# How many people actually lost their homes because they lost their trackers?



## Brendan Burgess (18 Jul 2019)

The Central Bank report said that 99 people lost their family homes as a result of losing their tracker.

I have not seen any such cases and find it very hard to imagine how it could have happened. It's possible, but one has to make a huge number of assumptions.

Over the last 10 years, about 10,000 have lost ownership of their home.  The main reason these people lost their homes was because their income dropped as a result of losing their job.  Some just handed back the keys because they were in deep negative equity and didn't want the hassle of the house or the mortgage anymore.

But let's look at a typical borrower who wanted to stay in their house and did what they could to keep it.

They took out a €300k mortgage with ptsb in 2006 and fixed for three years, after which they should have been given a tracker at ECB + 0.8%.   ( I choose ptsb because they had the biggest  gap between the SVR and tracker rates and because they increased their SVR long before any other bank. At one stage, they were charging 6.25% SVR when AIB was charging 3%.)

Here are the relevant rates





The biggest gap was May 2011 when they were paying 5.9% instead of 2% .






*Imagine a world where we had no restructurings and quick repossessions for anyone who fell into arrears*

This borrower was only able to pay €1,300 when the repayment was €1,900. After  6 months, his arrears would have been €8,000. The lender would have issued proceedings to possess the house and a year later he would have been out on the street.

If they had been on a tracker, they would have not even been in arrears. 

If this had been the banking culture at the time, we would have had hundreds, maybe even thousands, of borrowers who lost their home wrongly.

*But Irish lenders were very generous with their restructurings. *

Anyone paying €1,300 a month on a €300k mortgage would have got a restructuring.  The lenders restructured 120,000 mortgages. In comparison, 10,000 lost ownership of their home.

So what sort of a restructuring would they have got.

PTSB split mortgages very easily.  I have assumed in this case that ptsb would have warehoused €100,000. In other words, no interest charged and no repayments on the €100,000.





So actually, the repayments would be the same as they would have paid on a tracker.

To argue that someone lost their home because they lost their tracker, we would have to make another assumption that ptsb would have given them a split mortgage  on their tracker.





So, if this borrower could afford €850 per month,  and if they had been on a tracker, ptsb would have split 1/3rd of the mortgage and reduced their repayments to €850 a month.

So to argue that someone lost their home because they lost their tracker, you have to make _all _the following assumptions:
1) They wanted to keep their home
2) They engaged with their lender
3) They paid what they could
4) The bank forced them to give up their home
5) If they had a tracker, the lender would have given them a very generous restructuring to make the mortgage sustainable.

So ptsb is being penalised for doing generous restructurings.  That is not right.


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## SaySomething (18 Jul 2019)

You may be tying yourself in up in language. BTL or PDH - they are likely still to be family homes, regardless of who is resident in them... Sale of a property would almost always result in the resident/tenant losing their family home.


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## Bronte (18 Jul 2019)

I take issue with this:

But Irish lenders were very generous with their restructurings.

- The banks couldn't do anything else because there was nobody to buy the homes
- the banks would have taken massive hits if they choose to try and sell
- it would have made things a whole lot worse for the banks
- it was the banks fault for giving outragous loans to people in the first place
- it was the banks fault for giving loans based on 100% plus borrowings
- it was the banks fault for giving loans based on property prices based on banks insane lending

The banks did no favours, the banks had zero choice in the restructurings because of their crazy lending practices.

And what the banks did was restructure while waiting for the bust to end.


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## Brendan Burgess (18 Jul 2019)

Bronte said:


> But Irish lenders were very generous with their restructurings.



Hi Bronte

You are not denying that they were generous? 

You are just saying that their motivation was not kind-heartedness? 

In other countries with the same issues, banks just repossessed the houses and everyone moved on.

Brendan


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## SaySomething (18 Jul 2019)

Brendan Burgess said:


> Sorry Fake
> 
> I don't know how many but I have seen other cases.
> 
> ...



This is the issue that most people have - BTL/PDH or not.

They made their financial decisions based upon the information available to them at the time. Their commercial decision to sell a property was made because of an interest rate that should not have been applied to their loan. This has had a knock on effect on their finances.

