Banks can veto PIAs if arrears arose after 1 Jan 2015

[Jim Stafford]

Copied from another thread - Brendan

However, the difficulty the nurse would have is that she doe not appear to qualify for a Section 115A PIA (i.e. it appears that she was not in arrears as at 1 January 2015.) and thus the bank could veto the deal. She would have to make the PIA "attractive" to the bank to encourage them to vote yes.



Jim Stafford

 

[Brendan Burgess]

Hi Jim

I had forgotten about this. Do I understand it correctly?

If a person was in arrears on their mortgage before the 1 January 2015, the PIP can go to the High Court and get the PIA forced on the bank.

But this effectively has a sunset clause and will gradually go out of use.

The lender can veto any PIA for someone whose arrears began after 1 January 2015 and there is nothing the borrower can do about it.

Brendan

 

[Jim Stafford]

Brendan

Your understanding is correct. (If the debt is less than €2.5 million, the PIP goes to the circuit court, and if greater than €2.5 million the PIP goes to the High Court.)

However, there is an important point that some borrowers can get confused over. If a borrower's loan was "restructured" prior to 1/1/2015 (e.g. arrears capitalised, mortgage split) they can also qualify for section 115A.

There are still thousands of borrowers with "split" mortgages who are unaware that they could reduce their mortgage down to market value.

It is very surprising that so many people are still unaware of the Section 115A power, which enables the PIP to reduce the mortgage down to the market value of the house.

Jim Stafford

 

[Brendan Burgess]

There are still thousands of borrowers with "split" mortgages who are unaware that they could reduce their mortgage down to market value.

Hi Jim

Only 22,000 or so splits have been issued.

Many of these now find themselves in positive equity, so they would not gain from a write down.

Many of those in NE are in only small negative equity, so it's not worth it.

Most of the others are probably responsible citizens who want to pay their debts. The bank has allowed them to do so by warehousing a lump of it.

So for someone to avail of this

• They need to be in serious negative equity - maybe about 5,000 of the 22,000
  
• They need to be prepared to not pay their debts although they can do so - maybe 1,000
  
• They need to go through the hassle of a PIA - we are probably down to 500
  
• They need to know about it

which is why there are so few.

Brendan