# 20,000 deliberate defaulters



## Sarenco

On a separate note, you might consider whether it is wise to continue arguing that circa 20,000 borrowers are strategic/deliberate defaulters.  I don't see how you could ever stand up this figure and I would suggest that it is something of a distraction from the core issues.


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## Brendan Burgess

Hi Sarenco

It's absolutely a Key issue.

There are about 16,000 borrowers over one year in arrears and a further 30,000 over two years in arrears.

I am very clear.  If someone is in difficulty with their mortgage, but is paying what they can and that amount is, in any way reasonable, then I want to help that person stay in their home, assuming that the home is appropriate for their needs.  If they would qualify for social housing, then it makes a lot more sense for the state to help them pay the interest on their mortgage, than to mess around with buy to let.

I estimate that around 3% of the 600,000 mortgages are deliberate defaulters.  They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money.  They are doing this because they can get away with it. I am very clear that I want these people to resume paying and if they don't I want them out of their homes. I am not prepared to pay more taxes to help them.

When I say this in writing, on the radio or on TV, I get savaged for it. But I will continue saying it because until we face up to the cause of arrears, we will not be able to solve the problem. Instead we will busy ourselves with pointless action such as raging against the veto or reducing the bankruptcy period to one year. 

Brendan


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## Gerry Canning

Am with Brendan on this.
There is a  a core of non-payers who up to now have either played us or the banks as fools.

I am most definitely not a bank fan but the leg -lifters on mortgages need to be weeded out and let us  get to those who are genuine.
These leg -lifters give rise to the notion that non-payers take holidays/drink/gamble etc

At  20,000 cases they are not a Core issue but what they do do is give credence that a lot of mortgage defaulters are chancers.
Means time/resources are wasted sorting genuine defaulters who I would help from these 20,000.


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## so-crates

I agree with Brendan, it doesn't seem an unreasonable percentage guesstimate to me and he always clearly identifies how he has arrived at that figure. I'd even go so far as to hazard a guess that it is too low. It is something that needs to be factored in and needs to be considered separately from those that are defaulting due to distress because the possible resolution is different. It may be a small percentage but if those loans changed from non-performing to performing there would be fewer loans requiring intensive management and more repayments occurring. Fundamentally there are (and there always will be) people who will have reason to default deliberately. Depending on how you define "deliberate" I'd go so far as to say that a high proportion people defaulting are doing so "deliberately" just not necessarily cynically, willingly or voluntarily - they are worried and unhappy about it but their hands are tied by circumstances - still they know that they are doing it and they choose the loaf of bread over the mortgage, it isn't a mistake and it isn't forgetful omission, it is desperate deliberation. They need different resolutions to those who can afford to pay but do not do so. Unfortunately a cohort of mortgagees have engaged in this behaviour, primarily I suspect because the incentives to default have been larger than they are in other jurisdictions because the options open to the banks to chase were severely curtailed. The loosening of these restrictions has hopefully begun to have the effect of changing some minds but we cannot discount such deliberation going forward.


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## 44brendan

so-crates said:


> Depending on how you define "deliberate" I'd go so far as to say that a high proportion people defaulting are doing so "deliberately" just not necessarily cynically, willingly or voluntarily - they are worried and unhappy about it but their hands are tied by circumstances


That is a fair point. I have come across a number of cases where the mortgage is unsustainable and effectively no payments are being made. Clients have accepted this and are well aware that at some stage they will be forced to leave the property. While they could probably meet an interest only or even interest plus some element of capital payment this would still not be enough to service the mortgage at a sustainable level. They will not voluntarily surrender the property as in many cases they have no alternative accommodation. Reposession proceedings are in train but will move extremely slowly. To be fair to the defaulters there is no incentive for them to make any payments while the repossession is progression as they are all in substantial negative equity and any payment that they make will make little impact on the ultimate outcome which is the loss of the property.
While I only have a limited view of the overall picture I have yet to come across anybody who can pay but has stuck the head in the sand and refused to pay anything. many are reluctant to engage but when the Legal Proceeding letter is issued they do tend to co-operate. Perhaps because some banks are more prepared to put up with this type of non-action than others our experience of "strategic defaulters" is lower than other banks!!


