long as the mortgage is paid?

bbsrs · 06-08-2013 10:51pm

AltAccount wrote: »

Of course, why would the bank care who rents or lives in the house, as long as the mortgage is paid?

But the bank would have lost say 50% or more by selling the house in the present market so the mortgage wouldn't be paid.

leitrim1 · 06-08-2013 10:56pm

My friend bought a repo house. He bid €150 K and was unsuccessful. The sale fell through and he bought it 3 months later for €78 K

The bank wrote off €222k from what he said. It's mad.

AltAccount · 06-08-2013 10:57pm

bbsrs wrote: »

But the bank would have lost say 50% or more by selling the house in the present market so the mortgage wouldn't be paid.

Sorry, I presumed the wealthy parents were taking a mortgage on the house.

Bank prepared sell the house for 50% of the outstanding mortgage. The remainder of the outstanding mortgage becomes an unsecured loan owed by the original owners.

New couple (wealthy parents) buy the house for the reduced price by mortgage or with cash - the bank doesn't care, it's sold the house, which was its aim.

House is rented out to the original owners. Bank doesn't care. They'll send threatening letters to whatever address the owners supply them with.

They're completely unrelated transactions in reality.

AltAccount · 06-08-2013 11:00pm

leitrim1 wrote: »

The bank wrote off €222k from what he said. It's mad.

I've heard loads of these stories too (including one recently where a developer was let off with millions by the bank). I've yet to hear a verified account of someone being let off the hook for a substantial amount of their borrowings.

leitrim1 · 06-08-2013 11:12pm

AltAccount wrote: »

I've heard loads of these stories too (including one recently where a developer was let off with millions by the bank). I've yet to hear a verified account of someone being let off the hook for a substantial amount of their borrowings]

From what is known locally, the previous owner went in to the bank some 12 months earlier and left in the keys and informed the bank that he and his family were off to Australia. The house was empty for 12 months and seemingly loads of stuff was stolen from around the house and the bank wanted rid of it.

Dublinmackem · 06-08-2013 11:16pm

Jose1 wrote: »

then set about recouping the remaining cash via the courts. It's a win, win for the banks as they balance their books and replenish ailing cash reserves.

Sure they can't get money off the people when they're living in the house; do you really think they will get it off them after they take the house away? Not a hope man, there will be no replenishing by chasing the balance after chucking someone out, we can say the banks are ruthless but I know people up to their gills in debt and problems in today's situation and they leave the banks in the halfpenny place when it comes to being ruthless now, in terms of telling the lenders where to go; that they're putting food in their kids mouths and after that they might consider paying something if only they have it, right or wrong that's what's happening, the banks cannot deal with the volume, repossesions are a scare tactic to get borrowers to start co-operating but people just don't give a damn about banks

AltAccount · 06-08-2013 11:18pm

leitrim1 wrote: »

From what is known locally, the previous owner went in to the bank some 12 months earlier and left in the keys and informed the bank that he and his family were off to Australia. The house was empty for 12 months and seemingly loads of stuff was stolen from around the house and the bank wanted rid of it.

But was any money written off? Any debt forgiveness at all?

Or is it just that the borrower has left the country and the bank will go after them if they move home?

Play To Kill · 06-08-2013 11:33pm

AltAccount wrote: »

But was any money written off? Any debt forgiveness at all?

Or is it just that the borrower has left the country and the bank will go after them if they move home?

Would the bank not go after them anyway even if they were in another country?

AltAccount · 06-08-2013 11:38pm

Play To Kill wrote: »

Would the bank not go after them anyway even if they were in another country?

I'm not sure what kind of reach they have. You'll hardly be extradited for an unpaid loan.

If they start sharing information internationally on defaulting borrowers, you could see a lot of these "runners" finding it hard to get bank loans wherever they go.

leitrim1 · 07-08-2013 7:18am

There is another house locally with at least 8 bedrooms that fronts on to a lake. It is said locally that the previous owner refused €1m during the boom. He later got in to financial trouble and was found dead in the lake and the bank recently sold for €135

AltAccount · 07-08-2013 8:09am

leitrim1 wrote: »

There is another house locally with at least 8 bedrooms that fronts on to a lake. It is said locally that the previous owner refused €1m during the boom. He later got in to financial trouble and was found dead in the lake and the bank recently sold for €135

Sorry, but what's your point?

golfwallah · 07-08-2013 9:03am

roozer wrote: »

I see the banks are going to start repossessing houses in certain cases.

What will happen then, will the banks persue these individuals for the balance between the sale of the house and the money owed?

