# Defaulting on mortgage while still employed, coordinated mass default?



## silverfield (14 Feb 2011)

Folks just wondering about your thoughts on this idea. 

I want to default on my mortgage but am still currently employed - the reason being is the fact that my house is about 100,000 in neg equity and I don't want to live where I am and the banks will not work with me ( no personal debt and consistent savings ). 

I have approached the bank stating that I would pay off the remainder of the loss on the house over time but they simply said that they would not release the deeds to the new owner unless the balance of the loan is settled and so therefore I cannot sell the house. 

I feel that if enough people coordinated a mortgage default and a peaceful protest perhaps then the banks and the government would listen and actually come up with a viable plan. FG we don't want mortgage interest relief as this way the banks still win - we want an accelerated principal repayment scheme of some sorts!

Look what happened in Egypt which all started out as an idea on FB.

I'm simply putting out the feelers now to see what the public response would be to such an idea of coordinated mass default.

Thoughts....


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## callybags (14 Feb 2011)

Why should I subsidise you just because you "don't want to live where you are"?


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## fobs (14 Feb 2011)

Do you want to sell the house and take the negative equity with you? If so I think the bank should try to facilitate you. If in negative equity they have no proper secuirty anyway so letting you carry the negative equity with you is a good idea. Defaulting or not paying the negative equity is a different matter.


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## rustbucket (14 Feb 2011)

Banks should help you out imo if you are taking the negative equity with you. Why they wouldnt release the deeds to the new owners surprises me, especially if you have already stated to them that you would take on the negative equity. Could they not restructure the negative equity as a long term personal loan?


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## nai (14 Feb 2011)

but surely if you default you will find it very difficult to get any type of credit in the future - therefore eliminating any chance you may have of owning a suitable house ?


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## goingforgold (14 Feb 2011)

You say you have consistent savings. Can you not use this to reduce the 100K negative equity, and at the same time show the bank you are serious about dealing with it? The bank may then facilitate your move.


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## Time (14 Feb 2011)

They won't want to do anything until there are arrears on the account.


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## orka (14 Feb 2011)

silverfield said:


> ...I want to default on my mortgage but am still currently employed - ... - we want an accelerated principal repayment scheme of some sorts!
> Thoughts....


My thoughts: 
There is little enough public sympathy and appetite to help those who CAN’T pay mortgages that they signed up to – there will be next to none for those who can but WON’T pay.

I don’t think you will find many ‘can but won’t’ people who would be willing to wreck their credit rating. They are too easy a mark for legal proceedings forcing them to pay. 

If you default, you will end up in the same situation with your mortgage but with no possible hope of goodwill from the bank PLUS extra arrears, penalties and legal fees (spent pursuing you) added onto your debt.

Your best case scenario is that your bank will, at some stage, let you sell the house and roll the negative equity into a standalone loan/roll it into a future mortgage. The bank would have to have a lot of trust in you to let you do this. Defaulting will make it unlikely that any bank will trust you for a very long time.

While it is commendable that you want to service your loan, you seem to overestimate how much power you have in the relationship with your bank. “I will not on the other hand put my life on hold or sardine my family into a 2 bed house just because the This post will be deleted if not edited to remove bad language fell out of the market” – well, you may have to... 

The only way I can see out of your sardine-house that won’t involve increasing your debt/wrecking your credit rating for a long time is for you to rent it out and then rent somewhere bigger yourself. Or as a previous poster suggested, use your consistent savings to build a track record of paying down your NE. Your own personal "accelerated principal repayment scheme"...

I am fascinated, however, by how you would see this playing out – so, you default on your mortgage, stop making the monthly repayments... what happens next (short-term and long-term)? The bank caves to your demands and lets you sell and take a stand-alone loan for the 100K? Do you want a future mortgage or will you rent?


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## Brendan Burgess (14 Feb 2011)

Silverfield



> my house is about 100,000 in neg equity



You have assets and you have liabilities. 

You are in negative equity rather than the house. 

Use your savings to reduce the negative equity. 

The problem from the bank's point of view is that you would end up with an unsecured loan and people are less enthusiastic about servicing an unsecured loan. 

The other problem is that a change in the law could allow you to get a write off of unsecured debt, but it is unlikely to apply to secured debt. 

Do you have a tracker mortgage? How much savings do you have? You should try with the bank again in writing. And get their response in writing. If it does become a problem at a later stage, you will get a lot of sympathy from the judge. 

