We were on the Morning Show where Claire Brock was sitting in for Sybil and Martin. We spoke about credit cards, savings rates, pensions and other personal financial matters
We were delighted to take part in the Irish Independents first property video blog where we answered questions and spoke about the property market in general.
Something that people find really frustrating is how they look to a bank for a solution and are simply told ‘no’, there is never any mention of ‘what will work’. Imagine going into a negotiation where you have no idea of what is acceptable to the other party (short of full repayment), or even where full repayment can get rejected!
How are you meant to find any answer -given that all solutions are unknown and unknowable – if there is not at lease some kind of counter offer? Imagine doing this in any other area of your life…
You: I’d like to buy these shoes, how much are they? Shopkeeper: That depends. You: I’d be happy to pay €50 for them, will that work? Shopkeeper: No. You: What will you accept? Shopkeeper: That really depends. You: Do you want more or less or am I even in the right ballpark? Shopkeeper: Hard to say, it really depends…
(then go back to third sentence of conversation and LOOP UNTIL runtime error)
We have said in the past that split mortgages are not all they are cracked up to be, but they do have a place. We even made a nifty calculator to help people see what the results of doing this might be.
The problem with them is two fold, first of all they don’t necessarily work, second is that it is going to be refused unless you can’t even service the interest. Splitting a mortgage requires that the non-warehoused bit is on full repayment, so in 20 years time you might owe half of the original loan (assuming you never ‘un-warehouse any of it), but if you can service interest and keep going then you won’t get one.
Doing this can make sense though, even if the other part of the loan isn’t amortizing because in this situation at least your future debt isn’t stagnant, it’s reducing. The banks are blocking these though, because they have no ‘borrower solvency agenda’ they have only the ‘collect to the point of the person going bang’ agenda.
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 …
The Irish Property Owners Association did a survey recently asking investors about their position with banks and how their investment was faring in general. Something that was interesting was the way that people saw the lenders in terms of how aggressive they are on pursuing a debt.
Here is the list…
Due to disclosure requirements I can’t actually tell you much about dealing with banks when it gets to the specifics of some cases, what I can say is that should a person get any debt write down of the type that banks are not doing that you will be asked to sign something like the letter to the left (click for full version).
What we do find frustrating is that there will be an insolvency register where people are named, but that you can’t find out what kind of restructure took place or what creditors accepted.
This is almost like having an absence of case law with which to go to court. It’s a huge oversight and will reduce the effectiveness of advisors who will all act in a common arena totally blind to what all of the others are doing.
As for specifics, this means you can’t ever talk about getting a write down or even a non-write down advantageous re-arrangement. You can be asked to destroy all of the evidence you have referring …
A new low has been set in how ridiculous the area of debt mediation can be when dealing with banks. The most recent one is where re-arranged a clients finances to the point where they could make full repayments.
You would think such a proposal would be immediately accepted? Think again, Ulsterbank rejected this proposal for a client of ours. While we cannot reveal specifics what we can say was that the client merely needed some arrears re-capitalised and for a tiny proportion of arrears interest to be waived because there were delays caused by Ulsterbank not returning proposal letters our client sent them (which separately has CPC, CCMA and MARP implications), and was only requested as a way of accepting that both sides had short comings.
They could have said no to that part, as they ‘don’t do debt forgiveness’ (even when they create the problem), but instead they even refused to capitalise arrears which would be repaid in full as per the terms of the existing loan.
It isn’t often that our jaws drop, but when they do …