In the short run these banks will have to wait and see, while they pursue unsecured loans through legal channels.

But in the long run, many of these individuals will inherit assets from their parents or other relatives (or individual finances could improve) and the banks can wait around for a long time to get their money back.

I'm sure people will figure this out and many parents will begin to have another think about their wills.

It will be interesting to see how all this pans out over time.

bbsrs · 07-08-2013 10:10am

golfwallah wrote: »

In the short run these banks will have to wait and see, while they pursue unsecured loans through legal channels.

But in the long run, many of these individuals will inherit assets from their parents or other relatives (or individual finances could improve) and the banks can wait around for a long time to get their money back.

I'm sure people will figure this out and many parents will begin to have another think about their wills.

It will be interesting to see how all this pans out over time.

If you declare yourself bankrupt do you not get a clean slate when released from bankruptsy? A bank can't chase you for any money you make or inherit after your period as bankrupt is over, can they?

golfwallah · 07-08-2013 10:27am

bbsrs wrote: »

If you declare yourself bankrupt do you not get a clean slate when released from bankruptsy? A bank can't chase you for any money you make or inherit after your period as bankrupt is over, can they?

I doubt if every individual, whose home is repossessed and is left with an unsecured debt, will seek the bankruptcy route.

My guess is that only a minority will become bankrupt and yes / no answers to the question you pose are not possible, as circumstances can vary from case to case. People thinking of that option should seek professional advice, starting, for example, here: http://www.finance-ireland.com/bankruptcy-in-ireland/

For those who don't go the bankruptcy route, there are other options, of which one is doing nothing and waiting for years in the assumption that the bank will just go away. Not a wise choice IMHO.

gaius c · 07-08-2013 10:31am

bbsrs wrote: »

If you declare yourself bankrupt do you not get a clean slate when released from bankruptsy? A bank can't chase you for any money you make or inherit after your period as bankrupt is over, can they?

I expect that banks will be sneaky about this and offer people routes to avoid insolvency/bankruptcy when such a course would actually be in their best interests. It's not nice to be an insolvent but you are free of the debt within a few years. On the other hand, if you go the other route, the bank could have their grappling hooks into you for years after.

AltAccount · 07-08-2013 12:15pm

gaius c wrote: »

I expect that banks will be sneaky about this and offer people routes to avoid insolvency/bankruptcy when such a course would actually be in their best interests.

Why would a bank promote insolvency? Why is it sneaky if they don't?

serfboard · 07-08-2013 1:09pm

AltAccount wrote: »

If they start sharing information internationally on defaulting borrowers, you could see a lot of these "runners" finding it hard to get bank loans wherever they go.

That's definitely a prospect. A bank in say, Australia, would presumably ask where you lived before and look for credit-worthiness information from the Irish Credit Bureau. I wonder would they also look for that information when you're opening an account?

The other problem is this - bank has a secured loan on a house "valued" on books at 500K. They get 200K from the sale of the house. They then have an unsecured loan of 300K. Multiply this scenario by the tens of thousands and the result is a massive hole in the banks books ...

... which is filled by who? :rolleyes:

AlexisM · 07-08-2013 1:32pm

AltAccount wrote: »

Why would a bank promote insolvency? Why is it sneaky if they don't?

Insolvency/bankruptcy would offer the borrower finality to their debts. Repossessing the property without forcing bankruptcy means that the bank can let the debt sit there as long as necessary - until the borrower's circumstances improve, the kids leave home freeing up money, there's an inheritence etc. Even if they eventually write off the debt, they are no worse off than if they write it off now. It is probably not lost on the banks that one consequence of Ireland's high home ownership levels is that many people will ultimately inherit at least a part-share of their parents' home.

AltAccount · 07-08-2013 1:36pm

I don't getcha...

AlexisM · 07-08-2013 1:46pm

AltAccount wrote: »

I don't getcha...

Bank repossesses property, sells it but there is, say, a 100K shortfall. The borrower still owes 100K to the bank. But there are two scenarios for what happens to the debt depending on whether the borrower goes bankrupt or not.

If the borrower goes bankrupt, they get a clean slate when they emerge from the bankruptcy process - they owe nothing to the bank.

If the borrower doesn't go bankrupt, they still owe the bank 100K. The bank may write it off (unlikely) or the bank may just let the debt sit there for years, possibly rolling up with interest. If the borrower's circumstances change (eg inheritence from parents), the bank could swoop in to collect the old 100K debt.