The problem with handing back your house now is that they will sell it for a lot less than you will sell it for. so you will have a bigger deficit. As well as legal fees and a destroyed credit record.


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## silverfield (16 Feb 2011)

Many thanks to all who replied - I guess I will go back into the bank and try and talk to them again. If that fails I'll just enter the rental market and maybe facilitate a move that way? I guess to default while earning an income does not make much sense at the end of the day!


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## cormirl (29 Dec 2011)

*Default*

So I'm looking at options...restructure my mortgage over something like 80years! Or just default and let the bank suffer the debt.Developers get bailed out so why not we,after fall we are suffering these austerity measures for a wreckless lending envirnoment and goverment corruption.Have you heard of the term Jingle mail...I think its only a matter of time before this becomes a commonality.Irish people need to wake up and say enough is enough.Two fingers to the banks and walk away.If enough people do it they have to enforce some sort of debt forgiveness,but continuing to pay means the ball will always be in their court...They are crooks,and the goverment are crooks, we are the dumb sheep of Europe taking it up the rear.The Irish are too docile,we need to take on the banks and stop paying for their insolvency!


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## seantheman (29 Dec 2011)

cormirl said:


> so i'm looking at options...restructure my mortgage over something like 80years! Or just default and let the bank suffer the debt.developers get bailed out so why not we,after fall we are suffering these austerity measures for a wreckless lending envirnoment and goverment corruption.have you heard of the term jingle mail...i think its only a matter of time before this becomes a commonality.irish people need to wake up and say enough is enough.two fingers to the banks and walk away.if enough people do it they have to enforce some sort of debt forgiveness,but continuing to pay means the ball will always be in their court...they are crooks,and the goverment are crooks, we are the dumb sheep of europe taking it up the rear.the irish are too docile,we need to take on the banks and stop paying for their insolvency!


 
Ok,so i'm just an ordinary guy who worked hard for about 18 years abroad saved money,traded up in the property market and ended up with enough to build a mortgage free home in Ireland.
1.The bank wont suffer your debt, I will.
2.For reckless lending ;read reckless borrowing
3.You may be a dumb sheep,I aint
4.You insult the whole population with this "Irish are too docile" comment.
Now i understand that there must be a certain amount of debt forgiveness
to try and get this mess to rights again,and there has been a lot of well meaning advice given on this thread and this forum,but the opening post and your post must make reasonable people think why should we bother!


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## horusd (29 Dec 2011)

cormirl you have an interesting view for sure. You freely entered into a contract and freely borrowed money to buy your house, and now you are considering that this was a bad deal and everyone but you is to blame. No one held a gun to your head and forced the mortgage on you. If the asset had appreciated in value, you presumably would be content to pocket that as you took the risk, and are entitled to the reward. 

You would presumably be straight down to the courts if the bank attempted to sequester your gain, but feel no great compunction about saddling them (meaning us as taxpayers) with your losses. It has been one of the most curious developments inthis recession that if I make a mistake then someone else is to blame and must carry the can.


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## Macstuff (30 Dec 2011)

As a general observation I note that alot of people who advocate defaulting on their mortgages say that by doing it they will help themselves and / or that "its time that ordinary taxpayers stood up to the banks / govt". 
Such people need to remember that when people default on their loans, it only adds to the burden on the tax payer, as any loss the banks suffer is passed on to the owners of the banks ie the Irish people / govt. The govt pay for it through selling additional bonds which we pay back, via our taxes. 
So in reality the taxpayers suffer more, not less, through this action. 
I understand that there are people out there who can't pay - I feel for them, but have NO sympathy for anyone who won't pay


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## AlbacoreA (30 Dec 2011)

I don't think anyone defaulting is planning on remaining a tax payer. They most likely will emigrate.


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## croker (31 Dec 2011)

I agree with the ideas mentioned earlier. You should just save until you can pay off the debt.


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## oldnick (31 Dec 2011)

Whilst i'm an irish taxpayer paying and have always paid every loan and fully intend to continue doing so there is one view expressed in the last few posts that confuses me.

"_Not paying the banks means not paying the Irish taxpayer". _

Does this mean that because we were so stupid as to take over the banks and all their debts,no matter what these debts were, then it's incumbent on everyone to keep supporting the banks ?

There are many reasons for one to pay one's debts -to me its a matter of honour or principle.
But going on how the banks are "ours", the taxpayers, and therefore we must pay them (so they can repay,for example, the unsecured loans from foreign speculators) is not the greatest reason to repay a loan.