Decisions on whether to go on holidays, finance a new car, pay for further education, meet the full costs of a loan. Similar issues for PDH loans.

All their decisions were made based upon the information that the bank provided to them. That they were paying a higher interest rate than they should have been.

So a family should be able to reasonably argue that they would have been able to service a considerable portion of their loan if they had been on the correct interest rate then they may not have sold their home.


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## Brendan Burgess (20 Jul 2019)

I have just had a long PM - not sure why he is not posting it here instead. 

But he disagrees strongly with my argument that no one lost their home. 

He got into arrears.  Felt bullied by his lender. I was really shocked at the story and as I was reading it, I assumed that he had lost his house. Then his last line. 

_If I had of lost my home during this period It would have been avoided had I been given my tracker _

I think that this shows some of the thinking behind the "99 people lose their homes due to losing their trackers."  It's just not clear thinking.

Of course, if lenders had not restructured mortgages, then people would have lost their homes due to losing their trackers. But the banks did restructure mortgages - 120,000 of them. 

Brendan


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## NoRegretsCoyote (20 Jul 2019)

This is the precise wording in the CBI report



> 3.2.3. Loss of Ownership As at end May 2019, loss of ownership as a result of a tracker related failure has occurred in respect of 99 PDH and 216 BTL properties. The average redress and compensation paid to date in respect of loss of ownership of PDHs due to lenders’ failures is c. €194, 000 and the average for BTLs is c. €162,000.



There is no detail about the methodology used. It could be:

Anyone who had a forced sale/possession order and also received tracker redress. This could include people whose arrears were so severe that they would not have kept their homes even on a tracker rate
Anyone who had a forced sale/possession order only because of the impact of not having been given the tracker.
Or indeed the 99/216 could be somewhere in between 1) and 2) as set out above.

If I was a regulator being accused of having not taken this issue seriously I would probably go with the liberal definition of 1) above.

As we can see from the mortgage arrears data, there are thousands of people who have not paid anything at all in half a decade, and it is doubtful if an interest rate of 0% would prompt them to re-start.


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## TrackerThieves (20 Jul 2019)

Brendan Burgess said:


> I have just had a long PM - not sure why he is not posting it here instead.


Quote from  beginning of PM "I was about to post this reply in the thread but decided not to as I have a FSPO case about to go tho investigation and decided against posting publicly" thought that explained clearly why I sent you a PM instead of posting details in the thread.

Anyway I thought if you seen it from a point of view of someone who faced a lender that was unwilling to help in anyway you might have a change of opinion. Even though we seem to have completely different opinions at least we had a discussion and I do appreciate your opinion. I honestly believe if there are others who had small arrears as a direct result of a tracker related issue and then faced a lender who acting as ours did and had no real interest in helping it would easily be possible for arrears to get to a level where they were in danger of losing their home. Maybe customers were treated differently depending on whether they were in positive or negative equity


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## Brendan Burgess (20 Jul 2019)

Hi TT 

I suppose it's possible that someone is paying the equivalent of a tracker amount on an SVR mortgage and the lenders says "It's not enough, we are going to repossess your home.". And the borrower says "Oh dear, we don't want the hassle of court, so we will just surrender it or voluntarily sell it." 

I haven't come across that.  I will stress that the banks restructured 120,000 mortgages on family homes.  So in cases where someone was paying the equivalent of the tracker amount, they would have got a restructuring easily enough. And if the bank refused, it's very unlikely that the bank would have succeeded in the court. 

Brendan


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## TrackerThieves (20 Jul 2019)

Brendan Burgess said:


> So in cases where someone was paying the equivalent of the tracker amount, they would have got a restructuring easily enough


do you mean over a long period?
We would have paid roughly the equivalent of a tracker rate but for only for 4 months before going on interest only for 6 months


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## Brendan Burgess (20 Jul 2019)

TT

You did not lose your home or come close to it. So your story is irrelevant to the thread.  

BB


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## TrackerThieves (20 Jul 2019)

Brendan Burgess said:


> I have just had a long PM - not sure why he is not posting it here instead.


