# Hand Back the Keys



## Artemis (30 Apr 2012)

Considering the government, central bank, banks have not progressed the personal insolvency or come up with a workable resolution, should we not follow the New Beginnings/Laura example and create our own PI arrangement.

This would involve (the 10,000 plus) writing to the bank informing them we will hand back the keys and  pay a realistic, affordable monthly payment, for the next six years, and that is closure on the matter.

If the bank do not agree to this within three months we pay nothing until we are summonsed to court, which will be at least a year later, and then we will probably, be committed to pay less then we offered the bank originally, and they will have a significant legal bill also. 

  To the moral hazard brigade, too little, too late. We are fed up waiting. We want to give our children a future and get on with our lives. We didn’t commit any crime. We are not rich enough to qualify for the NAMA treatment and the banks will not come to the table. 



Could anything be worse for the economy/country than the current mess? 



Do we have an alternative?


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## Brendan Burgess (30 Apr 2012)

> To the moral hazard brigade



The problem with your proposal is that you are justifying the "moral hazard brigade" 

I have summarised the Bank of Ireland write off case here and I address your particular question here

I think that people should wait until the legislation is published before deciding whether to hand back the keys or not.


http://www.askaboutmoney.com/showthread.php?t=168680


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## Artemis (30 Apr 2012)

I disagree, this proposal forces the bank to come to the table and work with the borrower to agree a workable solution. 



  [FONT=&quot]The can has been well kicked and benefiting no-one.

[/FONT]


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## Jim2007 (30 Apr 2012)

Artemis said:


> I disagree, this proposal forces the bank to come to the table and work with the borrower to agree a workable solution.



Do you serious think that other tax payers are going to agree to foot the bill for your house???  Because that is what it comes down to in the end.  The politicians know very well that there is little support for this kind of a deal among the electorate hence the slowness to act on it...


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## Artemis (30 Apr 2012)

Jim, the money will never be repaid on many of these loans. It is about facing reality, not the current mess that is making things worse for everyone. 

The current borrowers in trouble did not ask the taxpayer to get involved, that was the banks, and we all know who benefited from that, Bond holders, Irish Banks and Developers.
  The only reason taxpayers are involved is because of politicians and top bankers. There was very little support for this bit yet the decision was made in a matter of hours in the dead of night.
  It is a pity we didn’t learn from Iceland. The current mess would be over long ago.


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## shammy feen (30 Apr 2012)

Jim2007 said:


> Do you serious think that other tax payers are going to agree to foot the bill for your house??? .


 
Why not?...They agreed to bail out the banks through a government mandated to make decisions for them through democracy...and there sure was and still is little appetite amongst the electorate for that...anythings possible in Ireland.


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## PaddyBloggit (30 Apr 2012)

Think I'd want to default too .....


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## Jim2007 (1 May 2012)

For this kind of proposal to have any chance of gaining ground you'd have to come up with a solution to the following:

- How do you refinance the banks after the write off, without raising taxes?  The banks must have a T1 rate in line with Basle III, that is a given.  Right now they are just about holding the line, but any big write off and the taxpayer would have to step in again.

- How do you keep a voter happy when he sees his neighbour get to keep his house, have his debts written off and let start all over, while he continues to struggle with his debts?

No government is going to run with this at present because the votes just are not there...  And until you can address these issues, it does not matter what other arguments you bring up, it is not going to be a vote winner.  At the end of the day there has to be something in it for the politicians too.


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## no money Mo (1 May 2012)

When a person defaults on their loan it is assumed that the taxpayer will be footing the bill, this is not the case for people who have their  mortgages with KBC, NIB, ACC and Ulster bank.


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## 44brendan (1 May 2012)

Theoritically the OP has a valid point. This can has been kicked down the road for a time & the frustrations of many are evident in some of the postings on this forum.
It is unfortunate that the insolvency legislation has again been delayed. However, this morning Alan Shatter stated that it should be published by the end of June latest and formalised within 1 month (OK, we've heard this before!). 
Frustrations and dissatisfaction are building up and the Bank's handling of clients in financial difficulkties is not helping to alleviate this. 
I can see some merit in a large body of mortgagors coming together to force the Banks hand on this, but suggest that a little more patience (pending finalisation of the Insolvency bill) is warranted. 
Brendan Burgess had some good suggestions on amendments to the heads of terms of the bill, which would avoid the issue of "moral hazard". Jim Power also came up with some very good ideas. Hopefully the legislators will take these proposals into account and we will see a bill that gives people an exit from their debt burdens, without seriously compromising the bad debt problems of the Banks.