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## Jim2007 (31 Dec 2011)

oldnick said:


> But going on how the banks are "ours", the taxpayers, and therefore we must pay them (so they can repay,for example, the unsecured loans from foreign speculators) is not the greatest reason to repay a loan.



The organizations that invested in bank bonds were not speculators!  These bonds were considered low risk investments and very often taken up by foreign pension funds, insurance companies and the likes, at the time there was nothing speculative about them.  If we were to screw them we would be hitting some of the very people we are not expecting to borrow more money from - the European taxpayers and pensioners.


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## oldnick (1 Jan 2012)

I'm not a financial expert . So I'm surprised to be told that investing in Irish banks in the last decade was considered by financial experts (pension funds,insurance companies etc) to be "low risk", when  most of the lending of Irish banks was to property speculators (sorry, investors) and naive impecunious  individuals who were easily given 100% loans for  crazily overpriced properties.

I'm puzzled how any expert financial scrutiny of Irish bank lending 2000-2006 - or, indeed, the basis of the Irish economy in that period - would consider that here was a low-risk investment opportunity. (I assume of course that financial organisations did  some due diligence when investing millions,nay billions, into Irish banks).

Perhaps the lenders to Irish banks were not speculators -just greedy and stupid.

But ,as I say, I'm not a financial expert.


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## Jim2007 (1 Jan 2012)

oldnick said:


> I'm puzzled how any expert financial scrutiny of Irish bank lending 2000-2006 - or, indeed, the basis of the Irish economy in that period - would consider that here was a low-risk investment opportunity. (I assume of course that financial organisations did  some due diligence when investing millions,nay billions, into Irish banks).



Hindsight is a wonderful thing!  We can all see now that it was crazy to:

Borrow 5 or 6 times one's income
For banks to lend people 5 or 6 times their income
For pension funds to rely on bank bonds as an investment 
For pensioners to invest all their savings in bank shares
And so on
But human nature being what it is, *everyone* looses the run of the themselves in a bubble.  This has been documented several times now in various books and reports - people's behaviour in bubbles is actually very predictable and is repeated on an all too regular basis!

One other thing about bubbles, is that very often more money is lost in the immediate aftermath than during the bubble itself!  Those who have not already been caught, rush in to be on board for the next ride, so to speak.  I still hear people claiming that now is the time to get in on the property ladder.... Even though borrowing levels are still far to high to be sustained.  Sadly people never learn....


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## oldnick (1 Jan 2012)

yes,Jim, I would agree. 
Whilst i didnt buy property in ireland in the pre-crash era I did buy abroad (Florida of all property crash places!) , I refused amazingly high offers on my properties because I was greedy and stupid, and I borrowed a fortune for commercial ventures that didn't work out; crazy at may age.
But I should have known better and there's no fool like an old fool. So I blame myself and intend to pay every penny back.

But I really believe that young Irish people , such as a couple of posters in this thread,  could not have known what would happen and they were under tremendous pressure to buy,buy.buy.
So, Horus, many people did have a gun put to their heads  if you are using that silly phrase in post 13 as a metaphor for being put under tremendous pressure -from the govnt, from the banks, from their peers, from everyone in this country (save for a few McWilliamses.)

I don't know the exact situation of the two posters here who have problems with their mortgages but I fully sympathise  with them. I'd understand them throwing the keys back at the banks, much as I know this would not benefit the rest of us.

Anyway this subject has been in so many different threads that it's just about been beaten to death.


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## Jim2007 (1 Jan 2012)

oldnick said:


> Anyway this subject has been in so many different threads that it's just about been beaten to death.



Very true...


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## seantheman (2 Jan 2012)

Jim2007 said:


> *everyone* looses the run of the themselves in a bubble.


 
Can't agree with this statement,Maybe more accurate to say "everyone loses".I didn't lose the run of myself during the bubble,in fact i was made out to be a bit of an eejit by some family and friends for not grabbing a bit of the property action in Cork, New York, Dundalk, Gortahork and Glenamaddy.Now i have no problem helping out someone who bought a family "home" at the wrong time(because they were being encouraged by irresponsible and uneducated polititians not to miss the rising tide) and are caught in negative equity.I do have a problem with the speculators who invested in Dubai,Sunny Beach,Carrick on Shannon,Calcutta,Those Islands off the east coast of Whoknowswhere......


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## oldnick (2 Jan 2012)

Ah, Seantheman, we bow to your foresight, prudence and overall brilliance.