I originally sent a PM then you posted this so I put some  details in the thread and this is how you reply, seriously?


Brendan Burgess said:


> You did not lose your home or come close to it. So your story is irrelevant to the thread.


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## NoRegretsCoyote (20 Jul 2019)

Brendan Burgess said:


> Hi TT
> 
> I suppose it's possible that someone is paying the equivalent of a tracker amount on an SVR mortgage and the lenders says "It's not enough, we are going to repossess your home.". And the borrower says "Oh dear, we don't want the hassle of court, so we will just surrender it or voluntarily sell it."



If this, there was probably a lot of positive equity.


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## Brendan Burgess (20 Jul 2019)

NoRegretsCoyote said:


> If this, there was probably a lot of positive equity.




Why would it mean that they have a lot of equity? 

And even if they did, what would the relevance be? 

Brendan


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## TrackerThieves (20 Jul 2019)

NoRegretsCoyote said:


> If this, there was probably a lot of positive equity.


Wouldn't have been a huge amount but was in positive equity. I do remember a document stating it was in positive equity to the equivalent of 2 years payments, would need to double check


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## NoRegretsCoyote (20 Jul 2019)

Brendan Burgess said:


> Why would it mean that they have a lot of equity?
> 
> And even if they did, what would the relevance be?
> 
> Brendan



It would have meant the bank wouldn't have had to take a write-down.


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## Brendan Burgess (20 Jul 2019)

NoRegretsCoyote said:


> It would have meant the bank wouldn't have had to take a write-down.



That wasn't and isn't really a factor in their decision - contrary to public opinion.

Brendan


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## TrackerThieves (20 Jul 2019)

Homes now in positive equity risk repossession
					

BANKS are more likely to repossess houses where it is worth more than the mortgage, homeowners have been warned.




					www.independent.ie
				



Article by Charlie Weston from 2014 seems to indicate otherwise 
"BANKS are more likely to repossess houses where it is worth more than the mortgage, homeowners have been warned.
And these people who are in "positive equity" are less likely to be offered a solution to deal with arrears, according to a powerful Dail committee."
Any breakdown of the 99, as to how many from each lender and how many of the 99 were in positive or negative equity?
Is there any general stats that would indicate % of mortgages in positive or negative equity in any given year?


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## Brendan Burgess (21 Jul 2019)

TrackerThieves said:


> Article by Charlie Weston from 2014 seems to indicate otherwise



Hi TT

He is quoting the report of an Oireachtas Finance Committee and not any data.  (The Committee may have had data - I don't know.) 

There has been a dramatic rise in positive equity over the last few years. So based on this theory, you would expect house banks to be launching a tsunami of legal proceedings. But in fact they have fallen dramatically. 

The CB studies over the years have shown that, all other things being equal, a house in negative equity is more likely to be in arrears. but I don't think it was a huge difference.  This makes sense. If you have positive equity, you are going to try harder to protect it. 

So if more houses in negative equity were in arrears, more houses in negative equity would face legal proceedings. 

But the lenders based their legal proceedings on the payments and engagement and not on the level of negative equity.   

Brendan


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## Babog007 (21 Jul 2019)

Would you be deemed to have lost ownership if you've signed surrender of possession under mortgage to rent prior to lodging an appeal?


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## Brendan Burgess (21 Jul 2019)

If you lost ownership via MTR ... you are still in the house. So if it was due to losing your tracker,which I doubt, it can be reversed


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## deanne (21 Jul 2019)

_Article by Charlie Weston from 2014 seems to indicate otherwise
"BANKS are more likely to repossess houses where it is worth more than the mortgage, homeowners have been warned.
And these people who are in "positive equity" are less likely to be offered a solution to deal with arrears, according to a powerful Dail committee."
Any breakdown of the 99, as to how many from each lender and how many of the 99 were in positive or negative equity?
Is there any general stats that would indicate % of mortgages in positive or negative equity in any given year?_

I think that Banks' in many  instances waited until property prices increased and then deemed mortgages unsustainable if interest and principal were not being paid due to high rates of svr. This happened to myself, our tracker mortgage on our former home which became a buy to let when we moved out of Dublin. It was on a Tracker Rate, we borrowed an extra amount against this property to complete a new build and they changed all of this mortgage to S.V. R. .This high rate meant that we were unable to pay interest and principal, we were on interest only for 5 years, then bank said it was unsustainable and coerced us into selling it in 2015. We discovered in 2017 that we were impacted by the Tracker issue. We have received compensation etc. not nearly sufficient for the loss of this property. Bank said that it was a voluntary sale, it was anything but this... Been through Appeals, this lead to more ambiguity than clarity and not sure if justice will ever be done in our case.


