# Irish Times "918 homes repossessed last year; 40% drop in cases started"



## Bronte (7 Mar 2016)

http://www.irishtimes.com/news/soci...orders-increased-by-over-20-in-2015-1.2562460

Repossession orders increased by over 20% in 2015
Legal sources say numbers would have been even greater if not for conflicting judgments


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## Brendan Burgess (8 Mar 2016)

A total of 918 orders were granted for family homes - still a tiny number.  

Séamus Coffey, Karl Deeter and I have witnessed quite a few of these and we have encouraged journalists along to see what is happening.  We have yet to see an order being granted where we would disagree with the decision. They are only granted when almost nothing is being paid and or the borrower does not show up in court.  Many are for vacant houses. 


"the number of applications by banks to repossess homes fell almost 40 per cent from 8,164 in 2014 to 5,021 last year."

This is interesting. 

I am confused by the legal issues. I thought that it meant that many cases could not proceed but could then be started from fresh. So I would have expected the numbers of applications to increase, and not decrease.

Brendan


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## Bronte (8 Mar 2016)

Well it looks to me that maybe we are turning a corner if the figures for new applications for repossessions has dropped 40% it's a good thing.

But what is true is that the whole thing is a shambles from beginning to end and there surely is a better way of doing things than going to court constantly, for years, without legal or financial representation.


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## demoivre (8 Mar 2016)

Repossessions of family homes should only be happening in very exceptional cases. The tools are there to deal with most cases where people want to stay in their homes. We have come a long way with our Insolvency laws where we now have PIA's and we have a game changer, imo, in Section 115 A of the Personal Insolvency Act. For those debtors who want a completely fresh start we now have a one year discharge period from bankruptcy. I'm not sure you'd find better debt laws anywhere else in Europe, we just need to start using them more often.


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## Sarenco (9 Mar 2016)

demoivre said:


> Repossessions of family homes should only be happening in very exceptional cases.



Totally disagree.

If a mortgage can be restructured on a long-term sustainable basis, for the benefit of both lender and borrower, then that should obviously take place.  

If a lender is being unreasonable or irrational in not accepting a reasonable restructuring proposal from a borrower or his/her PIA, then it is helpful that a facility now exists whereby an application can be made to the Court to impose a restructured arrangement (although I suspect successful applications in this regard will be very rare).

However, we have to accept that there are thousands, if not tens of thousands, of non-performing mortgages that can never be restructured on a sustainable basis and lenders must be allowed to enforce their security interests in such circumstances, in a timely and cost-effective manner.

Otherwise, we will have to accept high mortgage rates with all the damaging consequences that entails for our domestic economy.


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## Brendan Burgess (10 Mar 2016)

demoivre said:


> Repossessions of family homes should only be happening in very exceptional cases.



Repossessions are only happening in very exceptional cases - i.e. where the borrower is paying little or nothing and not bothering to show up in court. 

In my view, they should be happening far more often.  There are many vacant houses and it's very difficult for the lender to get an order for possession. There are people living in very large houses which they can no longer afford, and the courts are reluctant to give an order to the lender if the borrower is paying something, although the mortgage is clearly unsustainable.  And then you have plenty of people taking a free ride - paying nothing and getting away with it for years. 

Brendan


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## demoivre (10 Mar 2016)

Brendan Burgess said:


> There are people living in very large houses which they can no longer afford, and the courts are reluctant to give an order to the lender if the borrower is paying something, although the mortgage is clearly unsustainable.



An unsustainable mortgage can be made sustainable through a PIA. Correct me if I'm wrong but I thought that the main idea behind the Insolvency laws was to keep people in their family homes where at all possible. The big problem, as I see it , is that that there are many people out there who would hate to see Johnny and Mary get a debt write down of a €100k to make their mortgage sustainable, but there is an indifference when the likes of Denis O Brien's company Millington gets a €119,000,000 debt write down when they bought Siteserv. We need to move on.




Brendan Burgess said:


> And then you have plenty of people taking a free ride - paying nothing and getting away with it for years.



And that I don't agree with either.


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## Brendan Burgess (10 Mar 2016)

demoivre said:


> Correct me if I'm wrong .



Delighted to.

There are many people living in large houses which they can no longer afford who are not insolvent. They have plenty of equity in their home and can sell them. They won't qualify for a PIA.



demoivre said:


> the likes of Denis O Brien's company Millington gets a €119,000,000 debt write down when they bought Siteserv.