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## seantheman (2 Jan 2012)

oldnick said:


> Ah, Seantheman, we bow to your foresight, prudence and overall brilliance.


 
The patronising doesn't sit that well with ye Oldnick
I had actually posted my piece thinking that Jim's was the last post,Didn't realise that there was a second page that you had contributed to,So much for foresight
Seriously though i thought it was much more to do with commonsense
which most people,despite what was being said at the time,exercised


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## Alwyn (2 Jan 2012)

There was no escaping the in your face sales pitches at the time. You couldn't open a newspaper without a glossy property supplement falling on your lap, even parents were putting pressure on the younger ones to buy. How many times over the years did we hear there's money in mortor


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## oldnick (2 Jan 2012)

Seanthe man:- I suppose I was thinking of my own dumb decisions 5-10 years ago, but that was no excuse for my sarcastic knee-jerk response. Apologies.


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## cormirl (15 Jan 2012)

Banks default all the time, business default all the time but when its the small person trying to make a living its bad..... People we are caught in a continuing spiral of negative equity and austerity measures that we are forced to carry for the rest of our lives and this is WRONG!!!!!
We shouldn't have to bail out the banks and suffer extreme taxes due to bad gov. policy. Bond holders lent to Ireland knowing it was high risk as it was a overheating economy and there was plenty red flags but they continued to lend. 
So your say its unjust to default because the Irish tax payer has to foot the bill. Well wake up people you are already footing the bill for wreckless lending between banks and developers and that ok is it? Iceland put up there two fingers to the bond holders and didn't let the IMF in, they are back in the bond markets already, Argentina did the same now its prospering wealthy economy...we under other hand are easy prey form the German/French banks as we have a large export market and an ability to repay so let’s tax the hell out of the Irish, watch the value of their homes plummet to nothing, restrict all capital into the country as its now high risk with devaluing property, its a civilised country and they won’t rise up so let them suffer the debts for the rest of their lives and save the banks.....People unemployment is sitting close to 15%, Houses are still devaluing and will for the next 3-4 years, you are paying for a debt that will never be paid for...a mass default will force the gov to take drastic action to deal will residential negative equity. They can’t bail out the developer and not the residential market when its the people in the residential market bailing out for the recklessness of out financial & bureaucratic system. I have no problems paying for a bad debt that I stupidly invested in when it was an opportunity to get a first time mortgage. How silly was I to think I could own an asset! How silly was I take accept money from an institution who knew full well how much they were lending out to people and the risks they were taking with an overvalued market....they are in the business after all of knowing such things..


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## mcloving (15 Jan 2012)

cormirl said:


> Banks default all the time, business default all the time but when its the small person trying to make a living its bad..... People we are caught in a continuing spiral of negative equity and austerity measures that we are forced to carry for the rest of our lives and this is WRONG!!!!!
> We shouldn't have to bail out the banks and suffer extreme taxes due to bad gov. policy. Bond holders lent to Ireland knowing it was high risk as it was a overheating economy and there was plenty red flags but they continued to lend.
> So your say its unjust to default because the Irish tax payer has to foot the bill. Well wake up people you are already footing the bill for wreckless lending between banks and developers and that ok is it? Iceland put up there two fingers to the bond holders and didn't let the IMF in, they are back in the bond markets already, Argentina did the same now its prospering wealthy economy...we under other hand are easy prey form the German/French banks as we have a large export market and an ability to repay so let’s tax the hell out of the Irish, watch the value of their homes plummet to nothing, restrict all capital into the country as its now high risk with devaluing property, its a civilised country and they won’t rise up so let them suffer the debts for the rest of their lives and save the banks.....People unemployment is sitting close to 15%, Houses are still devaluing and will for the next 3-4 years, you are paying for a debt that will never be paid for...a mass default will force the gov to take drastic action to deal will residential negative equity. They can’t bail out the developer and not the residential market when its the people in the residential market bailing out for the recklessness of out financial & bureaucratic system. I have no problems paying for a bad debt that I stupidly invested in when it was an opportunity to get a first time mortgage. How silly was I to think I could own an asset! How silly was I take accept money from an institution who knew full well how much they were lending out to people and the risks they were taking with an overvalued market....they are in the business after all of knowing such things..


 
All the more reason for ireland to change their bankruptcy rules to what they have in england/wales. 
Get people free of their debt and let then start from scratch.
If england/wales can do it then why not Ireland.


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## Time (15 Jan 2012)

Because the banks control the show and it is not in their interests to allow a change.


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