# Vulture Fund took investment property now going after family home that has a tracker



## Paulino (8 Mar 2017)

Hi,

I have done my best to read as many posts as possible in order to get the best advice possible.  As we are not legal eagles or accountants we are beginning to lose sleep over this, to such an extent that it is beginning to effect our ability to go to work  and generate revenue from our business. We have never attended a court and find the whole prospect of being persued for our family home incredibly stressful especially as we have made efforts to negotiate. When we took on the mortgage for our investment property, we made sure that our home was not offered as security on it. Coupled to this, the fact that our family home has a tracker mortgage and if Pepper force a sale, we will lose it's considerable value. I have attached as much  information as possible.

*Sequence of Events*

On 9th Sept asked to put together SFA for Pepper. We submitted it on Friday 21 November 2016. They declined our proposal on 21 December 2017 and gave us 20 working days to submit an appeal. On 9th Jan, we sent them an email saying we were in the process of getting accountant to negotiate on our behalf and need 2 weeks to submit details. On the 9th Jan (same day), Pepper came back and said they would not give us any more time. On the 12th Jan 2017, We gave them details of an accountant who would take over on our behalf. This accountant asked us to get valuations for the property.

On the 16th Jan 2017, We phoned Pepper to get a response on the email from the 12th Jan 2017. Pepper sent a template for us to sign that day saying that the accountant is now authorised to deal on our behalf.

On 28th of January, Pepper sent me a letter containing statement of account (total amount owed + arrears), included was a letter asking us to come in and talk to them to review the loan and a proof of indentity. They asked us to forward them this within 21 days.

On 1 Feb, we get a letter from Pepper's solicitors asking us to pay back the loan in full.

On 15th Feb we receive a letter from the receiver.

On 15th Feb, I send a letter to Pepper asking them whether I could sell the property myself as I could possibly get a better price as opposed to a rushed sale. Later that day, they emailed to say they were declining this offer.

*
Income details

Net monthly Self: 2250 euro with potential for strong growth*

Income history: Myself and my spouse began building a localisation business in the year 2000 and at its height it was turning over €1.2 million.  We lost the business in 2010 as an international client with whom we had nearly 90% of our  business with was taken over.  We spent a number of years trying other business ideas and startups and in 2014 started a company which is now beginning to show strong potential.

*Net monthly income partner/spouse*: *2250 euro with potential for strong growth*

Income history: Same as above

Amount of child benefit received:  *€260*

Amount of Mortgage Interest Supplement received: 0

*Personal circumstances so we can calculate your reasonable living expenses *

We require a car for work and we have two teenage kids who go to the local community college.  They are 13 and 16 years old.

Reasonable living expenses: *€2,240.65* (got this for isi.gov.ie)


*Home loan*
Lender:  *EBS*
Amount outstanding: *300,000*
Value of home: *450,000 - 500,000*
Interest rate: *Tracker*
Years Left:* 15 *
Monthly repayment : *€1757*
Amount in arrears :* 0*

*Summary of discussions and agreements with the bank*:

we were in arrears in early 2016 but after paying the full mortgage, the arrears were consolidated in January 2017.

*Investment property - *Delete if not applicable 
Lender: *Permanent TSB recently sold to Pepper*
Amount outstanding: 277204
Value of home: 170,000 - 190,000
Interest rate: Variable Commercial loan
*Note:* Two weeks ago receiver has been brought in to sell the property. Solicitor says they will go after family home for the shortfall.
Amount in arrears: *30,000
*
Investment property Italy 
Lender: *Banco di Napoli*
Amount outstanding: *50,000*
Value of home: *120,000*
Interest rate: About 1.78%
Note: *This week we have put the property up for sale but property market not great in Italy so am expecting at least a year for a sale*
Amount in arrears: 0

*Other loans and creditors - *delete those which don't apply to you
Overdraft - amount outstanding: € 5,750
Overdraft - monthly amount you are paying: € 250
Credit Card - amount outstanding: € 9,450
Credit Card - monthly amount you are paying: € 150
Term loan Amount outstanding: €20,200
Term loan - monthly repayment: € 150


*Other savings and investments 

Do you expect any lump sums in the medium term future? *

I have recently been told that I can withdraw up to €25,000 from my Company pension
*

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

I really want to keep the family home as it is ideal for our family's requirements. In addition to this, my kids are entering leaving cert year and being forced to sell would place a lot of stress on the family.


*Any other relevant information

What is your preferred realistic outcome? *

Consolidate, that is recapitalise with EBS and bring down total monthly Debt and pay Pepper something.