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## p15574 (1 May 2012)

no money Mo said:


> When a person defaults on their loan it is assumed that the taxpayer will be footing the bill, this is not the case for people who have their  mortgages with KBC, NIB, ACC and Ulster bank.



That's an interesting point. Is it known what proportion this is? I'd imagine it's quite small, e.g. a total of something like 10-15%. It'd also be interesting to know if the proportion in arrears is similar across all the institutions - it might give an indication of laxity of controls.


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## Billy Baltic (1 May 2012)

This is just an opinion but I get the feeling ,from talking to others and reading here, that people are less and less looking toward affordable monthly payments and more toward the New Beginnings example. The former would have been great until there was a realisation that the latter is possible (somehow).


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## bugler (1 May 2012)

no money Mo said:


> When a person defaults on their loan it is assumed that the taxpayer will be footing the bill, this is not the case for people who have their  mortgages with KBC, NIB, ACC and Ulster bank.



In those cases it is also likely to be taxpayers footing the bill - albeit in their role as variable rate mortgage holders from those institutions.


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## no money Mo (1 May 2012)

bugler said:


> In those cases it is also likely to be taxpayers footing the bill - albeit in their role as variable rate mortgage holders from those institutions.



which in turn would lead to more defaults


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## Artemis (1 May 2012)

no money Mo said:


> which in turn would lead to more defaults


   and eventually, zombie banks would collapse, property would stabilise at  its true value. The uncertainty would be over and the economy would  begin to stabilise. 
New independent foreign banks, (not glorified community employment  schemes, funded by the tax payer) would enter the market, just as Bank  of Canada attempted to buy EBS at no cost to the taxpayer but were  stopped by Noonan, and a functional banking system would emerge.


  Many of the current banking sector would be re-employed in the new  banks, but senior strategic decision makers would be told where to go.


  The surprising thing is all this could have  happened in 2008/2009, at zero cost to the taxpayer .But instead we are  in the hole for at least 70BN and at least four years from where we  should be.

However all is not lost as we can still continue to throw good money  after bad, form committees, write reports, ask who will pay for it? and  the cycle goes on.


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## Bronte (2 May 2012)

44brendan said:


> However, this morning Alan Shatter stated that it should be published by the end of June latest and formalised within 1 month .


 
Shatter mentioned _hopefully_ by June and formalised by Autumn.  There is no guarantee this bill will have any teeth in that banks can veto the insolvency.  Also looks like they are trying to do a very very complex bill and most likely will be designed to give jobs to the boys (accountants, lawyers etc) instead of a simple procedure to go bankrupt as is the UK and Norway model for dealing with this situation.


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## PiedPiper (2 May 2012)

*Whose spinning what*

I think that poor woman laura got a terrible deal.

If the bank wont take the house as a full and final settlement hang on in there and fight.

Even at that you are over paying them.


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## PiedPiper (2 May 2012)

no money Mo said:


> When a person defaults on their loan it is assumed that the taxpayer will be footing the bill, this is not the case for people who have their mortgages with KBC, NIB, ACC and Ulster bank.


The banks have been paid, bailed out given the money to pay the tax payer has already paid twice once more wont make any difference.

This mess will go on forever if the begrudgers and the liars spouting the moral hazard get their way.

The bank gets paid win lose or draw they are insured.


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## Bronte (3 May 2012)

PiedPiper said:


> I think that poor woman laura got a terrible deal.
> 
> If the bank wont take the house as a full and final settlement hang on in there and fight.
> 
> Even at that you are over paying them.


 

You have got to be kidding.  Laura got a great deal.  One that anyone else would be and should be happy with.


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## oldnick (3 May 2012)

I was one of the softies when it came to struggling young people in financial trouble  and I often argued against those who said it was all their fault -I thought there were too many hard-heartened  comments  about people in trouble. 

But Pied Piper - your  "poor " Laura is causing me and many others to change views. 
A well paid person  on a relatively small mortgage (relative to her income compared to many other mortgages), who even had tenants paying her rent, just handed back the keys. And all that happened was  the generous settlement whereby she pays back a few grand a year for a few years. Amazing !

Really, Pied Piper you are some kind of troll, aren't you? Just saying those things to arouse a grumpy old man like me. Either that or your a complete anarchist,happy to see an imminent collapse of the banking sector, housing market and social stability.


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## Bronte (3 May 2012)

There is something distinctly odd about the Laura story.  When God was brought into it etc.   Ill health or something.  No proper questioning of her by the media.