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## Brendan Burgess (21 Jul 2019)

deanne said:


> I think that Banks' in many instances waited until property prices increased and then deemed mortgages unsustainable if interest and principal were not being paid due to high rates of svr. This happened to myself, our tracker mortgage on our former home which became a buy to let when we moved out of Dublin.



As I say, there is no evidence of this.  And that certainly is not evidence. 

The number of repossession proceedings started has fallen dramatically as house prices have risen.

You had an investment property.  You were in arrears on it. And the bank encouraged you to sell it after 5 years of interest only! 

Brendan


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## deanne (21 Jul 2019)

Brendan Burgess said:


> As I say, there is no evidence of this.  And that certainly is not evidence.
> 
> The number of repossession proceedings started has fallen dramatically as house prices have risen.
> 
> ...


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## deanne (21 Jul 2019)

Yes, 5 years of extortionate interest rates, we paid 70,000 euro interest, it would have been half of this amount if we were on the correct rate .  The bank made this unsustainable by taking our tracker rate from us, we never fixed once. The bank has admitted that they should have kept our mortgage on the tracker but didn't, the consequence of this was interest only then unsustainable which is was but only because of overcharging!


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## Brendan Burgess (21 Jul 2019)

Just to be clear

I have said that I think the 99 figures for homes is excessive.

The figure for buy to lets is an understatement. Yours was a buy to let.

Had it been your home, you would still have it.

Brendan


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## deanne (21 Jul 2019)

Brendan Burgess said:


> Just to be clear
> 
> I have said that I think the 99 figures for homes is excessive.
> 
> ...


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## deanne (21 Jul 2019)

There are many other people in my situation, so called voluntary sales that are anything but voluntary. Our situation demonstrates the lengths that the bank took to ensure that we were denied a tracker mortgage rate. We have been "done over twice" by our bank and then by an ineffectual Appeals Panel, who seem too bored and confused to read the bottom line. This controversy is far from over and I hope rather than anticipate that justice will be done.


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## Trackman (21 Jul 2019)

BB

1. One assumption that has a large bearing on total monthly interest paid is the initial term of the mortgage. There is a big difference between the interest paid on a 25 year mortgage versus a 35 year mortgage, without factoring sky high prices in 2006 or popular 100% mortgages. 

2. The compound loss of funds over the overcharged period can trigger arrears. An impaired credit rating resulting in a inability to obtain credit further exacerbating the situation. This may of been major a factor in a person surrendering their home voluntarily. 

3. The assumption that customers who lost their home (PDH or BTL) were offered an alternative payment arrangement is just that, an assumption.


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## NoRegretsCoyote (21 Jul 2019)

Brendan Burgess said:


> That wasn't and isn't really a factor in their decision - contrary to public opinion.
> 
> Brendan



Take two customers denied a tracker and in arrears c 2012.

One has €50k positive equity. The other has €50k negative equity.

They both get a letter from the bank suggesting they sell the property and repay the principal plus arrears.

My guess is that the customer with positive equity would have been much more likely to sell the asset and walk away. Particularly for BTLs.


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## Brendan Burgess (21 Jul 2019)

NoRegretsCoyote said:


> My guess is that the customer with positive equity would have been much more likely to sell the asset and walk away. Particularly for BTLs.



This thread is about family homes. 

Everyone I have dealt with wanted to keep their family home - by which I mean the home in which they were still living. 

When someone was in positive equity, this was particularly strong.

In negative equity, there was sometimes a feeling "I want to get this millstone from around my neck" and they handed back the keys. 

So, my experience has been the very opposite of what you are suggesting. 

Brendan


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