Mortgage of 300 (but tracker)
Repay Pepper 100 or make them an offer but probably need up to 100K
Consolidate debt of 35,400 with above recapitalisation

My Maths: Assume tracker worth 100k, give EBS discount of 30% to entice them

New Mortgage (variable/fixed) = 230,000 + 35,400 + (100K to pay off pepper)
New Mortgage = 365K (Debt consolidated + Pepper paid off)

Italian propery sold after 1 year to bring down mortgage to
365K - 70k = 295K

Could also release some pension of 25K if necessary to bring it down to 270k

*Other Information:
*
As mentioned earlier, we have absolutely no experience with courts and the legal system here in Ireland. We are looking for advice on what to do and how to proceed. My wife and I are very stressed over this.

Many thanks.


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## Brendan Burgess (8 Mar 2017)

Don't panic.
*
There is absolutely no way that Pepper can touch your family home. 
*
They are either trying to frighten you or telling you that you may lose your family home, so that they comply with the Central Bank requirements. 



Paulino said:


> Solicitor says they will go after family home for the shortfall.



What solicitor said this? Yours or theirs?

This is what would have to happen.
1) The Receiver sells the  investment property and there will be a shortfall of €80,000
2) They get a judgement against you for €80,000
3) They register that as a judgement mortgage against your home.
4) They seek to enforce that mortgage by asking the court to grant them an order for possession.

There is not a hope in hell that they would get that.  I very much doubt that they would even try.

So they will sell the investment and register the shortfall against your family home.
If you ever sell the family home, you would have to pay off the judgement mortgage out of the proceeds.

*But they would never be able to jump in ahead of EBS and force the sale of your home. 
*
It is theoretically possible that after your mortgage is paid off, they might try. But I doubt it.

By then you will have sold the investment property and paid off most of the shortfall.


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## Brendan Burgess (8 Mar 2017)

Paulino said:


> On 9th Sept asked to put together SFA for Pepper. We submitted it on Friday 21 November 2016. They declined our proposal on 21 December 2017 and gave us 20 working days to submit an appeal.



This did not all start 5 months ago?  You must have been in discussions with ptsb before that.  

If you reached an agreement with ptsb and Pepper is ignoring it, then you should complain to the FSO and the Central Bank. 

Make sure that you build up a good file on this.  Keep all the documents.  Keep records of all phone calls. 

Brendan


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## Brendan Burgess (8 Mar 2017)

Paulino said:


> We have never attended a court and find the whole prospect of being persued for our family home incredibly stressful especially as we have made efforts to negotiate.



I suggest that you find out when your local court holds its hearings for repossession cases. Go down and watch the farce. You will see people who are paying nothing getting away scot free.  You will see how it's almost impossible for a lender to enforce their security in Ireland.  It would be even more difficult for someone with a judgement mortgage. 

Brendan


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## Paulino (3 Apr 2017)

Thanks so much for this advice Brendan. It has been very thorough. I have a further three questions.

1) Assuming they put a lean on the family home, how much would this cost overall? We have been told that the daily interest charge is €18.73, based on 279,000. Assuming a sale price of 180k on the investment property, that would leave a shortfall of approx 100k. I estimate the daily charge to be 100/279= 0.3584. Therefore 0.3584*18.73 = 6.71 daily. Therefore over a year (6.71 x 365 days) = €2450 annual interest on 100K. Are there other charges that I am missing? Once they put a lean on the house (of say 100K), is that amount then fixed (i.e. there is no further negotiation possible to come to a settlement at a future date, or is it set in stone?).

2) Assuming we can reach a position where we can pay them off, how much would they accept assuming we owe them 100K and taking into account that they bought this property as part of a basket for a fraction of what we owe on the mortgage? There must be a financial model somewhere for this, where various scenarios can be keyed in?

3) Does it make sense to go back to EBS and attempt to renegotiate the tracker mortgage that we have (that we estimate is worth about 100k over the remaining lifetime) and attempt to use this to release cash to pay them off and consolidate some of the other debt mentioned above?

Many thanks again.


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## Brendan Burgess (3 Apr 2017)

You are jumping ahead of yourself here. 

They might seek a judgement on your family home, but they might not bother as you don't have equity in your home. 

Hard to know if they would do a deal.   They might. 

I don't think that EBS will restructure a tracker in negative equity to allow you pay off a mortgage to someone else. But I have been surprised in the past at the deals banks offer, so you could try.

Brendan


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## Paulino (3 Apr 2017)

Hi Brendan,
Many thanks for your response. You will see from the first post that there is equity present.

*Home loan*
Lender: *EBS*
Amount outstanding: *300,000*
Value of home: *450,000 - 500,000*
Interest rate: *Tracker*
Years Left:* 15 *
Monthly repayment : *€1757*
Amount in arrears :* 0*

Many thanks


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## Brendan Burgess (3 Apr 2017)

Sorry, I read it upside down. 

OK, they may well seek a judgement. 

The interest rate on court judgements has been reduced to a ridiculously low rate of 2%.

http://www.homs.ie/news/rate-interest-judgment-debts-reduced/

So they may well be open to doing a deal.

Brendan


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