Delighted to correct you again.

This implies that Denis O'Brien got some sort of a write-down at our expense. Siteserv was an insolvent company which could have been just put into liquidation or receivership with their 900 employees let go.  The debts were written down to make it saleable.

Denis O'Brien paid the market price for it. He did not benefit from any write-down. If there had not been a write-down he would simply not have bought it and the company would have been wound up.  He could probably have bought the assets cheaper from the liquidator.


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## Sarenco (10 Mar 2016)

demoivre said:


> An unsustainable mortgage can be made sustainable through a PIA. Correct me if I'm wrong but I thought that the main idea behind the Insolvency laws was to keep people in their family homes where at all possible. The big problem, as I see it , is that that there are many people out there who would hate to see Johnny and Mary get a debt write down of a €100k to make their mortgage sustainable, but there is an indifference when the likes of Denis O Brien's company Millington gets a €119,000,000 debt write down when they bought Siteserv. We need to move on.



Ah, so you're saying that any unsustainable mortgage can become sustainable if somebody else picks up a sufficient amount of the tab.

Fair enough but I don't really want to pay somebody else's mortgage.  Sorry.


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## 44brendan (10 Mar 2016)

Sarenco said:


> Because I suspect lenders would rarely reject a reasonable proposal to restructure a mortgage on a sustainable basis. Why would they act in such an irrational fashion?


Sorry to burst your bubble on this one Sarenco but unfortunately the majority of banks are prepared to in many cases decline reasonable proposals from customers which would peacefully resolve the arrears position to the benefit of both parties.
In my own experience in the industry I am constantly amazed at the amount of "reasonable" proposals that are declined by ASU Departments because they don't fit within the narrow box of solutions. Believe it or not banks do not encourage their arrears support staff to "think outside the box" in terms of working with clients to find an appropriate solution. They tend to operate a "fear of making a mistake" type of process where poor decisions are made purely because a decline of a proposal is never seen as a "wrong" decision.
I am operating in the sector and many would see me as a proponent of the banks. However I frequently resort to tearing my hair out when I see some of the decisions that are declined purely because of the whim of an individual. Institutional thing does that to you over time!!


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## 44brendan (10 Mar 2016)

demoivre said:


> Correct me if I'm wrong but I thought that the main idea behind the Insolvency laws was to keep people in their family homes where at all possible


No this was not a stated purpose of the insolvency laws as far as I am aware and I have read the 2012/2013 Acts a number of times. the legislation was to help those with unsustainable debt including mortgage debt to reach solutions with their creditors. In many cases these solutions could include the sale of the family home.


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## Sarenco (10 Mar 2016)

44brendan said:


> In my own experience in the industry I am constantly amazed at the amount of "reasonable" proposals that are declined by ASU Departments because they don't fit within the narrow box of solutions. Believe it or not banks do not encourage their arrears support staff to "think outside the box" in terms of working with clients to find an appropriate solution.



Hi 44brendan

I could well imagine that relatively junior officials within an ASU Department might adopt a "computer says no" approach but I would have thought that would be likely to change in most cases where a case moves up the managerial food chain in anticipation of an application being brought by a borrower under Section 115A of the Personal Insolvency Act.

Happy to bow to your experience if you don't think that would be the case.

In any event, it doesn't really take away from my core point that there are still thousands, if not tens of thousands, of non-performing mortgages that can never be restructured on a sustainable basis.


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## Black_Adder (10 Mar 2016)

Sarenco in other countries there is what is termed the inter-generational mortgage.

Imagine if we did that. Bear in mind that apparently the Central Bank eventually realised that an interest only mortgage was in fact sustainable, and I think that is accepted in Dame Street.

Why not the inter-generational mortgage?

[I do realise the limit of thinking in Dame Street. Eventually when somebody is forced to pay rent much higher than a mortgage - the dozy intellectuals [opinion] will realise - hey we better drop the deposit 1% for every month you can show you can pay a hugely higher rent]


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## Sarenco (10 Mar 2016)

Yep, the Central Bank changed its guidelines some time ago to clarify that a interest-only mortgage for the life of a borrower can be considered a sustainable restructuring option where there is a reasonable prospect that the borrower will be in a position to meet the interest-only payments in retirement and that there will be sufficient assets on the demise of a borrower to repay the outstanding principal out of his/her estate.

