# Looking for direction on Mortgage Arrears & dealing with Bank



## euroman (22 Nov 2012)

Just looking for some direction here, I am helping out a family member with their on-going debt crisis. They received a letter from Bank (Pepper formally GS Money ) stating They are no longer able to provide alternative repayment arrangement due to viability & sustainable as there is no evidence of viable long term affordability that would sustain their mortgage. The options they give are to (i) Appeal there decision (ii) Voluntary surrender the property or (iii) sell the property. 
They have two loan agreements Mortgage Bal 1 €350,000 Arrears Bal 1 €60,000 @ 4.74% and Top up Bal €68,000 Arrears Bal €8,500 @ 5.40% The monthly repayments are €1800 and they have been paying back €800 per month for the last 2 years. Value of home €300,000. There is 3 children in the family. They would like to continue to live in their home is possible. Is there any point in appealing this as it doesn’t seem to be an independent organisation? The Appeals Board, Pepper Asset servicing. All advice welcome. Thank you.


----------



## orka (22 Nov 2012)

The mortgage looks truly unsustainable if they can only afford €800 per month.  Is your relative's financial situation likely to improve any time soon?  At the interest rates you quote, interest only should be €1,964 a month so they are not even paying half the monthly interest.  So arrears are just going to build and build.  Even if they were paying more standard interest rates of maybe 4% per month, interest only would be over €1,600 per month.    

The total balance outstanding is 486,500 on a value of 300,000.  Have Pepper indicated what will be the status of the balance outstanding if the property is sold (either voluntarily or after repossession)?  If the balance will be written off, this could be the best option.  I think Pepper bought GE's mortgages at 40c on the euro so getting back 300K on a 486.5K debt (61.5% of the outstanding) may still mean a profit for them.  Offering voluntary surrender subject to a write-off of any remaining balance after the sale might be a good starting point for discussions with them.  I know it doesn't achieve the aim of staying in the house but it would give them a clean sheet to restart with no past debt hanging over them.


----------



## Importer (22 Nov 2012)

If at all possible, I would urge your relative to try and avoid making any decision or progress on this matter until the Personal Insolvency Bill is in place in three or four months time.

If I was acting as your relative's Insolvency Practitioner under the new bill,
I would be seeking to establish an arrangement with the creditors to :

1)write down the mortgage debt to more or less the value of the property,300K
Request interest only payments on the 300K for five years at a rate of 3% - 4%
Any available disposable income left after paying the mortgage and basic living expenses would be used to pay off unsecured creditors (including written off mortgage) for a period of 5 years
If there is no Income left to pay unsecured creditors, then the PIP should request the unsecured debt to be written off completely
After five years the position should be reviewed

There is no guarantee that the Mortgagor will agree to this. If not I think the only remaining solution is bankruptcy.


----------



## euroman (22 Nov 2012)

Thank you so much, keep it coming!!!


----------



## euroman (17 Jun 2014)

18 months on and things are no better.  Where can one go from here?

Income details
Net monthly *€1800 e.g. self-employed/BER Asser *
I was involved in the construction industry and lost everything
Net monthly income partner/spouse: *€800  Part-time work: *
Amount of child benefit received *(€280) *
Amount of Mortgage Interest Supplement received NIL
Personal circumstances so we can calculate your reasonable living expenses 
The Insolvency Service has published Guidelines for reasonable living expenses based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be. 
One adult family or two adult family
Do you need a car for work or do you use public transport?  Yes I need a CAR for my employment
Number of children 0- 2 years old:
Number of 3 years old children: 
Number of 4 - 11 years old: *2*
Number of 12 - 18 years old: *1*
Monthly childcare costs: *160 Child maintenance*
Monthly spend on special circumstances: e.g. exceptional healthcare costs NIL



Home loan
Lender: PEPPER
Total Amount outstanding: *€429,847*
Value of home: *€180,000 - 200,000*
Interest rate: fixed rate *4.74%*
Monthly repayment *€1800 *
Amount in arrears *€90,190*

Summary of discussions and agreements with the bank e.g. in Marp since Jan 2011 . Only able to pay €800 a month Not eligible now as unable to pay interest

Credit Union 
Amount of shares *NIL*
Amount of loan outstanding *7,000*
Monthly repayment *40.00*
Term left 


Other loans and creditors - delete those which don't apply to you
I WENT personal guarantee ON A NUMBER OF ACCOUNTS with a business venture  AND HAVE DEBTS OF €30,000 FOLLOWING THAT.


Other savings and investments NONE

Do you expect any lump sums in the medium term future? 
NO 


How important is retaining the family home to you? 
Which of the following best describes your situation?

I do care about keeping the family home.  I would like to avail of the Mortgage to rent scheme if at all possible


----------



## 44brendan (17 Jun 2014)

There is no advice to offer here which would mean you retaining this property. You have not indicated what the action taken to date by Pepper is. Have they commenced reposession proceedings against you? You are insolvent and not in a position to offer the bank any realistic level of repayments. 
Have you been offerd a "mortgage to rent"? This is unlikely as it would make no sense from the point of view of the lender. 
Without being harsh, you need to consider your options outside of this property as you can no longer afford it!


----------



## Gerry Canning (17 Jun 2014)

Euroman; 
As per Brendan, you are insolvent and Pepper will want as much as they can get.
Means that eventually you will lose the property .

Strongly suggest get advice from an Insolvency practitioner as this issue needs to be handled carefully to give you the best of what will be worst options.
Sorry if I sound harsh as well!.


----------



## Brendan Burgess (17 Jun 2014)

44brendan said:


> Have you been offerd a "mortgage to rent"? This is unlikely as it would make no sense from the point of view of the lender.



Hi 44B , I don't understand this.  Why would it make no sense from the lender's point of view? If they can sell the house to a Housing Agency for its market value, why wouldn't they do this? 

euroman

You should be able to do a deal with Pepper to surrender the house and have the shortfall written off.  If this means surrendering it for sale to a Housing Agency, even better. 

When you last asked, Importer advised you to wait for the insolvency legislation. That is now up and running. 

You should try to get an informal arrangement done with your creditors to avoid the need for insolvency. But if you need to go bankrupt, do so now while your income is low.


----------



## euroman (18 Jun 2014)

Thank you for your replies: 
Pepper have said they may commence legal proceeding with respect to the mortgage etc and they also outlined the usual 3 options, Assisted Voluntary Sale, Voluntary Surrender & Mortgage to Rent.  

We are making inquiries re the MTR but to be honest I don’t know if we will meet the terms & conditions of that with your home having to be under €180,000 outside of Dublin.

I guess bankruptcy is the very last option.  When you say do an informal arrangement what do you mean as there is nothing there.  

Are there many Insolvency practitioners out there?  

Thanks again for your feedback much appreaciated.


----------



## 44brendan (18 Jun 2014)

> Hi 44B , I don't understand this. Why would it make no sense from the lender's point of view? If they can sell the house to a Housing Agency for its market value, why wouldn't they do this?


 
I should have elaborated that given the information provided by Euroman and the criteria from those cases that I have seen approved he would be unlikely to be accepted for this scheme.


----------



## euroman (6 Oct 2014)

Family friend said they were talking to Insolvency practitioner and they advise just focusing on the family home and forget about the other loans.  He has 3 judgments with Bank of Ireland re business loans where he went personal guarantee.  Judgments were taken out 5 years ago.  Am I right in saying that in another 5 years they will disappear and that will be the end of it or can they be renewed?    Thank you.


----------

