Talking with a strategic defaulter…

That strategic defaulters do or don’t is just a sideshow about quantifying their numbers, for several years we have been dealing with them on the advisory side of our company. Banks have large legal departments and teams chasing borrowers, and in turn the borrowers will from time to time hire their own professionals as a counterweight to the process, what you are about to read isn’t intended as justification, ethical reasoning or anything else, it’s just an insight into the thoughts of a strategic defaulter, why they did it and what has happened so far.

The person in question is a white collar professional and the director of a relatively well known company, she agreed to speak to us on the basis that we kept her identity private. She has a family home and six investment properties.

Karl: Did you make a concious decision to default on your loans? If so why?

Yes, because the bank were insisting I go on interest and capital repayments on the investment properties and the figures just wouldn’t add up so I chose to …

Read More

ICS to be sold and currently ceasing mortgage offerings.

We have just found out that the EC have approved Bank of Ireland in keeping New Ireland assurance but that ICS must be sold and they are to stop accepting [glossary id=’6898′ slug=’mortgage’ /] applications with immediate effect.

We don’t actually know what this means at present, we have not been informed of how they will deal with pipeline applications, applications that are on the system and approved but not offered, or that are awaiting approval.

We have been told that it will be ‘business as usual’ but it may not be,we heard this line before from INBS and others, and if not this is going to cause quite a nightmare for many people and some them will be our clients.

This is out of our control, and not something we had a contingency plan for, but unlike the norm in Irish finance we are not going to wash our hands of it and say ‘not our fault’, this isn’t about blame, this is about Irish Mortgage Brokers doing a great job for every client we represent, and that isn’t …

Read More

2013 the year banks told borrowers to hand back the keys?

We help different people with different things, and while most of our debt problem clients face broadly similar reactions from the banks, we think it’s important to post the documents which show a presence of lashings and lashings of stupid. To see the full letter click on the image at the bottom of the post

One such document was received by a client recently from the Irish Civil Service building society, also known as ICS and a subsidiary of Bank of Ireland. It’s no secret that posting these documents makes us highly disliked by the banks,  but if people don’t expose them then the great farce will go unchallenged.

What makes this case interesting is that the bank offered a short term forbearance plan which the client asked them to tweak. Then they turned around and changed their mind and went from ‘we can give you a few months to get your affairs in order’ to ‘sell the house or even abandon it’.

In 2008 to now I have never heard a bank say that walking away (also called jingle …

Read More

The credit bureau they don’t tell you about, an ‘internal’ ICB at Irish banks

Something which isn’t widely known is the way that banks keep internal credit scores. This isn’t the bit they report to the ICB which is well regulated and has various rules regarding how it is dealt with, this it the kind of thing they do for themselves which is not shared information.

Recently we had a client declined from a bank for something on their credit history, we searched and came up with nothing then found out via another route that there had been something with this bank 13 years ago when the person was still a student.

This person had taken out mortgages since then and had a perfect credit history, nothing went awry (the only issue was back when they were in college), but that old event came back to haunt them.

Big deal? Probably not, but then think about the potential fallout for people who opt for personal insolvency? What if the banks do the same to them? Where they are not locked out officially from financial services but they are in fact an un-creditworthy client in …

Read More

2008: When banks independently all decided to make a similar decision

This week five years ago is when independent mortgage advisors were in the middle of getting some harsh news, some lenders were pulling out of the market completely, others were informing us of 50% cuts to procurement fees.

Fair or unfair? In light of things like Croke Park it would be seen as totally unfair, you’d never get any other industry that takes a 50% hit like this as fast (and then there is the separate issue of lending dropping 95% on top of the 50% reduction).

Brokerage has already been down the path the public sector are on. I recall sitting across the table from PTsb chief David Guinane who in late 2007 called in the broker bodies and informed them that they were getting a reduction that they might not be happy about, but that this was not something we could negotiate.

There was talk in brokerage of boycotting both them and Irish Life in return, and while we were still debating about what to do all of the other …

Read More

Dear Banks, leave me alone… How to speak to them

In the process of negotiating with banks many of our customers feel various things, like intimidation, fear, confusion and anger. In trying to get a lender to give a simple and straight forward response we find that it helps to use a certain language or nomenclature in letters and replies.

The simple truth is that they tend to exert authority if you give them this authority, but if you give them the authority with the express requirement that it forces them to make a painful decision should they act upon it. The letter below is a sample that we have used with a few people who have investment properties and it seems to get a decent result.

Don’t use it until such time as you have filled in your Standard Financial Statement (SFS), the end result you are looking for with a letter like this is to get the lender to accept your rent as full settlement of your account until …

Read More

Mortgage to rent in as bad a shape as the mortgage market

I think Ciaran Lynch hit the nail on the head when he said the ‘mortgage to rent’ scheme risks ‘becoming a flop‘. The issue here comes down to the creditors treatment of borrowers.

We have already posted a letter from Pepper showing how they are willing to do write-downs for customers. This is there for anybody to see, it isn’t here-say or rumour. In that case the loans of GE Money (a sub-prime lender) were sold to another company at a big loss.

The buyer of the loan buys it for say, 36c on the Euro meaning a loan for €100,000 is purchased for €36,000. What happens next is that they write to the borrower and say ‘hey borrower, if you pay me €50,000 and make all of your payments then we’ll call it quits’.  Meaning the borrower gets a €50,000 debt write off for either paying their loan or selling up.

This is a strong incentive to do the right thing, and it …

Read More