AltAccount · 07-08-2013 2:50pm

Correct, which is why a bank wouldn't promote insolvency, and why IMHO they shouldn't be considered 'sneaky' for not promoting it.

AlexisM · 07-08-2013 3:37pm

Ah - you were just pretending to be stupid - nice one... I don't mind at all wasting my time trying to explain to those who don't actually need an explanation.

I do agree though - I have no problem with banks parking debts and coming back for repayment years later. The bank is only 'sneaky' to people who think the bank is there to give them best advice - and I really don't think there are many people like that left.

AltAccount · 07-08-2013 3:41pm

AlexisM wrote: »

Ah - you were just pretending to be stupid - nice one... I don't mind at all wasting my time trying to explain to those who don't actually need an explanation.
.

I'd suggest you misread my post. Less personal insults in future would be nice too b

gaius c · 07-08-2013 4:40pm

AltAccount wrote: »

Why would a bank promote insolvency? Why is it sneaky if they don't?

Because they would be feeding off a person's emotional attachement to the property they live in to make financial judgements that favour the bank and harm their own circumstances. And that person is unlikely to have independent advice to point out their options.

AltAccount · 07-08-2013 4:48pm

gaius c wrote: »

Because they would be feeding off a person's emotional attachement to the property they live in to make financial judgements that favour the bank and harm their own circumstances. And that person is unlikely to have independent advice to point out their options.

Why not? What are you basing this on?

Jose1 · 07-08-2013 5:07pm

AltAccount wrote: »

The rest of your post is just an ill-informed rant which doesn't answer the OP's question whatsoever.

In much the same as the middle part of yours:rolleyes:

For the record, I initially answered the OP's question in the best way possible. I then went on to express my personal view, ie rant to you!

What is the harm in doing that?

In the free world it's called discussion in your world it is obviously called something else. Lighten up dude:o

AltAccount · 07-08-2013 5:17pm

Jose1 wrote: »

In much the same as the middle part of yours:rolleyes:

For the record, I initially answered the OP's question in the best way possible. I then went on to express my personal view, ie rant to you!

What is the harm in doing that?

In the free world it's called discussion in your world it is obviously called something else. Lighten up dude:o

That's all well and good, but the question wasn't "what do you think of banks?", but "what will happen to mortgage shortfalls?".

TBH, I'm all for a good discussion, but we only got as far as post 3 before it degenerated into "De Big Bad Bankers, Dey're EVIL Joe, EVIL!"

Jose1 · 07-08-2013 5:27pm

AltAccount wrote: »

That's all well and good, but the question wasn't "what do you think of banks?", but "what will happen to mortgage shortfalls?".

TBH, I'm all for a good discussion, but we only got as far as post 3 before it degenerated into "De Big Bad Bankers, Dey're EVIL Joe, EVIL!"

A question for the Mods - Is this guy the forum police:rolleyes:

AltAccount · 07-08-2013 5:33pm

Jose1 wrote: »

A question for the Mods - Is this guy the forum police:rolleyes:

You asked me a direct question with your post, which I answered with my reasoning for my tone of reply.

I'm just trying to help the OP with replies based on facts/experience. You're trying to drag me into something else.

I'm done here.

gaius c · 07-08-2013 7:30pm

AltAccount wrote: »

Why not? What are you basing this on?

Well, they'll be short of cash and unlikely to afford such independent advice and various parties claiming to offer assistance (New Beggings, etc) may have agendas of their own.

Hopefully somebody like MABS will be resourced sufficiently to be able to help people who need a non-VI to go through their options with them.

Boskowski · 07-08-2013 7:45pm

bbsrs wrote: »

Off topic a bit but was discussing this earlier with friends and a question popped up no one had an answer for , maybe someone here can answer. If the bank sell a repossessed house could somebody buy the house and let the person that lost the house live in it.for instance if a wealthy parent bought the house for a fraction of the mortgage debt and left their son or daughter rent it from them , is that legally possible?
Edit, just to add eventually the house could be willed to the sor or daughter who by the then should be released from bankruptsy. Would that also be legally possible?

Theoretically yes I'd say but in practice it would smell like fraud.

First of all you'd have to be legitimately broke. Quite unlikely if you had generous parents who're only waiting to buy that house back for you at a discount price.

