# Vulture fund have offered me a discount to settle a buy to let in Negative Equity



## jonahmurphy (7 May 2020)

Hi

Just reading through posts relating to these Vulture funds, i had a mortgage with one of the main banks which was sold to a vulture in the last 18 months. i have been back and forward with then threatening all sorts of legal action/repossession etc.

In the last few days they have offered a discount to settle the mortgage in full, it equates to about a 30% write off.

Is this happening more readily now?


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## RedOnion (7 May 2020)

Are you in negative equity?


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## jonahmurphy (7 May 2020)

Yes


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## RedOnion (7 May 2020)

There's nothing unusual about being offered a discount in certain circumstances, such as yours.


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## Brendan Burgess (7 May 2020)

Hi Jonah

Can you give a rough idea 
Value of property: 
Mortgage balance: 
Arrears balance: 

Interest rate: SVR or tracker? 

Will you have to sell the property to pay the mortgage or can you raise it elsewhere? 

Brendan


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## jonahmurphy (7 May 2020)

Hi Brendan

Property value is somewhere around 170K
mortgage balance is about 250K
Arrears Balance of 25K

Tracker by .80

Property has not been request to sell, funds can be raised elsewhere.


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## Brendan Burgess (7 May 2020)

So they will write off about €70k  and get €170k 

They would get less if they actually got an order for possession and tried to sell it.

With 2 years of arrears, they would eventually get an order, but it would cost a fair bit to enforce and the property probably would not sell for €170k.

Seems like a reasonable deal on both sides.

Brendan


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## Brendan Burgess (7 May 2020)

The alternative would be to go for a PIA but I assume that you have investigated that.

Brendan


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## jonahmurphy (7 May 2020)

Yes, i am happy enough with the deal. just wondering if this is common practice at the moment as i don't seem to be able to find any information on AAM of from a Google search.


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## Baby boomer (7 May 2020)

Is it your PPR or a buy to let?


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## Brendan Burgess (7 May 2020)

Hi Jonah

I don't know how common it is but it happens a fair bit.

It is one of the advantages of having your loan sold to a vulture fund.  The main banks rarely do deals like that in case it encourages other banks to default. 

It was more common in the past. But I have heard of offers of such deals being withdrawn or reduced.

My gut feeling is that you should go for it while it's available. 

I recommended this to one person who continued to negotiate for a better deal and it was withdrawn. They were in positive equity and could pay their mortgage so I don't know why they messed around.

Brendan


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## MrEarl (7 May 2020)

Baby boomer said:


> Is it your PPR or a buy to let?



Good question. 

I had assumed that it was a principal residence, right or wrong. 

Best of luck to the original poster, nice to see people getting a reasonable compromise, so they can move on with their lives.


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## jonahmurphy (8 May 2020)

Thanks All

It is a buy to let.


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## Jim Stafford (8 May 2020)

_Prima facie_, it seems it good deal, given that the normal "_business model_" for vulture funds is recover the value of the charged asset and to seek a contribution towards the residual debt. In this case the fund just seems to be settling for the value of the charged assets,  Perhaps they realise that they might not have a good charge on the property? Perhaps they realise that you have no other funds?

Given that Covid has changed everything, you do need to obtain legal advice on executing any settlement agreement.  You may be unable to raise the necessary funds etc to complete within the deadline stipulated, and that could leave you exposed to a judgment that you could not defend.

Jim Stafford


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## Baby boomer (8 May 2020)

jonahmurphy said:


> Thanks All
> 
> It is a buy to let.


In that case, would you not consider paying the arrears (or they might agree to capitalise it) and keeping it as an investment?


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## jonahmurphy (8 May 2020)

I think now i have the opportunity to get shut of it i will take it, dealing with this over the last few years has been an annoyance.


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## jonahmurphy (9 Mar 2021)

Just to update on this, deal was done and i received the deeds from my solicitor today. all very straight forward after agreeing the final figures etc.

Again thanks for the advice.


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## theprof (20 Mar 2021)

jonahmurphy said:


> Just to update on this, deal was done and i received the deeds from my solicitor today. all very straight forward after agreeing the final figures etc.
> 
> Again thanks for the advice.


Hi, glad it worked out, curious did you ask for a deal or did the bank suggest it to you first?


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## SPC100 (20 Mar 2021)

Thanks for update, very interesting.

If you got the deeds, that implies you had cash/assets elsewhere to pay off the mortgage?

If you had other cash/assets in surprised they offered such a good deal. I guess from their point of view, they made money on it as they likely paid less than 70p.c. when they bought the mortgage.


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## cremeegg (20 Mar 2021)

Well done to the OP


jonahmurphy said:


> Property value is somewhere around 170K
> mortgage balance is about 250K
> Arrears Balance of 25K
> 
> ...


I have a property almost exactly like this, except that there are no arrears. 

Should I stop paying the mortgage and see what happens?


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## Brendan Burgess (20 Mar 2021)

jonahmurphy said:


> deal was done and i received the deeds from my solicitor today.



Hi Jonah

I am curious about this as well.

How did you settle the mortgage? 

Brendan


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## Brendan Burgess (20 Mar 2021)

cremeegg said:


> Should I stop paying the mortgage and see what happens?



It's likely that the rental income is well ahead of the interest cost, so probably not. 

If the lender knows that you have other assets, they probably won't do a deal. 

And, of course, you will wreck your credit record, if that is important to you.

Brendan


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## cremeegg (20 Mar 2021)

Brendan Burgess said:


> It's likely that the rental income is well ahead of the interest cost, so probably not.
> 
> If the lender knows that you have other assets, they probably won't do a deal.
> 
> ...


The rental income is ahead of the interest cost, but why is that relevant, I am in business to make a profit.

I dont have other assets that the lender could easily access. I have other property but it is mostly mortgaged to other lenders.

The damage to my credit record is a consideration, but I am unlikely to need any significant future credit.


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## RedOnion (20 Mar 2021)

cremeegg said:


> The rental income is ahead of the interest cost, but why is that relevant


Can the lender / fund appoint a rent receiver in your case?


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## Brendan Burgess (20 Mar 2021)

cremeegg said:


> The rental income is ahead of the interest cost, but why is that relevant, I am in business to make a profit.



Eh, that is what a profit is!

When the income exceeds the costs. 

Particularly as you are in deep  negative equity, this is a real profit. 



Brendan


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## cremeegg (21 Mar 2021)

RedOnion said:


> Can the lender / fund appoint a rent receiver in your case?


I don't think so, but I would have to be sure before I did anything.


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## cremeegg (21 Mar 2021)

Brendan Burgess said:


> Eh, that is what a profit is!
> 
> When the income exceeds the costs.
> 
> ...


I don't understand the point here. You asked if the rental income is ahead of the interest. It is. I don't understand how that is that relevant ?


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