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## thedaras (3 May 2012)

If I was her ,I wouldn't have gone public..
If the tax payer is picking up the bill, and she has any sort of life,she will be watched with interest.Id hate to live like that.I can just see the red tops " tax payer picks up the bill while Nurse lives it up" or some such ,when she is seen buying something considered non essential like a Mars bar!
I ,like others think there should be some way of helping those who are young and stuck with massive mortgages,but this story has changed my mind.
If a young woman ,in a house,which was rented out for some of the time,on an income of 70k,can just hand back the keys and pay 250 a mth for six years,and has an income of 2.500 net per month ,and can then get another mortgage in six years!
So lets say I have a house ,I hand back the keys,because I cant sell it and want to move to a different part of the country and take a pay cut and I have 2,5k a month and I pay 250e a mth for six years,meanwhile Im building up my career,(based on her age),I may well meet a partner who could buy a house,and I have 2.250 a month to help pay this new mortgage.
Or I could stay in my job ,earning 70k, pay a full mortgage for a house which has reduced in value,and in six years time be no better off,I know which option I would choose.She did the right thing,but I would question how bright it was for New beginnings to go public about it.It has done nothing for their cause and nothing for those in a similar position.
Though who wouldn't take that option if it were open to them? 
What are the disadvantages,especially if you hadn't put a huge amount (ie similar to paying a rent) of money into the house?
Off you go ,debt free apart from a nominal amount ,you rent for the next six years,save as much as you can and can probably buy the same house back for less than you paid originally..


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## Kluivert (30 May 2012)

Can I throw my two cents in on this. 

When banks prepare financial statements, they must undertake an impairment review of their loan book and account for it on recoverable basis. 

Like any business with Debtors, when preparing the financial statements, you are required the put in a provision for bad debts, against the debtors balance. 

As far as I am aware, banks have already done this and thus, to agree with terms of Basle III, the same banks have already been re-capitalised. 

There was some suggestions a while back stating that the banks are over capitalised.


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## dodo (6 Dec 2012)

Only if the mortgage is with an Irish Bank would it effect tax payer,eg BOS,UB not Irish banks so how would Irish tax payer lose out ob these


Jim2007 said:


> Do you serious think that other tax payers are going to agree to foot the bill for your house??? Because that is what it comes down to in the end. The politicians know very well that there is little support for this kind of a deal among the electorate hence the slowness to act on it...


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## manninp2 (7 Dec 2012)

I don't think many people agree with mortgage write-downs i.e. keep the house and reduce the debt.

In my opinion, if debt is to be written off, you must lose the house.


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## Dr.Debt (7 Dec 2012)

Well, the new Personal Insolvency Bill says that the main home must be protected at all costs.......(or words to that effect) In fact under the bill, an Insolvency Practitioner is not permitted to propose any settlement where the debtor will lose their home or indeed equity in their home.


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## Kerrigan (7 Dec 2012)

Dr.Debt said:


> Well, the new Personal Insolvency Bill says that the main home must be protected at all costs.......(or words to that effect) In fact under the bill, an Insolvency Practitioner is not permitted to propose any settlement where the debtor will lose their home or indeed equity in their home.



Well that's a breath of fresh air for those caught up in this mess.  Finally something positive.


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## mark71 (7 Dec 2012)

Dr.Debt said:


> Well, the new Personal Insolvency Bill says that the main home must be protected at all costs.......(or words to that effect) In fact under the bill, an Insolvency Practitioner is not permitted to propose any settlement where the debtor will lose their home or indeed equity in their home.



If that is correct it's a huge relief to a lot of people, myself included.


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## Dr.Debt (7 Dec 2012)

Yes it is correct under Part 4, section 99.

There is a sting in the tail though.....In most cases,The bank will be able to veto any settlement proposal if they don't like what is being proposed (provided they are a significant majority Creditor.)

So on one side an Insolvency Practitioner is not allowed to propose any settlement which involves the debtor losing their house but on the other side the majority creditor can veto the proposal if they don't like it.

The main thrust of the bill clearly supports the idea of a debtor retaining their PPR if at all possible


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## Kerrigan (7 Dec 2012)

Any idea Dr. Debt who the Insolvency Practitioners will be?


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## Dr.Debt (8 Dec 2012)

No, Its not clear yet.
It has been said that Accountants and Solicitors might be interested and other "suitably qualified persons"


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## Kerrigan (8 Dec 2012)

Hmmm I've heard the debt management companies are heavily lobbying.


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