To be honest, the whole idea of inter-generational mortgages sends a shiver down my spine. The way they work, as I understand it, in countries such as Japan and Switzerland, is that a borrower's offspring has the right, but not the obligation, to take over a borrower's IO home loan.  The obvious consequences are increased social inequality and high property prices.

Great deal for the banks though - a ready made cohort of perpetual debt slaves.  Nice.


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## 44brendan (11 Mar 2016)

Sarenco said:


> Great deal for the banks though - a ready made cohort of perpetual debt slaves. Nice.


To be fair there could be a rationale for this type of mortgage. Operating similar to the Bond market a type of non repayable loan where interest is perpetually serviced with inflation ultimately reducing the real value of a loan to a fairly negligible level.
Example would be that I purchased my 1st house in Dublin for 33,000 pounds. If I had taken an IO mortgage at that time for the full value of the property I would still owe c€41k which even at the low end of the property cycle would be an extremely manageable debt for me to either pay off or transfer ultimately to my children.
Taking say an 80% LTV there is definitely scope for such a product to be marketed. From a bank perspective I have always felt that a large element of repayable debt is wasted as no sooner is it repaid than the banks have to find alternative customers to lend that money to. Ie the banks get paid back the money only to lend it again.
Agreed that it is "outside the box" but could certainly work for certain categories of clients.


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## Sarenco (11 Mar 2016)

44brendan said:


> From a bank perspective I have always felt that a large element of repayable debt is wasted as no sooner is it repaid than the banks have to find alternative customers to lend that money to. Ie the banks get paid back the money only to lend it again.



That's really why I think "no term" loans are a great deal for banks - minimal underwriting costs, essentially annuity business.

From an individual borrower's perspective, I certainly agree that long term IO arrangements are advantageous during periods of high inflation.  But the reverse is also true where deflation becomes embedded in an economy.


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## demoivre (15 Mar 2016)

Brendan Burgess said:


> Delighted to.
> 
> There are many people living in large houses which they can no longer afford who are not insolvent. They have plenty of equity in their home and can sell them. They won't qualify for a PIA.



And rightly so. I would have thought that it was blindingly obvious that we are talking about cases of negative equity.



Brendan Burgess said:


> Delighted to correct you again.
> 
> *This implies that Denis O'Brien got some sort of a write-down at our expense*. Siteserv was an insolvent company which could have been just put into liquidation or receivership with their 900 employees let go. The debts were written down to make it saleable.
> 
> Denis O'Brien paid the market price for it. He did not benefit from any write-down. If there had not been a write-down he would simply not have bought it and the company would have been wound up. He could probably have bought the assets cheaper from the liquidator.



That's your erroneous conclusion. The only point I'm making is that banks do write downs all the time, but mostly only in the legal process when it's Johnny and Mary.


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## Brendan Burgess (15 Mar 2016)

demoivre said:


> That's your erroneous conclusion.



If it's erroneous, you might correct it?


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## demoivre (15 Mar 2016)

Sarenco said:


> Ah, so you're saying that any unsustainable mortgage can become sustainable if somebody else picks up a sufficient amount of the tab.
> 
> Fair enough but I don't really want to pay somebody else's mortgage.  Sorry.



You're paying anyway if the borrower goes bankrupt to deal with the shortfall after a house is repossessed and sold.


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## demoivre (15 Mar 2016)

Brendan Burgess said:


> If it's erroneous, you might correct it?



It's up to you to correct your own erroneous conclusions. Feel free not to read my mind.


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## demoivre (15 Mar 2016)

44brendan said:


> No this was not a stated purpose of the insolvency laws as far as I am aware and I have read the 2012/2013 Acts a number of times. the legislation was to help those with unsustainable debt including mortgage debt to reach solutions with their creditors. In many cases these solutions could include the sale of the family home.



It seems strange to me that Section 115A of the Insolvency Act would have been introduced if keeping families in their homes wasn't a significant consideration in formulating the Insolvency laws.


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## Sarenco (15 Mar 2016)

demoivre said:


> You're paying anyway if the borrower goes bankrupt to deal with the shortfall after a house is repossessed and sold.



