# Great Result dealing with A.I.B.



## robert 200 (2 Dec 2015)

I had a very positive meeting with A.I.B on Monday. It was to conclude our negotiations which
have lasted 5 years. I am currently in negative equity.

A.I.B. have agreed to allow me to stay on an interest only tracker for 5 years.

A.I.B. have 8 buy-to-lets and my family home as security. Assuming capital appreciation of
3% per annum I will be back in positive equity within this period.

My 24 tenants and myself are delighted with this outcome and the fact that we have security of
tenure for the foreseeable future.

Think this calls for a celebration.


----------



## Bronte (2 Dec 2015)

robert 200 said:


> Think this calls for a celebration.



It absolutely does and congratulations well done Robert200 and thanks for sharing.  (and well done AIB negotiatiors and realists, wouldn't Ireland be a much better place if we were to hear about stories like this more often.  To help make some amends for the mess you guys got us into and out of which the taxpayers helped you)


----------



## Clonback (2 Dec 2015)

A pragmatic solution by AIB and congrats to Robert.The location in South Dublin I would think made it work for both parties.


----------



## Brendan Burgess (3 Dec 2015)

HI Robert

That is great news indeed.  It's interesting that they were happy to put trackers on interest only.  I would have thought that it would be in their interests to get rid of the trackers.  They could have appointed receivers easily enough I assume. 

I see that you asked about the IMHO a few years ago. Did they help you to negotiate this? 

Brendan


----------



## dereko1969 (3 Dec 2015)

I'm a little confused by your posts. Yourself and your wife are on €115,000 between you, you have 8 properties that (seemingly) are all rented out, in great locations in South Dublin (according to yourself) so should be covering or just below the mortgages outstanding given the rents being achieved in Dublin.
Might be useful to share how it came to pass that you found yourself in this situation.
Whilst I think it is good that Banks are taking a pragmatic approach, it depends how pragmatic that approach is and the detail provided is scant.
Are all the properties cross-secured on the family home?
What is the deficit between rent and mortgage payments?
Is it just one mortgage covering all the properties?
Are all the properties in negative equity?
What tracker rate are you on?
Did you run into arrears? When?


----------



## robert 200 (3 Dec 2015)

Hi Brendan ,
I didn't involve IMHO in the end , i thought the softly softly approach might be better and luckily it worked out.


----------



## Bronte (3 Dec 2015)

dereko1969 said:


> , it depends how pragmatic that approach is and the detail provided is scant.
> Are all the properties cross-secured on the family home?



I never really understood why this was important, you owe the money and they will come after everything, they don't need cross security.


----------



## Bronte (3 Dec 2015)

robert 200 said:


> Hi Brendan ,
> I didn't involve IMHO in the end , i thought the softly softly approach might be better and luckily it worked out.



I realise you don't want to divulge in case you are identified, plus I assume you signed a confidentiality agreement, but you might do one of two things.  Identify kindof what you did on here, or send Burgess an email outlining the gist of  it and at some stage he I'm sure will use it to help others.  Do it maybe a month from now so it's not linked to you or your previous posts or bank, on here.  I only ask for the benefit of others who are not so fortunate to have as yet stuck a deal and are facing another Christmas of hell.  Best of luck.


----------



## robert 200 (3 Dec 2015)

Hi Dereko ,
There were a few reasons I ended up in this situation .
A heart attack , prostate cancer , an acrimonious divorce , BOI and AIB shares and a little thing called
an Economic Downturn that wiped approx.  65% off the value of my buy-to-lets.


----------



## Delboy (3 Dec 2015)

Am I the only one here that finds this deal a bit worrying? AIB are a state owned bank after all.
The 3% annual growth in House prices bit...what happens if that doesn't come to pass.

If it does, what happens in 5 years time- do you have to sell up and pay down debt. Or do you switch to the full Mortgage amount, incl Capital, and continue on?


----------



## HelpingHand (3 Dec 2015)

Delboy said:


> Am I the only one here that finds this deal a bit worrying? AIB are a state owned bank after all.
> The 3% annual growth in House prices bit...what happens if that doesn't come to pass.
> 
> If it does, what happens in 5 years time- do you have to sell up and pay down debt. Or do you switch to the full Mortgage amount, incl Capital, and continue on?



Ba humbug! The deal gives the debtor an out, if the receiver came in and sold the lot, the bank take the capital loss onto their books immediately, the bank has probably no realistic chance of ever recovering the outstanding loan losses. This way, the bank are giving the debtor and themselves a chance, capital appreciation may happen, indeed it will most likely happen ( stats are in favour of this after a bust ) Are the State not lining up AIB for a sale ? Do they not want it's loan book to be in good order and performing ? Well done again, to both parties.


