I know that feel bro

Life cover and mortgage arrears

I was asked to help form part of a working group on mortgage arrears which has yet to publish their respective papers on various topics. The one I undertook had to do with mortgage arrears and the issue of life cover on a loan.

While the intention wasn’t to release anything for a few weeks yet, I thought it was pertinent to share this one given some of the days headlines (link to the paper is at the end of the blog).

The area of mortgage protection is a tricky one because some people are paying beyond the necessary amount and others are not, but they equally can’t make the payments so the policy lapses. What happens next is that in some cases a person dies, one example we are working through involves a suicide, and others involve people who become terminally ill.

Deirdre Clune made headlines today when she pointed this out, it’s covered in TheJournal.ie and also in The Examiner. …

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RTE Six One News: Insolvency Service piece by Conor Hunt, 3rd April 2014

We gave a few thoughts on the recent ISI figures.

That the case numbers are low is to be expected, firstly, informal negotiations have had a six year head start, you can’t expect the ISI to be caught up already, secondly, in the UK it took about a decade for the system in general to find its feet.

Lastly, many people don’t want to use personal insolvency as it is rigid and informal deals are not to the same extent, banks offer better terms outside of insolvency, and perhaps the greatest success is that banks are doing these deals only since the ISI launched.

Prior to that they wouldn’t so the fear of people using these solutions has spurred the lenders into action.

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Today with Sean O’Rourke: Some of the problems with the Property Market

We were asked to discuss some of the problems in the property market with Sean O’Rourke and Philip Farrell of Real Estate Alliance.

There are issues such as gazumping with other bidders, gazumping where there are no other bidders, under-pricing to increase interest and timed viewings which create an ‘auction type environment’.

It is incredibly difficult for estate agents to manoeuvre their way through this without upsetting somebody (and it can’t be the vendor who is their ultimate client). This is why we should consider some small rules where people get punished for anti-market behaviour such as the vendor having to pay a buyer a certain sum if they pull out after the contract is signed.

This isn’t going to stymie anybody, remember, it is only after the booking deposit is paid, accepted, and the contract sent out, signed and returned that this could happen.

An unintended consequence may mean that contracts don’t get sent out very easily in the future, but can we believe that people would avoid getting contracts sent out? That’s unlikely, some kind of structural change …

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e cigarettes and how insurers view them

Does an e-smoker have to pay higher insurance prices like a smoker does?

Do e-cigarrette smokers get treated like regular smokers when it comes to life assurance prices? The smoking status (which is in its strictest form described as having smoked ‘any tobacco in the last 12 months’) varies from insurer to insurer. 

Irish Life: at present someone who uses e-cigarettes (ie no other tobacco-related products) is classed as a non-smoker (Please note this may change in the future).

Aviva: smoker rates

Zurich: rate “e-smokers” at +50%, assuming that they have already been off (tobacco) cigarettes a minimum of 12 months, the reason being the likelihood of these smokers returning to full smoking habit is quite high.

Caledonian: considers anyone smoking tobacco or e-cigarettes, or anyone using nicotine replacement patches, gum etc in the past twelve months to be a smoker. Smoker rates will apply to that client.

New Ireland: classes e-cigarette users as non-smokers, but this is currently being reviewed.

Friends First: smoker rates

Worth considering which company to speak to if you use e-cigarettes!

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Mothersday Infographic - a mothers worth

What’s a mother worth? (financially)

Irish Life did some interesting research (full infographic here) on ‘what a mother is worth.

It’s fascinating to see the difference of perception versus reality towards a mothers contribution to a household and the cost it would require to replace what they do.

This doesn’t factor in issues such as many dads being damn near useless by comparison – which is not easily statistically expressed, but anecdotally those that match mothers pound for pound are not common.

Just an interesting few thoughts for the day, and a reminder of the value and importance of mothers contribution to their households (hope we see a similar showing on Father’s day!)

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Six One News looks at the problem of Rent Receivers

Rent receivers are generally sent in when a landlord is unable to meet the terms of their contract. It doesn’t mean they can’t pay anything (although often insolvency is behind it), sometimes the landlord is on an ‘interest only’ term that reverts to capital and interest and the uplift in cost means there is no way they can meet the increased commitment.

The issue is also more common in properties with equity because the bank don’t stand to suffer a loss in that position (they do in properties with negative equity), it’s also used as a more coercive approach to borrowers who want to hold on to trackers, as ‘interest only’ is often extended for people willing to forgo that aspect of their contract.

Unbalanced taxation on property is also a concern, the ability to tax a cash flow loss on residential property makes it a difficult trade off of ‘who shall we upset’ the choice being the bank or Revenue (most opt for the former).

 

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Morning Ireland: The issue with rent receivers

We spoke to Cathal Mac Coille on Morning Ireland about the issue of tenants who are affected by rent receivers. This is something we have covered before on the site and the issues are not easily resolved.

Receivers fundamentally change the dynamic of a tenancy and it often means people have to move out, lose their security deposit and face a market with reduced supply and higher costs, not an enviable situation at all.

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informal debt deals by unregulated advisors

Devil in the detail in debt write downs

(this article appeared in the Sunday Business Post on the 23rd of March)

The banks are starting to write down debt. Should we be surprised? Recent news of large write downs on home loans by AIB has left out some of the necessary detail to add context to the story. The lender has equally shied away from confirmation of what happened, making it all a bit opaque.

Why would a bank choose to offer a capital reduction by writing off part of a mortgage? An alternative is to split the loan into a part which the customer can afford to pay and another part which is ”warehoused. If zero interest is charged on the warehoused part, then the affordability for the customer can be the same as if this part is written down, even if the psychological impact is different.

It is likely that there are peculiarities in the cases where debt has been written down, which means this will only happen in the minority of cases. For example, if a loan was on a one off house with a …

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2014 estate agents and their tricks

Estate Agents – amazing how nothing has changed

Something which never ceases to amaze me is how estate agents have such an uncanny ability to capitalise on any opportunity. It’s really something to be admired, the absence of a hard sale makes it particularly difficult to spot, but like sharks who can smell blood at one part per million.

One should clarify, I like estate agents, it doesn’t mean I don’t know when they are making a market. The recent practice of only having three viewings or viewings that can only take place in one week is a recent addition to the toolbox which is designed to have a few effects.

This was something I thought was a bit sharp but rare, then today encountered three times in an afternoon of making calls. The method goes as follows:

1. List a property at a price so keen that it is bound to attract a lot of interest.

2. Field lots of calls as interested buyers ring in, about 7/10 will be tire kickers because the true price sought is way over list but the innocent/uninitiated will show …

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