But on the surface it sounds technically possible.

gaius c · 07-08-2013 7:51pm

Not only could it happen, it already has happened.

nino1 · 08-08-2013 9:22am

to answer the op, you cannot get blood from a stone so there would be little point persuing the owner for the balance.
If they are in a bad enough situation that the house has to be repossessed then they would have no means of paying the shortfall.
And if they came into money in the future there are creative ways of not letting the bank know about it.

fliball123 · 08-08-2013 9:57am

nino1 wrote: »

to answer the op, you cannot get blood from a stone so there would be little point persuing the owner for the balance.
If they are in a bad enough situation that the house has to be repossessed then they would have no means of paying the shortfall.
And if they came into money in the future there are creative ways of not letting the bank know about it.

Sorry but there needs to be a move away from this debt forgiveness..These people bought the house its on them. Ireland has too much off a hand out society its time people learned that they must be accountable for their own actions and the money tree known as the tax payer which is constantly cherry picked to cover everything including unmarried mothers some of whom will never work and will never bother to chase the kids fathers, spongers on the dole some of whom will never work a day in their lives , a public sector some of which is grossly overpaid and some of which is not fit for purpose. The tax payers money tree has had all of its fruit picked, the branches plucked and the tree itself has been cut down for timber.. We can not afford to take on any one elses or anymore debt.

A sensible approach would be to organise a life insurance policy and mortgage repayment that sits at a % of the individuals income for the rest of their lives ..Such as 33%..

This gives them 67% of whatever thy earn to live and if they have a life insurance policy it means the bank gets the rest of their cash when this person dies.

if the person earns more they can pay more..

gaius c · 08-08-2013 10:07am

nino1 wrote: »

to answer the op, you cannot get blood from a stone so there would be little point persuing the owner for the balance.
If they are in a bad enough situation that the house has to be repossessed then they would have no means of paying the shortfall.
And if they came into money in the future there are creative ways of not letting the bank know about it.

If it comes to that, they are better off going for PIP and getting the debt completely off their backs. Split mortgages and all these other creative solutions are designed to keep the debt with the debtor.

Bear in mind the age profile of those in trouble. Over 60% of the people talking to MABS are in the 41-65 age bracket. They don't have time on their sides to both repay the debt and make provisions for their retirements. A large proportion of them need to accept short term pain in exchange for longer term relief.

bbsrs · 09-08-2013 6:18am

fliball123 wrote: »

A sensible approach would be to organise a life insurance policy and mortgage repayment that sits at a % of the individuals income for the rest of their lives ..Such as 33%..

This gives them 67% of whatever thy earn to live and if they have a life insurance policy it means the bank gets the rest of their cash when this person dies.

if the person earns more they can pay more..

That's not sensible , all that would do is take away what ever will anyone had to work and most people with mortgages are workers . Your sensible plan would just increase the amount of people on the dole and living in social housing long term.

fliball123 · 09-08-2013 9:04am

bbsrs wrote: »

That's not sensible , all that would do is take away what ever will anyone had to work and most people with mortgages are workers . Your sensible plan would just increase the amount of people on the dole and living in social housing long term.

How do you figure that out? Its their debt they give a % its up to them if they want to pay more. It also leaves them enough to live off and if they get work or more hours or a job that pays more then their standard of living goes up. So it actually incentivises you to earn more money as % stays the same regardless of how much you earn..and the better part is its not thrown onto the tax payer

bbsrs · 09-08-2013 3:57pm

fliball123 wrote: »

How do you figure that out? Its their debt they give a % its up to them if they want to pay more. It also leaves them enough to live off and if they get work or more hours or a job that pays more then their standard of living goes up. So it actually incentivises you to earn more money as % stays the same regardless of how much you earn..and the better part is its not thrown onto the tax payer

Someone lost their job and lost their house as a result, you want them to pay 33% of whatever they earn ,after tax i presume ,for the rest of their lives and live off the remaining 67% . So say the get a job paying €400 per week after deductions minus 33% leaves €277 I say they would be more likely to stay on the dole forever and get a social house at that rate especially if they have kids. Even if they got a job paying net €600 minus 33% they would still be more likely to stay on state support, there would be no sizeable financial incentive for them to work IMO.

fliball123 · 12-08-2013 10:05am

bbsrs wrote: »

Someone lost their job and lost their house as a result, you want them to pay 33% of whatever they earn ,after tax i presume ,for the rest of their lives and live off the remaining 67% . So say the get a job paying €400 per week after deductions minus 33% leaves €277 I say they would be more likely to stay on the dole forever and get a social house at that rate especially if they have kids. Even if they got a job paying net €600 minus 33% they would still be more likely to stay on state support, there would be no sizeable financial incentive for them to work IMO.