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## tunnellight

Hi,
I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.

I took legal advice on the situation - & the legal advice was *to strategically default , stay in the property for as long as possible & when eventually it would be repossessed , then I would have a nestegg built up. Was advised that I would never get another mortgage anyway as the property was so deep in negative equity*.
No joke!
I didn't do this because I morally could not do this - but this was what an actual solicitor advised me to do.
Of course I didn't really want to keep making repayments on a property ravaged by negative equity , along with taking on my exes share of negative equity - but I did.
Because I have a conscience.

If I had taken this legal advice I would fall into Brendans category. I well believe that many went down this route - & I resent my salary being fleeced by taxes to pay for others who went down this route.


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## Andy836

PadKiss said:


> Hi all
> I feel I must make comment here and it is not to disagree with Brendan's point but to provide some balance. I have uncovered a deliberate and concerted effort by all lenders to _strategically_ alter the terms and conditions that were agreed at the outset of mortgage loans. This was a deliberate and orchestrated effort and I am not saying that 2 wrongs are right but balance please. I can also confirm if we are talking statistics and percentages that of the many that have contacted me I have not met one strategic defaulter, (who may not need me anyway) which if Brendan's and 44 Brendan comments are to go by I should have come across at least some, but none!!!!!. But of the attempts at the strategic alteration of contracts by lenders, 100% of lenders is the figure I would use here. Just my views Padraic



Why would a strategic defaulter contact you? This is a very simple point that people can't seem to understand.

In what way does it benefit a strategic defaulter (who is successfully staying in their "family home" for free/near free) to identify themselves to a consumer advocate?

It seems you work in this space so please outline exactly why or any benefit a strategic defaulter would get from contacting a consumer advocate/advisor and telling them they're intentionally not paying their mortgage? Please, any benefit?


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## Andy836

tunnellight said:


> Hi,
> I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.
> 
> I took legal advice on the situation - & the legal advice was *to strategically default , stay in the property for as long as possible & when eventually it would be repossessed , then I would have a nestegg built up. Was advised that I would never get another mortgage anyway as the property was so deep in negative equity*.
> No joke!
> I didn't do this because I morally could not do this - but this was what an actual solicitor advised me to do.
> Of course I didn't really want to keep making repayments on a property ravaged by negative equity , along with taking on my exes share of negative equity - but I did.
> Because I have a conscience.
> 
> If I had taken this legal advice I would fall into Brendans category. I well believe that many went down this route - & I resent my salary being fleeced by taxes to pay for others who went down this route.



That's scandalous.

In fairness, the likes of the New Land League and those selling Freeman trusts have convinced people to take up their products/services.


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## Brendan Burgess

Gerry Canning said:


> Means time/resources are wasted sorting genuine defaulters who I would help from these 20,000.



A good point.  The existence of deliberate defaulters wastes a lot of time which could be spent working with those who are trying.


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## Brendan Burgess

so-crates said:


> still they know that they are doing it and they choose the loaf of bread over the mortgage, it isn't a mistake and it isn't forgetful omission, it is desperate deliberation.



I am a bit confused by that and I hope you are not interpreting anything I say as meaning that.

Everybody, or almost everybody, agrees that the basics of life take precedence over mortgage or rent payments.  I am referring to people who make no effort at all, or who pay unsecured creditors ahead of their mortgage.


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## epicaricacy

tunnellight said:


> Hi,
> I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.
> 
> I took legal advice on the situation - & the legal advice was *to strategically default , stay in the property for as long as possible & when eventually it would be repossessed , then I would have a nestegg built up. Was advised that I would never get another mortgage anyway as the property was so deep in negative equity*.
> No joke!
> I didn't do this because I morally could not do this - but this was what an actual solicitor advised me to do.
> Of course I didn't really want to keep making repayments on a property ravaged by negative equity , along with taking on my exes share of negative equity - but I did.
> Because I have a conscience.
> 
> If I had taken this legal advice I would fall into Brendans category. I well believe that many went down this route - & I resent my salary being fleeced by taxes to pay for others who went down this route.