----------



## dereko1969 (3 Dec 2015)

robert 200 said:


> Hi Dereko ,
> There were a few reasons I ended up in this situation .
> A heart attack , prostate cancer , an acrimonious divorce , BOI and AIB shares and a little thing called
> an Economic Downturn that wiped approx.  65% off the value of my buy-to-lets.



Sorry for your troubles. You keep talking about negative equity, fair enough, but you haven't answered whether your rental income was meeting your mortgage payments and how short you were in meeting these every month and whether or not any of these could have been sold. You haven't answered any of the detailed questions I asked.
I'd be with Delboy on this as it seems symptomatic of me of the kicking the can down the road that has infected civil society - I don't want you kicked out of your family home but I don't understand why they're letting you hang onto the 8 buy-to-lets that you have.
Your tenants would more than likely become someone else's tenants if they were sold.
It's this type of stuff by the Banks that means I'm paying a least 1% more on my mortgage than I should be.


----------



## dereko1969 (3 Dec 2015)

Bronte said:


> I never really understood why this was important, you owe the money and they will come after everything, they don't need cross security.


I suppose part of what i'm trying to find out is why they haven't forced the sale of any of the 8 buy to lets.


----------



## HelpingHand (3 Dec 2015)

Because any losses on the said loan(s) would be crystallised immediately on the banks books. Do not forget that AIB is up for sale.


----------



## robert 200 (3 Dec 2015)

I agree Helping hand , this way the bank "should " get back every euro owed to them and I get to keep my home.
Sorry if my good news upsets you Derek I suppose there will always be begrudgers.


----------



## orka (3 Dec 2015)

dereko1969 said:


> I suppose part of what i'm trying to find out is why they haven't forced the sale of any of the 8 buy to lets.


What would that achieve?  It would leave the borrower with fewer assets to increase in value to plug the negative equity gap - making it longer and less likely that the problem would be sorted.  If, for example, they forced the sale of 4 of the 8 properties, it would take the borrower 10 years rather than 5 to have the property values back at the same value as the mortgages (this and following comments assume the 3% forecast increase happens).  And just think about that - in 5 years time, the mortgages and the properties will be valued the same - so what has the borrower gained?  At that point, his buy-to-let balance sheet is at zero.  It's not like he will own them outright in 5 years time courtesy of AIB/the taxpayer/you.

If the interest was at a 'bank cost of borrowing' rate, there would be no cost/loss for the bank.  The cost to the bank is the tracker interest gap lost on the capital repayments that should be made between now and 5 years time.  So maybe a percent or two on capital repayments for the next 5 years (and capital repayments are relatively small in early repayment years).  If the gap between the bank's borrowing rate and the tracker is 2%, I reckon the cost over the 5 years might be €1.72 per €1,000 borrowed.  So if there's €1M of borrowings, the cost to the bank is less than €2,000 over 5 years.  I think that's a more cost-effective option for the bank than (a) the potential for a write-off increasing and (b) legal and internal staff costs chasing up for the next 5 years.

As a tax-payer, I would prefer they incur a cost of €2,000 over 5 years than spend time and money hounding someone - possibly resulting in an actual write-off.  I don't like actual write-offs but if someone can cover the interest until the negative equity goes away, great.  The banks should do those deals all day long.

Having a nicely ordered loan book will make the bank a lot easier to sell too.


----------



## elcato (4 Dec 2015)

I think the point here that should be noted is that AIB are up for sale. I hope the OP has a good written contract of the deal as once it's sold then they may 'change their minds'


----------



## dereko1969 (4 Dec 2015)

Whatever about my feelings about AIB's approach to the buy to lets. The purpose of this site is to share information so that proper advice can be given.
The OP has hardly provided anything that would give enough information to others dealing with AIB to benefit from his experiences, just that it can be done, that's not hugely helpful to others.
And my views above were expressed on the scant information provided, it may very well prove to be a good medium term decision by AIB but given the information provided we can't tell. It's certainly a good deal for the OP and fair play for getting it.


----------



## robert 200 (16 Aug 2017)

According to C.S.O. figures I am back in positive equity after less than 2 years. Hopefully this will be a lesson to A.I.B. - to work with their customers and stop using bullying tactics.


----------



## Brendan Burgess (16 Aug 2017)

robert 200 said:


> Hopefully this will be a lesson to A.I.B. - to work with their customers and stop using bullying tactics.



The banks generally reach rescheduling agreements with 90% of the borrowers who engage with them.

