# Would the bank do a deal?



## Keefor (4 Dec 2012)

I currently have a 650k of mortgage debt with my principle residence and an investment property. The joint value of the property's would be around 425k. I recently lost my job and my relatives said they would pool some of their money together to pay a lump sum off my mortgage debt IF the bank would be willing to make a deal and write down the mortgage for more money than the lump sum they are willing to pay.

Has anyone come across this situation before where they have made a deal with the bank and got more money written off than the lump sum that was paid off? Say for example I got a lump sum of 100k, how much would the bank be willing to write off to accept the cash lump sum of 100k now? If someone has experience of this what is the best way to approach the bank? 

I dont expect to get the kind of salary I used to be on so I envisage mortgage debt repayment issues for the future unless something is done. Please help!!


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## user name (4 Dec 2012)

What bank are you dealing with


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## Importer (4 Dec 2012)

First of all, we don't know enough about your situation to give you a meaningful reply. Before anyone can give you any proper advice you will have to provide a lot more information
We know that you have mortgage debt of 650K.
Did you receive any redundancy payment ?
Do you have any other assets, investments or savings ?
Do you have any other loans ?
What are the chances of getting employment ? Do you have skills that are in demand ?
Are you single or married ? Children ?
Does your spouse work ?
What age are you ?
Are you in arrears on your mortgages ?
Do you have a clean credit rating ?
What level of mortgage is on the investment property and whats value 
of the peoperty? Do you have rental income on the investment property ?

Sorry to say this but I'm not aware of any bank that will do an over the counter deal to write off debt easily even in exchange for debt reduction
from your side. Writing off debt will only happen in the near bankruptcy cases where its clear that the individual is so swamped in debt that there's no way out and no way to recover.

If you approach the bank with this type of proposition, they will consider your case only after in-depth consideration of all your personal circumstances. 

If the bank considers that you're a person who will be able to secure another job and pay your way out of debt, then its very unlikely that it will write off anything. If the bank is aware that there are relatives in the background willing to come to your aid, it may weaken your case.

On the other hand if the bank considers that you are a candidate for bankruptcy, it may consider writing down some debt if this course of action
is effective in reducing its overall loss and is a better option for the bank than bankruptcy

If you can give some more information, then we may be able to offer some oppinions on what the bank response is likely to be, or how the bank might view your case


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## Brendan Burgess (4 Dec 2012)

Do you have one mortgage secured on two propertie or are they separate mortgages? 

Presumably it's the same bank? 

Bank of Scotland is doing deals on investment properties. They want to get rid of their mortgage book. If it's with BoS, then you have some chance. 

If you are with one of the other banks, you have no chance at the moment, and it's probably not worth approaching them.  

If you have a tracker mortgage, you may be better off waiting to see if deals will be done on tracker mortgages. 

The chances are that they will switch you to interest only. If you mention that you have access to €100k cash, they will pressurise you for the cash and not give you any deal. 

You could ask if you could sell the investment property.  They might do a deal on the shortfall after it's realised. 

Or better still, wait until we see how the banks react to the Personal Insolvency Bill.

Brendan


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## Dr.Debt (4 Dec 2012)

This idea that Bank of Scotland is doing deals and writing down debt is complete and utter nonsense "because they want to exit the Irish market". There was one case reported in the press where bank of Scotland Ireland allegedly wrote down a credit card debt from 8000 to 5500 and the Journalist didnt seem to understand or didnt want to understand that there was extenuating circumstances in that particular case

Importer is correct when he says that no bank is going to write down one penny more than they need to. If any bank really wanted to wash its hand s of the loan book that quickly, it can just sell the loan book.


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## Keefor (4 Dec 2012)

Thanks for the responses. My bank is BOI.

No redundancy payment, no other assets or savings or loans.

I would say my chances are good re getting employment but not at a rate that I was on. I am married but my wife's salary is low and we just about met the mortgage repayments if I was receiving rental income. However as my salary will drop I will more than likely have to pay interest only on at least one of the properties when I get a job in the future. 