Yes I do, why should I have to forgo more and more in taxes and cuts in order to cover this persons loses, its getting to the point (and with nett 30 - 40k people leaving this country) that it is no longer worth while working in this country.

Well think about that situation..If they lost the house it has been sold so the debt is cut straight away and yeah if they get social housing so be it if they get the dole take 33% off for paying their debt.

You seem to forget that they had no problem paying the mortgage up until they lost the job and had no problems with the terms or conditions aswell as the length of time that they were on the hook for the property. As I say they made the choice and I didnt so why should my standard of living drop even further to cover this.

bbam · 12-08-2013 4:58pm

I have to laugh when the old nugget is thrown out that people took out mortgages and they have to carry the can now no matter what...

My sister works in the bank and worked there all through the "boom". She says that the pressure within the banks to get mortgages out to people was incredible. They were directed to "fluff" over earnings, exaggerate bonus etc.. They had agreed people who would go out and value a property at whatever was suggested by the bank in order to give out a mortgage. All this was in order to secure as much commission sales for the branch as possible... Now in my mind there were two parties involved in the dance regarding these mortgages, now that they are in trouble the bank has as much responsibility as the holders. And by extension the tax payer may have to cough up for the shortfall..

I can't understand why people are happy to see a developer have say a €20M debt written off... But the thoughts of 100 mortgage holders having €100,000 each written off is unpalatable to them.

fliball123 · 12-08-2013 5:05pm

bbam wrote: »

I have to laugh when the old nugget is thrown out that people took out mortgages and they have to carry the can now no matter what...

My sister works in the bank and worked there all through the "boom". She says that the pressure within the banks to get mortgages out to people was incredible. They were directed to "fluff" over earnings, exaggerate bonus etc.. They had agreed people who would go out and value a property at whatever was suggested by the bank in order to give out a mortgage. All this was in order to secure as much commission sales for the branch as possible... Now in my mind there were two parties involved in the dance regarding these mortgages, now that they are in trouble the bank has as much responsibility as the holders. And by extension the tax payer may have to cough up for the shortfall..

I can't understand why people are happy to see a developer have say a €20M debt written off... But the thoughts of 100 mortgage holders having €100,000 each written off is unpalatable to them.

Sorry but I dont think you will find any who are happy to any developer off the hook but the fact is the tax payer cannot suffer any more debts that are not theirs

bbam · 12-08-2013 5:42pm

fliball123 wrote: »

Sorry but I dont think you will find any who are happy to any developer off the hook but the fact is the tax payer cannot suffer any more debts that are not theirs

Well like it or not.
When we went gung ho into baling out the banks we became part and near full owners of the whole wasps nest. Debts and all.

fliball123 · 13-08-2013 10:06am

bbam wrote: »

Well like it or not.
When we went gung ho into baling out the banks we became part and near full owners of the whole wasps nest. Debts and all.

Sorry we dont own all of the banks..We own a small % of BOI and a larger one of AIB ... As I say regardless the mortgages should be taken on an individual basis and the person who signed on the dotted line ultimately made the decision to buy..

I guarantee you if the tax payer had turned and told the home owner during the boom that sorry you made 100k on selling that house we want part of the profit there would of been outrage..

I understand people seeing banks and others in the higher echelons being let off and there needs to be a push on that aswell...But letting everyone who cant or does not want to pay their mortgage of the hook is simple taking debts from one section in society and passing it to others...My solution is simple they pay a % and it incentivises the person to earn more..

I hope that no one gets debt forgiveness in this country as if they do in 10/20 years times the mistakes that were made will be made again

bbsrs · 13-08-2013 8:05pm

fliball123 wrote: »

Sorry we dont own all of the banks..We own a small % of BOI and a larger one of AIB ... As I say regardless the mortgages should be taken on an individual basis and the person who signed on the dotted line ultimately made the decision to buy..

I guarantee you if the tax payer had turned and told the home owner during the boom that sorry you made 100k on selling that house we want part of the profit there would of been outrage..

I understand people seeing banks and others in the higher echelons being let off and there needs to be a push on that aswell...But letting everyone who cant or does not want to pay their mortgage of the hook is simple taking debts from one section in society and passing it to others...My solution is simple they pay a % and it incentivises the person to earn more..

I hope that no one gets debt forgiveness in this country as if they do in 10/20 years times the mistakes that were made will be made again

No one who took out a mortgage signed anything saying if the failed to meet repayments the tax payer would have to foot the bill. Your gripe should be with the government who decided the people pick up the tab for the banks wrecklessness.

repossessions, what happens then?

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