There won't always be a shortfall - there are plenty of home loans currently in default where the secured property is in positive equity.  In any event, the amount of any shortfall that might arise on a sale would invariably be substantially lower than the cost of forgiving a sufficient amount of the outstanding debt to allow the borrower to remain in a house they can no longer afford.

The reality is that Section 115A of the Insolvency Act is not going to result in wholesale debt forgiveness as you seem to be suggesting.


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## 44brendan (15 Mar 2016)

demoivre said:


> It's up to you to correct your own erroneous conclusions. Feel free not to read my mind.


This is ludicrous demotive. You made the assertion. You may well be correct but any assertion made on the basis of "sure everyone knows that he got a write-off" cannot be accepted on its own merits. Provide some back-up verification or otherwise you have lost any credibility!!
Would apply as much to Joe Soap as it would to DOB!!


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## demoivre (16 Mar 2016)

Sarenco said:


> In any event, the amount of any shortfall that might arise on a sale would *invariably be substantially lower* than the cost of forgiving a sufficient amount of the outstanding debt to allow the borrower to remain in a house they can no longer afford.



Why so? And does that generalization also apply to apartments?



Sarenco said:


> The reality is that Section 115A of the Insolvency Act is not going to result in wholesale debt forgiveness as you seem to be suggesting.



Where have I suggested that?


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## demoivre (16 Mar 2016)

44brendan said:


> This is ludicrous demotive. You made the assertion. You may well be correct but any assertion made on the basis of "sure everyone knows that he got a write-off" cannot be accepted on its own merits. Provide some back-up verification or otherwise you have lost any credibility!!
> Would apply as much to Joe Soap as it would to DOB!!



It's news to you that as part of the deal in buying Siteserv Millington got a €119 million euro debt write down? Rather than me copying and pasting can you not just check the records yourself?


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## Sarenco (16 Mar 2016)

demoivre said:


> Why so? And does that generalization also apply to apartments?



Because the cost to a lender of forgiving a significant amount of debt compounds over time.  This is clearly not specific to any loan or property type.



demoivre said:


> Where have I suggested that?





demoivre said:


> The big problem, as I see it , is that that there are many people out there who would hate to see Johnny and Mary get a debt write down of a €100k to make their mortgage sustainable



Were you not suggesting that unsustainable mortgages could and should be made sustainable by writing off significant amounts of debt?  My apologies if I misinterpreted your post but perhaps you might clarify what you did mean.


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## demoivre (22 Mar 2016)

Sarenco said:


> Because the cost to a lender of forgiving a significant amount of debt compounds over time.  This is clearly not specific to any loan or property type.



??? You said " the amount of any shortfall that might arise on a sale would *invariably be substantially lower* than the cost of forgiving a sufficient amount of the outstanding debt to allow the borrower to remain in a house they can no longer afford." 
Where is the evidence of this? 




Sarenco said:


> Were you not suggesting that unsustainable mortgages *could and should* be made sustainable by writing off significant amounts of debt? My apologies if I misinterpreted your post but perhaps you might clarify what you did mean.



I said any mortgage could be made sustainable through a PIA. However I don't believe all unsustainable mortgages should be made sustainable.  One size does not fit all where mortgage arrears are concerned.


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## Sarenco (22 Mar 2016)

demoivre said:


> I said any mortgage could be made sustainable through a PIA. However I don't believe all unsustainable mortgages should be made sustainable.  One size does not fit all where mortgage arrears are concerned.



Ok but where would you draw the line?  In other words, what unsustainable mortgages do you think *should* be made sustainable by way of a debt write down?


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## demoivre (22 Mar 2016)

Sarenco said:


> Ok but where would you draw the line?  In other words, what unsustainable mortgages do you think *should* be made sustainable by way of a debt write down?



As per the PIA guidelines. But banks dont want to give write downs to Johnny and Mary because they want Johnny and Mary to pay for bad borrowing, bad lending, bad government policy and bad regulation, which was what happened during the Celtic tiger. Section 115A of the Personal Insolvency Act might focus the minds of the reckless bankers a bit more.   



Sarenco said:


> the amount of any shortfall that might arise on a sale would invariably be substantially lower than the cost of forgiving a sufficient amount of the outstanding debt to allow the borrower to remain in a house they can no longer afford.



Supporting data would be welcome.