I have 2 kids and I am in my late 30's. I have a clean credit rating. The mortgage on the investment property is around 300k and its current value is about 215k. The rental income is about 600 euros a month short of the repayments.

When I get a job. I wont be able to meet the repayments so I was hoping the bank would realise if they got money up front now it would be better than chasing me for years for money that I wont have to give them. Is it not better for the bank to take money now rather than incur costs and time over a long period chasing me for money that more than likely I will never be able to afford to pay back? 

If not is the banks angle that they think the property market will eventually rise to cover the costs of any arrears and mortgage outstanding?


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## Keefor (4 Dec 2012)

Thanks Brendan. 2 mortgages with the same bank. Its with BOI. Neither mortgages are trackers. How long would I need to wait for the banks to react to the personal insolvency bill?


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## Dr.Debt (4 Dec 2012)

Hi Keefor, Sorry to read that you have been made redundant. If im reading the situation correctly and you do manage to get back up on the horse and find a new employment, it seems that your situation may not be all that bad especially if you can put the investment property on interest only for the time being. Truthfully, I dont believe the bank will bite your hand off, by offering debt forgiveness.

Then again, God loves a trier. You might approach them about selling the investment property offering to go 50 / 50 on the negative equity arising from the sale. Bank of Ireland are trying to restore their deposit /  loan ratio to a more sustainable level at the moment, so they might see some value in closing off one of those two mortgages.

Best of luck...


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## Artemis (5 Dec 2012)

In terms of the original question, Would the bank do a deal? Let me tell you Irish Banks, Foreign Banks and NAMA are celebrating at recovering 10% of the outstanding balance, after the Asset is sold, without the cost and hassle of having to go to court. 

Unless you are living in Southfork with no mortgage, I suggest you tell the bank where to go. 

Put an offer on the table and as soon as a figure that is manageable is reached, start paying it every month and get on with it for the next 5 years. 

If the bank will not engage, tell them to summons you to court. As long as your proposal is reasonable in relation to your circumstances you will be no better of in front of the judge.


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## Importer (5 Dec 2012)

I think thats probably poor advice.....

The bank and the borrower have entered into a binding written contract.

As far as I understand it, the OP has not yet defaulted on his loan and as far as I am aware his credit rating is intact and he is not in arrears. I'm also surmising that his particular situation is far from hopeless which is extremely relevant as to how this situation plays out

If he decides to forego his credit rating and play hardball with the lender then yes he may end up in front of the judge. The judge does not have the power to write off the debt. He may make an order regarding the level and size of repayments but thats pretty much it.

As regards the banks celebrating at recovering 10% of the asset value. That makes no sense at all. I think you must have been discussing this with the bar stool philosophers. At the very minimum the bank will want to recover the value of the security which in most residential cases will be a minimum of 50%


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## Artemis (5 Dec 2012)

10% of the shortfall, not the asset. assuming the asset is worth 50% and even if the borrower did pay 10% of the loan not the shortfall, that would be a 60% recovery for the banks. An yes there would be High-Fives to beat the band, if the banks could achieve this.

And in terms of your bankers waffle about entering into a written contract, all borrowers did that but only the small guys are being asked to stick to it.


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## manninp2 (6 Dec 2012)

Artemis said:


> 10% of the shortfall, not the asset. assuming the asset is worth 50% and even if the borrower did pay 10% of the loan not the shortfall, that would be a 60% recovery for the banks. An yes there would be High-Fives to beat the band, if the banks could achieve this.
> 
> And in terms of your bankers waffle about entering into a written contract, all borrowers did that but only the small guys are being asked to stick to it.



10% of the shortfall of 50% would leave the bank with 55%.


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## Artemis (6 Dec 2012)

manninp2 said:


> 10% of the shortfall of 50% would leave the bank with 55%.


Excellent grasp of basic maths, but I think we could figure that out. 60% recovery is based on "10% of the loan not the shortfall" as clearly stated in the text.


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