RTE Radio 1: Talking Money with Karl Deeter & Jill Kerby

On talking Money on the 24th of November we looked at the issue of mortgage arrears and the role of the Insolvency Service in terms of finding ways to get solutions with guaranteed end dates. There is a mismatch between the goal of banks and borrowers and it is resulting in solutions that often don’t work.

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KBC launch a ‘quick approval’ process

For a while we have seen competition starting to heat up a little in the mortgage market. Several moves recently have started to demonstrate this further, Bank of Ireland have their ‘pay you to borrow from us’ campaign, KBC had a ‘pay you to switch’ along with rates that beat everybody else.

Now they (KBC) have launched a quick approval process which aims to cut down the time it takes to get approved which at it’s worst was taking up to four weeks with some banks. This is only for an approval in principle, which isn’t worth much (not like a loan offer is) but it is the first step in the mortgage process in terms of getting meaningful feedback from a lender.

They have a first time buyer 1yr fixed rate of 3.5%, short term fixed rates are where banks tend to go to attract business as the first year costs are what many buyers are fixated on rightly or wrongly.

There is one bank rumoured to be considering a return to brokerage, another who shut operations considering re-opening …

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Bank of Ireland will pay your stamp duty (because they can’t pay brokers)

Something many people don’t know is that Bank of Ireland are not allowed to distribute through brokers for another few years.

This means they are being locked out of one of the most dynamic channels in the market. Equally, they were paring back on ICS which recently sold.

They had often complained that it was ‘too expensive’ to pay brokers procurement fees, but now they are willing to pay customers even more than they paid brokers! This is because they are losing out to better offerings through better advice channels.

There is no other way for them to compete at present without literally paying for the business and we take that as a huge compliment, it also shows up the inherent contradiction in their past claims of brokers being ‘too expensive’, clearly in comparison they are not.

Lastly, they don’t pay your stamp duty, they pay the 1% of the loan amount, the idea that it pays your stamp is merely branding, it could go towards anything including a day at the races.

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ICS Building Society RIP 1864 – 2014

After 150 years the Irish Civil Service building society (known as ICS and a subsidiary of Bank of Ireland) is set to close. The letter delivered to the intermediary channel is on the left.

ICS started before the formation of the State and was subsumed into Bank of Ireland in the mid 1980’s.

The relationship with mortgage brokers was long standing, although in recent years there were a few developments which caused it to lose market share.

ICS first took brokers away from Bank of Ireland in c. 2009, previous to this brokers could deal with either a local branch (we dealt with now closed Westmoreland St. branch) or via ICS.

Then they reduced procurement fees, lastly they engaged in ‘dual pricing’ where it was cheaper to go to BOI than to ICS. All of these things were perhaps justified in the view of ICS but it didn’t mean people would then borrow from them and these things combined lead to less broker support …

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Boucher says ‘X’ then BOI says ‘Y’

To veto or not to veto, that is the question…

There is a clear message of ‘veto’ coming from BOI, that has been covered in the press following his comments to the Oireachtas Finance Committee.

‘He said his bank would seek to veto any proposal from Personal Insolvency Practitioners (PIP) featuring mortgage write-down for its customers. Bank of Ireland’s policy is only to write off mortgage debt in cases of bankruptcy or personal insolvency, where the bank is forced to make the move’ 

Then they email all of the PIP’s the email below which states that they do want to engage, but to do so on a basis outside of formal arrangements and prior to things going that route, which makes sense if their message is that they will veto those anyway.

It is unrealistic to make this request then make a habit of saying ‘no’ twice, if they do all of the debt advisors will realise it’s a ruse and go straight to bankruptcy which will cost the lender, or they will always …

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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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