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## 44brendan (22 Mar 2016)

demoivre said:


> As per the PIA guidelines. But banks dont want to give write downs to Johnny and Mary because they want Johnny and Mary to pay for bad borrowing, bad lending, bad government policy and bad regulation, which was what happened during the Celtic tiger.


There needs to be some level of rationalization for any proposition other than a banks bad/people good mantra. The banks are not a homogenous species who need to be dealt with outside of the normal law due to past transgressions.
The Johnny's and Marys of the world who borrow money from banks or other have an obligation to repay that money. If they can't repay the Insolvency Regulations are already there to assist them.
The majority of bank shares are either owned by the Government or pension funds. Any unnecessary w/o of bad debts incurred means a loss to pensioners and taxpayers.


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## Sarenco (22 Mar 2016)

demoivre said:


> As per the PIA guidelines.



Could you direct me to the guidelines that detail the appropriate or acceptable amount of debt to be written down?

I don't accept your moral thesis.  Why would banks want to do anything other than maximise recoveries?  Why would they want to punish borrowers?

At the end of 2015, over 120k PDH loans had been restructured and there were roughly 37k PDH loans remaining that were over 720 days in arrears.  It seems reasonable to assume that a very significant portion of these remaining 37k loans simply cannot be restructured without writing down the debt to a point where the lender would have been better off simply enforcing their security and cutting their losses.  Otherwise, you would expect that these loans would already have been restructured at this stage.


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## demoivre (30 Mar 2016)

Sarenco said:


> Could you direct me to the guidelines that detail the appropriate or acceptable amount of debt to be written down?



Each case would have to be dealt with for it's own merits.



Sarenco said:


> I don't accept your moral thesis. Why would banks want to do anything other than maximise recoveries? Why would they want to punish borrowers?



They would be punishing borrowers less if the debt write down under a PIA is less than the write off if the property is repossessed and sold and the shortfall is dealt with by the borrower through bankruptcy.



Sarenco said:


> At the end of 2015, over 120k PDH loans had been restructured and there were roughly 37k PDH loans remaining that were over 720 days in arrears. It seems reasonable to assume that a very significant portion of these remaining 37k loans simply cannot be restructured without writing down the debt to a point where the lender would have been better off simply enforcing their security and cutting their losses.



I wouldn't accept that at all. A miniscule percentage of arrears cases have gone through the ISI. Only time will tell whether recent changes to the Insolvency laws will change that.


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## demoivre (30 Mar 2016)

44brendan said:


> The Johnny's and Marys of the world who borrow money from banks or other have an obligation to repay that money.



918 homes were repossessed last year. How many bankers lost their jobs because of extremely reckless lending practices? How were the regulator /Central bank sanctioned for overseeing these practices?


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## Sarenco (30 Mar 2016)

demoivre said:


> How many bankers lost their jobs because of extremely reckless lending practices?



Not that it's relevant to the issue under discussion but in excess of 3,000 employees of Irish banks were made redundant in the wake of the financial crisis.


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## Sarenco (30 Mar 2016)

demoivre said:


> A miniscule percentage of arrears cases have gone through the ISI. Only time will tell whether recent changes to the Insolvency laws will change that.



I think we can agree that there have been a miniscule number of PIAs to date. 

The amendments to the Personal Insolvency Act have now been in place for a number of months.  The Minister for Justice advised the Dail on 28 January 2016 that a grand total of 18 applications had been filed under Section 115A of the Personal Insolvency Act for a court review of a proposed PIA (and that 2 of those applications were subsequently withdrawn).


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## demoivre (1 Apr 2016)

Sarenco said:


> I think we can agree that there have been a miniscule number of PIAs to date.
> 
> The amendments to the Personal Insolvency Act have now been in place for a number of months.  The Minister for Justice advised the Dail on 28 January 2016 that a grand total of 18 applications had been filed under Section 115A of the Personal Insolvency Act for a court review of a proposed PIA (and that 2 of those applications were subsequently withdrawn).



Wow that is a small number alright but I think the law came in to force in late November and those figures  probably only relate to the end of December, still very low take up though. It would be sad to see families  losing their homes because of their lack of knowledge of the Insolvency laws. It would also be a failure of government imo who were hoping for a substantial increase in the overall number of PIAs and who introduced Section 115 A  of the Personal Insolvency Act to support families who want to stay in their homes.


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