AIB has probably been the most flexible of all the banks. It may have been the first one to introduce the split mortgage.  It is the only one to publicly say that they will write down mortgages in some cases.

Many borrowers are unreasonable and then characterise AIB as bullying because AIB insists that they pay their mortgage ahead of their Credit Union, holidays or private school.

Brendan


----------



## Brendan Burgess (16 Aug 2017)

dereko1969 said:


> I'm a little confused by your posts. Yourself and your wife are on €115,000 between you, you have 8 properties that (seemingly) are all rented out, in great locations in South Dublin (according to yourself) so should be covering or just below the mortgages outstanding given the rents being achieved in Dublin.





robert 200 said:


> Hopefully this will be a lesson to A.I.B. - to work with their customers and stop using bullying tactics.



Just gone back over the thread.

AIB moved a tracker mortgage to interest only and you accuse them of bullying you!


----------



## robert 200 (16 Aug 2017)

That was not my experience with AIB nor the vast majority of landlords in the Irish Property Owners Association - 4,000 fulltime landlords were forced to sell all their properties
over the last 3 years. That is one of the reasons for the current wave of homelessness.

I never missed a repayment in 25 years but when the crash came the rents halved - I just needed a little time for things to get back to normal.

In ANY business if a customer has an excellent track record you cut him a little slack if things get tight - Thats the real world.

AIB used a number of bullying tactics - threatening repossessing my home , tormenting me with phone calls , sending in receivers and increasing interest rates etc.etc.

It took 5 years of argument for them to cop on. I give them no marks for that and their part in the homeless situation.


----------



## Brendan Burgess (16 Aug 2017)

robert 200 said:


> 4,000 fulltime landlords were forced to sell all their properties
> over the last 3 years. That is one of the reasons for the current wave of homelessness.



I see. And they had to knock down the houses after selling them? 

Repossession does not increase the wave of homelessness. 

Brendan


----------



## Brendan Burgess (16 Aug 2017)

robert 200 said:


> AIB used a number of bullying tactics - threatening repossessing my home , tormenting me with phone calls , sending in receivers and increasing interest rates etc.etc.





dereko1969 said:


> I'm a little confused by your posts. Yourself and your wife are on €115,000 between you, you have 8 properties that (seemingly) are all rented out, in great locations in South Dublin (according to yourself) so should be covering or just below the mortgages outstanding given the rents being achieved in Dublin.



I have no idea if AIB was being unreasonable or if you were.  A lot of investors who borrowed too much think that the bank should carry the can and extend their tracker mortgages indefinitely. 

Given the number of properties you had, it would seem reasonable that they told you to sell most or all of them.

Brendan


----------



## bren1986 (16 Aug 2017)

It all doesn't really add up, you never missed repayments in 25 years? You were still in negative equity? Surely most houses are paid off after 25 years of repayments or close to it.

You have tracker mortgages and rents not covering your repayments? I would assume it would have to have been very close or how would people on variable buy to lets been able to hold on because that difference of 2% is a big difference in monthly repayments.


----------



## robert 200 (16 Aug 2017)

Brendan ,

Allow me to explain 

I have a property in Rathmines in 8 units - studio apartments. 6 of the tenants receive rent allowance and their rent is €595 p.m.

If I had been ordered to sell this property by the bank - after the appropriate notice had been given to these 6 tenants they would most likely have become homeless for 2 reasons.

The first reason is because rent allowance tenants are not flavour of the month because of the limited allowance and some hungry landlords know they can squeeze extra rent from professionals.

The second reason is that these properties are being converted back into single private dwellings. This is also happening in Ranalagh , Rathgar , Clontarf and Fairview etc etc.

The shortage of rental accommodation is seriously contributing to the homeless crises.

That is why in my opening post I said myself and my 24 tenants now have security of tenure for the foreseeable future.


----------



## robert 200 (16 Aug 2017)

Brendan Burgess said:


> Repossession does not increase the wave of homelessness.


----------



## Brendan Burgess (16 Aug 2017)

Hi Robert 

Thanks for that.

As I have said, repossession does not increase the level of homelessness.

The stupid ban on bedsits has done so. 

Brendan


----------



## bren1986 (16 Aug 2017)

Thanks for explaining that part Robert but it doesn't explain it all, not that you have to it is your privacy.

But don't fool yourself thinking AIB care if they made 24 people homeless, If majority of banks could they would put people in arrears out on street. They only care about making money at the end of the day. And it is there lending in the boom that has this country in such a mess.

Also congratulations on your deal it was a hell of a good deal and you on a tracker.


