Getting through the heavy lifting of debt mediation, one result at a time

We had another successful outcome with a lender and thought that it might be worth describing in terms of how it came about and how it worked out.

This time it was Bank of Ireland who many say (in the past ourselves included) are notoriously difficult to deal with, while they are not easy (as none of them are) we have noticed a definite thaw in recent months in how they deal with negotiators which is a positive development.

The client in question has a job in the public sector (many in mortgage arrears do), but has faced various reductions in income and tax increases which resulted in payments being missed.

They engaged with the bank to no avail, spoke to another firm who they heard offer debt mediation for free but then got a quote and that kind of annoyed them so they called us. We suggested that if they wanted free service they go back to the provider who they spoke to first, that provider sent out a standard financial statement reminding them it would cost upwards …

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The 2,000 Irish evictions you dont’ hear about

There may be close to 2,000 evictions that won’t be in the papers. There will be no pictures of people being forced from the home their families occupied for generations, no in depth story, little empathy and worst of all, it’s something that hurts people who are entirely innocent.

What we are talking about is the ‘move out’ letters people are getting from banks that appoint receivers and in particular the ones that are becoming commonplace when rent receivers are appointed. 

The ‘broke landlord’ is unlikely to receive much in the way of empathy from anybody, this is why receivers are being sent in on investment properties rapidly while repossessions and executions on family homes are so much slower to occur, but that misses the point, we have made one process ‘slow’ to protect families, while allowing the other to be quick to ‘get landlords’ but really all we are doing is ‘getting families’ who are affected and showing them an entirely different duty of care.

It isn’t that an investment property doesn’t house a family the same as a …

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Don’t be late! Banks announcing cut off dates for mortgage cheques

Every year Santa brings a few unlucky kids some coal, the banks have a similar deal for people who are late with their paperwork and it’s called a ‘cut off date’.

This means that irrespective of what you do, you won’t be able to get a mortgage cheque if you submit paperwork after a certain date (we’ll list them as they come in). The problem for some people is that they might be reliant on closing in 2013 in order to get a legal property tax avoidance for owner occupiers so if you are going to try to draw down in December do yourself a favour and get everything sorted out ASAP.

And also remember, by ‘documents in’ that means ‘on the system’ and from the time a document arrives to when it gets scanned up can take a few days depending on the institution.

Cut off dates announced thus far:

BOI and ICS: Tuesday 17th

KBC: Friday 20th

(edit: 28/11/13 10:51am)

AIB/Haven: Monday 16th

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RTE Drivetime: What it’s like to be inside a debtors meeting

We were asked to talk to Drive Time on RTE radio about a borrower meeting we were at with a bank. This meeting was typical of the ones we regularly attend and also typical in both tone and outcome.

While we accept the bank have a collection agenda underpinned by the mortgage contract, their methods for obtaining a result are unnecessarily painful and that doesn’t make economic sense for any party involved.

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Some Irish mortgage statistics worth considering

We all know the headline [glossary id=’6898′ slug=’mortgage’ /] arrears figures and that they are a disaster. Take a look at some of the other figures which don’t make it into general reporting (other than when they come out during Oireachtas committees and the like). Something that still isn’t widely known is that huge numbers of arrears cases are not engaged and haven’t filled in the most basic Standard Financial Statement required to get an arrears resolution.

AIB

6,000 mortgages 2.5 to 3 years behind and not engaging 16,000 Standard Financial Statements (SFS) analysed to collate ‘strategic figures’ 50 per cent of arrears cases haven’t yet filled in an SFS, the founding document of resolutions 2,000 re-engagements after legal threats 2,000 arrears cases have money on deposit greater than arrears 1,000 buy-to-let mortgages with nothing paid in last six months or more 4,000 accounts where customer could pay full mortgage from net disposable income allowing for living expenses (insolvency guidelines plus 20 per cent on top) but do not

Ulster Bank

35 per cent of arrears cases either not engaging …

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Lickety split-mortgages: are they really a solution? #splitfail

The calls for ‘more split mortgages’ are commonplace, what is often lacking is a deeper understanding of the flaws inherent. For instance, why was there any outcry at banks charging interest on the warehoused portion? Failure to do so is an effective write-down and cash flow loss.

That isn’t to say banks shouldn’t get both, but don’t dress it up in the flowery language of ‘split mortgages’, instead just say ‘we believe in write downs and cash flow losses’. Take an example where a bank doesn’t charge interest for 25 years on a €100,000 warehoused portion of a mortgage where a total of €300,000 is owed.

Assume a discount rate (we’ll side with ECB being able to do their job [mistake]) of 2%. The present value is = 1/(1+r)^n this is where ‘r’ is the rate and ‘n’ is the compounding periods. The reason for doing this is to give an idea of what the €100,000 would be worth in the future if there was no interest and inflation never went over 2%, the …

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Let’s take the emotion out of strategic default

(this article originally appeared in the Sunday Business Post on the 8th of September 2013) The term ‘strategic default’ lacks a definition. Because of this, any debate that incorporates this term is, in part, pointless. Discussing something so undefined can only end in disagreement if the topic is entirely subjective. There are those who refuse to accept it exists, just as there were those who once refused to believe the world is round. Many continue to insist that, in pretty much all circumstances, borrowers are innocent.

They aren’t, just as the banks are not innocent either. As a day-to-day practitioner, I know that strategic default is real. I have seen it, dealt with it, made money on the back of advising people doing it and continue to do so. People hire guys like me to push back against banks like ours.

Some attempt must be made to determine what does and doesn’t constitute a strategic default. A failure to do so means we face a double dilemma. The first is to turn the national debate into one focused on the …

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What banking insiders think of what banks are going to do

We got a comment on our site from an ex-banker who heard a radio segment where we were talking about banks and repossessions. We got in touch and asked if we could post his comment as a stand alone entry, he agreed, his thoughts are very interesting and in part might help explain why we have repossession orders without repossessions, eye opening reading…

I listened to your piece on Newstalk this morning (19/08/2013) regarding ‘strategic defaulters’ and I just wanted to congratulate you for highlighting the reality of this issue.

I worked for the former *closed bank* for over 17 years and for a two year period I was it’s Mortgage (Residential) Administration Manager. Although I’m out of banking now I still help former clients with negotiations with various banks.

My experience over the past couple of years, and especially this year, in ‘dealing’ with the banks, foreign and domestic, has exposed some incredibly unethical and unfair practices and on the whole I fear …

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Spin me right round’ – some thoughts on IBF data

In statistics there are two key components, the first is the actual ‘data’ the second is the ‘inference’ or what the data actually means. If you saw that one summer was hotter than the last by collecting daily average temperatures that would have statistical significance, if on the other other hand you saw that July was 56% hotter than January then you’d be stating the obvious and your ‘inference’ would be laughable.

That we can see this when it comes to meteorology is obvious, and almost nobody would take such news as having any significance, but when it happens in finance it can go unchecked although Eamon Quinn at the Wall Street Journal caught the IBF out on their release which is about mortgage lending being ‘56% up this quarter’.

Here’s the actual quote they lead with ‘The latest figures from the IBF/PwC Mortgage Market Profile, published today, show that the number of new mortgages issued in Q2 2013 has increased by 56.1% on the previous quarter.’ And it …

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