Arrears solution for a strategic defaulter: here’s a new plan you can ignore

We make no secret of dealing with strategic defaulters, depending on the client we don’t necessarily say that they are in that category, but with most of them we try to be forthright enough to make it clear that what they are doing is intentional and doesn’t have to be this way. That aside, the banks are still trying to find ways to resolve the issues.

One such offer came to one client from PTsb. The interesting thing here is that the client did fill in an SFS and was refused split mortgages and other such options because they didn’t qualify but continued to pay zero.

Then they get an offer to capitalise the arrears. That’s wonderful, they are now no longer in arrears once they sign up to this! What a great outcome, now they can go back to repaying zero and start the whole clock all over again.

So, having racked up about 18 months of un-paids on interest only the arrears will now be (upon signing) back …

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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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Savage Sunday: Today FM 8th September 2013

The panel on this weeks Savage Sunday was Tony Williams, Kate Shanahan and Karl Deeter. The topics were Priory Hall, in particular KBC writing to a recently widowed debtor seeking arrears payments, politics, mortgages and property, Ivan Yates and finishing off with some thoughts on Ryan Air.

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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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Newstalk Lunchtime: Jonathan Healy and Karl Deeter on Insolvency Service of Ireland

We spoke to Jonathan Healy about the new insolvency service, how it was not going to be possible to determine its success for at least three months (as protective certs last 70 days and can last more), as well as the importance of understanding that the security behind a debt is a very different concept to the decency of the creditor.

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