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.

Read More

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 …

Read More

Newstalk Lunchtime on Q2 mortgage arrears

We spoke to Jonathan Healy about the mortgage arrears crisis and noted that despite 19,000 buy to let properties having made no payment in over a year that banks haven’t taken them back.

Read More

Why paying off your credit card rather than your mortgage is stupid

It’s a common debate in debt that people prioritise in certain ways based on certain behaviours. A common one being that it is rational to pay off a credit card because that is what buys the shopping or puts fuel in the car.

The belief being that a credit card provides liquidity when needed, but in paying off this debtor first it brushes over two key facts.

1: If you told the credit card holder to go and jump for their money you’d be instantly better off by whatever you owed them, we regularly see settlements done for 10c on the Euro. This saving (assuming it equates to the missed mortgage payment – which is a leap of faith at best) could be used to fund the following month or two for fuel/groceries, and that isn’t to say you couldn’t repeat this process with a mortgage too as a source of financing if you had to, but doing it first is a mistake.

The first rule in personal finance is about prioritisation and while we regularly tell people to burn …

Read More

The Deeter Plan

My best laid plans have often blown up in my face, so chances are the idea I had which I mentioned to Pat Kenny last week has lots of snags built in; but today it was discussed on the Pat Kenny show (I wasn’t there for it) and given some additional context.

The thrust of the idea is that having something that is more process or practice based rather than principles based would work better in terms of fast and efficient negotiation.

You can listen to the concept in the link above which has the audio clip, but I’ll lay it out here too. When banks lend money they underwrite a person based on their affordability. My idea is that you re-establish a persons disposable income in their new financial circumstances and use the banks own calculations (albeit this time against them) to ‘re-underwrite’ the loan and in that respect reverse their own criteria against them.

This way if banks are conservative on lending they get conservative payments back …

Read More

Our submission to the Central Bank on CCMA 2013

As a firm we believe compliance is important, relevant and while not always efficient it helps to smooth out some of the issues in firm/client relationships. This is why we encourage every firm working with indebted people to respond to the Central Banks call for submissions on the new proposals for the CCMA 2013.

Our submission paper is here.

Amongst the suggestions are that banks stop using auto-diallers and instead are allowed more points of contact but it must be by a human, also that the hours used at present from the CCA 1995 are revised and made less invasive, the trade off being that this doesn’t apply if people don’t engage or if they expressly permit it.

There are many points to consider, from revocation of tracker mortgages, to disclosures, paperwork required etc. but the main point we want to make is that people should submit their suggestions and don’t wait until afterwards to scratch your head and say ‘why does it work this way? Why didn’t somebody think of …

Read More

Overindebted property investors – a fix without insolvency using Section 69

There are a lot of property investors who will see the ramp up of repossessions or insolvency of their current situation result in large losses occurring.

We hear from many clients that they plan to opt for personal insolvency, but in many instances this doesn’t need to be the case. If a person has five properties and one is a family home they could opt to sell the investment properties and have any losses accrued into a general shortfall where the settlement repayment plan is a compromised effort.

Compromised settlements will be a stock solution for a huge number of investors, but this doesn’t demand insolvency. In fact, Personal Insolvency (given that property ownership is required to opt for it) may not be anywhere near as popular as predicted because sales resulting in losses will mean the debt is unsecured.

There is still the family home, but banks have given an undertaking to help cut deals for family homes once unsecured debtors are taken care of first, that is what doing a Debt Settlement Arrangement is for, a Section 69 …

Read More

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 …

Read More

Continuing slowdown in growth of arrears is welcome, says IBF

Below is a statement from the Irish Bankers Federation regarding today’s arrears figures.

Continuing slowdown in growth of arrears is welcome, says IBF

The Irish Banking Federation (IBF) notes that the latest Central Bank statistics on mortgage arrears confirm a continuing slowdown in the rate of growth in arrears.  While the total number of private residential mortgages in arrears has increased, as had been expected, this further slowing of growth in arrears is particularly welcome.

As the following statistics and graphs show, the slowdown in the growth in arrears is evident across different stages of arrears:

·a decline in the number of early stage arrears of less than 90 days – a quarter-on-quarter decline of 1.3%

· a further slowing in the pace of increase in arrears over 90 days – the slowest quarter-on-quarter rate of increase since Sept’09

· a further slowing in the pace of increase in arrears over 180 days

The decline in early-stage arrears (less than 90 days) is particularly significant as it confirms that fewer customers are falling into arrears.

At the same time, the …

Read More

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 …

Read More