Actual repossessions versus perceived repossessions

If you were to read the headlines and not delve into the figures you’d be forgiven for thinking banks are either taking back houses wholesale or are about to. There will be a marked increase that is for certain, but have a look at some of the actual figures below.

This shows actual repossessions versus surrenders and abandonments. It’s clear to see that jingle mail and people giving back properties voluntarily is far greater than those being ‘turfed out’. The ratio is generally more than 2:1 against repossessions.

Some of these properties are being sold at a loss, some have equity, others are owned by people who just leave the country, the main thing to consider though, is that for the 95,000 loans more than 3 months behind (the topline figure of almost 150,000 ‘in stress’ is a little misleading) only 200 were taken back without consent in 2012.

That’s a mere 0.2% of the loans in arrears, and it’s still a nearly insignificant 0.85% of …

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A critique of the new Central Bank and CCMA measures

This article appeared in the Sunday Business Post on the 17th of March 2013

A senior banker described the new rules introduced by the Government and Central bank as ‘a charter for the obvious’ because ‘banks need to become banks not terminal collections companies’, and while some are quick to lend support or decry it as a travesty, we should instead look at the factual impact the new targets and code of conduct on mortgage arrears will actually have.

Policy makers say it is a leap forward, debtor lobbyists say it is nothing short of throwing borrowers to the wolves, both are wrong, its just a new set of trade off’s.

Being able to repossess a property is normal in any housing market, ‘bans’, ‘delays’ or ‘moratoriums’ on repossessions have been used in several nations (Czech Republic, Russia, Hungary, Ireland and the USA) and are government lead. In our case it was Government lead until the Dunne ruling in 2011 hard wired it into law. This must be reversed, it is …

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Taxation of debt forgiveness – is it a liability in waiting?

The writing-off of a debt, for example, by a bank, is not a disposal for Capital Gains Tax purposes. We have already queried this with Revenue and their direction on it is established.  There is also no provision in the Taxes Consolidation Act 1997 specifically providing that the writing-off of a debt is a gain.

However, the taxation of gifts is dealt with in the Capital Acquisitions Tax Consolidation Act 2003.

The position as regards Capital Acquisitions Tax is that it is assumed that financial institutions, in making an offer to customers to restructure the latter’s obligations, are motivated by commercial considerations only and are not intent on making any type of actual gift to the customer, this is a key consideration – because it cannot be a gain (under the 97′ Act) it could only be taxable as a gift – except that it isn’t.

Commercial agreements entered into on an arms length basis would be outside the scope of Capital Acquisitions Tax.

Obviously the usual caveat applies whereby determining the final taxation position of the transaction would require …

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Why make out that a phone call is a felony?

I’m normally a fan of Stephen Donnelly’s but have to wonder if there is some bias in his article this week.

In looking at this from a compliance perspective (because the allegation is really that regulations are being broken by the bank) we will consider three key pieces of legislation

The consumer credit act 1995 The consumer protection code 2012 The code of conduct on mortgage arrears 2009-2011

All of which are statutory codes with full enforcement powers built into them.

It starts with this paragraph ‘IF your bank phoned you up to four times a day, would you feel harassed? Imagine, as your mortgage arrears mounted, that you had maintained contact with your bank, as you’re meant to do, but they kept calling’.

The person was apparently being harassed, called ‘early morning and late evening’ – which I assume is an a way of alluding to wrongdoing but not actually stating whether section 46 of the Consumer Credit Act was being broken or section 8.14 of the Consumer Protection Code.

We also can’t look …

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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 …

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The difference between hard and soft

Upon reading the title I thought – that might be interpreted a bit weird… I don’t weigh in that often on the future of the Eurozone, other than to say that I think it will continue although large changes will be required.

And that is where I get the ‘hard and soft’ idea from, the marriage of states that formed the Eurozone was between fundamentally different philosophies and the pre-nuptial agreement was weak.

There are broadly three groups, the hard money, financially disciplined (and free market oriented) and competitive nations are the first group. This group is Germany, Finland, Austria, and the Netherlands. Then there is group two who prefer soft money, socialism, statism and weak financial discipline.

Group three is France, they have a whole group all to themselves, because they are in both camps at once but will one day choose between them.

Eurozone breakup is still not something I can fathom, but it has become more probable from what was an outlier two years ago. As the crisis enters it’s 6th year we still don’t seem to …

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Talking through my hat

In Saturday’s Independent Laura Noonan covered mortgage arrears (it wasn’t Charlie Weston – one commenter mentioned him and we had to delete it for obvious reasons). I’ll refer back to the table below a few times in the blog

OFFICIAL figures on the “mortgage crisis” overstate the number of households in real trouble – and lack key insights into how deep the problem really is.

An investigation by the Irish Independent has revealed the Central Bank’s figures include several types of borrowers who are no longer in trouble.

A large number of senior bankers right across the industry who spoke to the Irish Independent now insist the situation is improving.

The latest statistics, however, indicate that 77,630 households are at least three months behind on payments.

But these figures include: – Those who missed payments long ago and have since resumed paying normally.

Why don’t the banks make this information public then? And when the say ‘repaying normally’ …

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Zombie Banks acting like Zombies

I wrote a piece in today’s Irish Sun about our banks and that the state owned operations are showing a decided lack of inventiveness when it comes to helping existing borrowers.

This may be down to disincentives, issues with management or the Department of Finance, but suffice to say, it doesn’t make sense that non-state owned banks and foreign banks are innovating in potentially beneficial ways for their customers and the banks we paid to save are not.

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RTE News: Personal Insolvency Bill, January 2012

Paul Colgan from RTE covered this story about the proposed Personal Insolvency Bill which will update Ireland’s dated debt legislation. This is a more humane approach to dealing with debt issues and we are pleased to see it coming to fruition. Any legislation will have teething issues and will not be perfect, but this is definitely a step in the right direction.

Our foremost concern (as echoed in the clip) is about the regulation and oversight of any plan.

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