----------



## Cervelo (17 Aug 2017)

robert 200 said:


> That is why in my opening post I said myself and my 24 tenants now have security of tenure for the foreseeable future.



First of all congrats on get the bank to agree to your terms, I know from personal experieance that even with rock solid guaranteed securities they can be very shortsighted when dealing with indidividuals.
But I can't help but wonder about the "security of tenure" for you and your tenants when the interest only period ends and you have to start paying the capital portion of your loans ??


----------



## bren1986 (17 Aug 2017)

I also assume you were in mortgage arrears and it was ongoing for 5 years, did they capatilize arrears and how much arrears did you occur over the period?

Maybe AIB played this smart and allow you to maintain it for the 5 years until property recovers and if you can't make full repayments afer the 5 years they will then make there move to minimize their loss.

Your repayments will be increased dramatically you will be paying interest and capital on a big mortgage and end of 5 years.


----------



## dereko1969 (17 Aug 2017)

Now that you're in positive equity have you suggested to AIB that you increase your payments? Seems odd you're able to fit 24 tenants into 8 bedsits.


----------



## Brendan Burgess (17 Aug 2017)

dereko1969 said:


> Seems odd you're able to fit 24 tenants into 8 bedsits.



Let's make Robert the Minister for Housing. 

Brendan


----------



## robert 200 (17 Aug 2017)

*Hi Ladies , did you read the details? i have 8 properties

I can now refinance if AIB try their bullying tactics again

I see the green eyed monster is alive and kicking ,

disappointed in our founder !!!!*


----------



## bren1986 (18 Aug 2017)

Hi Robert,

Dereko1969 is correct because above you said

---------------------


robert 200 said:


> I have a property in Rathmines in 8 units - studio apartments. 6 of the tenants receive rent allowance and their rent is €595 p.m






robert 200 said:


> That is why in my opening post I said myself and my 24 tenants now have security of tenure for the foreseeable future.



----------------

So basically you have 8 studio apartments with 24 tenants.

Studio apartments should only have 1 bed in them and you have 24 tenants?

Nothing you are saying adds up no harm bank wise or tenant wise.


----------



## Brendan Burgess (18 Aug 2017)

robert 200 said:


> A.I.B. have 8 buy-to-lets and my family home as security. Assuming capital appreciation of
> 3% per annum I will be back in positive equity within this period.
> 
> My 24 tenants and myself are delighted with this outcome and the fact that we have security of
> tenure for the foreseeable future.



On reading it again, Robert is quite clear that he has 8 separate properties.



robert 200 said:


> I have a property in Rathmines in 8 units - studio apartments. 6 of the tenants receive rent allowance and their rent is €595 p.m.



This is just one of the 8. I think it was the coincidence that he has 8 properties and one of them is in 8 units that caused the misunderstanding. 

Brendan


----------



## bren1986 (18 Aug 2017)

I have to assume Robert is over 50 given he stated he never missed a mortgage repayments over 25 years etc..

Now if he does own 1 property with 8 studios we have to assume 8 studios cost in the region of 200k in the boom, then he also has another 7 properties let's say average 200k also. That is a substantial loan book.

So with 8 studios and 7 properties I'm just going to guess 2million given he hasn't given any details I'm speculating. Obviously he has a mortgage on all properties as if he was in positive AIB would have been calling in their money.

So he's currently paying 2million let's say

Montly repayments on 2mil interest only is 1,666

When he has to revert back to capital and interest let's assume rate is 1.5% as he has a tracker mortgage

Over 10years repayments = 18k monthly
Over 15years repayments = 12.5k
Over 20years repayments = 10k

I just also find it hard to believe you have 8 studio apartments and 7 properties (24 tenants) 6 tenants we know pay 595 each and AIB accept payments of 1666 monthly interest only and you are bound to be taking in let's assume 24x500euro each (average) tenant which is 12,000euro monthly.

AIB aren't fools to let you profit 10.5k rent monthly and only pay them 1666 for 5 years??? That means after you pay mortgage you profit 630,000euro over the 5 years less whatever tax.

See this is what happens when you don't give full details one has to speculate. And I think I'm being generous with my speculation because I think if you do own 8 studios and 7 properties your loan book is a lot higher.


----------



## robert 200 (18 Aug 2017)

i am restricted by confidentiality agreement.

i just wanted AAM to know that
there are fair deals to be had if you are 
patient and that AIB are finally making
intelligent commercial decisions now.

Hopefully they will restrict the forced sales
of Pre-1963 properties which was seriously 
adding fuel to the homeless numbers.


----------