Was it really your 'conscience' or the fact that you believed you would never be a home owner again that prompted your laudable display of altruism?


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## epicaricacy

Brendan Burgess said:


> 'They are drinking or gambling the money.
> 
> When I say this in writing, on the radio or on TV, I get savaged for it.'
> 
> Brendan



Is it any wonder that you get 'savaged'?


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## MrEarl

Brendan Burgess said:


> ....I am very clear.  If someone is in difficulty with their mortgage, but is paying what they can and that amount is, in any way reasonable, then I want to help that person stay in their home, assuming that the home is appropriate for their needs.  If they would qualify for social housing, then it makes a lot more sense for the state to help them pay the interest on their mortgage, than to mess around with buy to let.
> 
> I estimate that around 3% of the 600,000 mortgages are deliberate defaulters.  They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money.  They are doing this because they can get away with it. I am very clear that I want these people to resume paying and if they don't I want them out of their homes. I am not prepared to pay more taxes to help them.
> 
> When I say this in writing, on the radio or on TV, I get savaged for it. But I will continue saying it because until we face up to the cause of arrears, we will not be able to solve the problem. Instead we will busy ourselves with pointless action such as raging against the veto or reducing the bankruptcy period to one year.
> 
> Brendan



Very well put Mr. Burgess.

Infact, I would respectfully suggest it be taken half a step further, in so far as those who can pay but simply won't should not just be put out of their homes, but in addition they should be dragged into court and appropriate action taken against them.  All said and done, it's a type of fraud imho !


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## Brendan Burgess

Andy836 said:


> Why would a strategic defaulter contact you? This is a very simple point that people can't seem to understand.



Another great point.  A lot of the debt advocates claim that they have never met a strategic defaulter.  But that is because they are meeting with people who are trying to deal with their problems.

I come across them all the time. Go into the  Circuit Court hearings for possessions and you will see plenty of them. Actually, you won't see them, because they don't bother showing up. They will have paid nothing at all for up to 5 years and they don't bother coming to court. 

Brendan


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## so-crates

Brendan Burgess said:


> I am a bit confused by that and I hope you are not interpreting anything I say as meaning that.
> 
> Everybody, or almost everybody, agrees that the basics of life take precedence over mortgage or rent payments.  I am referring to people who make no effort at all, or who pay unsecured creditors ahead of their mortgage.



I am not interpreting you as meaning people in those circumstances, no. Strictly speaking the word "deliberate" encompasses more people than you mean. I am trying to exclude those based on the driver behind their choice. Probably, I'd prefer the term "cynical defaulters" but that is far too negative!


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## Brendan Burgess

tunnellight said:


> I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.



Hi tunnel 

This is a real problem for the borrowers and for the lenders. If you haven't sorted it out yet, I think you should do a case study in a separate thread.

*Information required for mortgage arrears and negative equity questions*

While what the solicitor said sounds scandalous, and while I disagree with it, some borrowers are forced into impossible positions.

Brendan


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## Sophrosyne

Brendan Burgess said:


> I estimate that around 3% of the 600,000 mortgages are deliberate defaulters.  They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money.
> 
> When I say this in writing, on the radio or on TV, I get savaged for it.
> Brendan


 
I have to agree with Sarenco. Sometimes people defeat themselves.

You cannot possibly know or prove any of this and so you are making a rod for your own back while giving your opponents the upper hand.

Less zeal, more facts!


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## Brendan Burgess

OK, we will conduct a survey of the 64,000 borrowers in arrears over three months and ask them if they are deliberately defaulting? 

Denying the existence or failing to estimate the numbers is not helping to solve the problem.  

We have a poor record in Ireland of paying our taxes, water charges,  Local Property Tax etc.  Why would it be any difficult for people with mortgages? Especially when they reckon that there is no penalty and probably actually an incentive to default?  

I reckon that around 97% of people act responsibly. But that could be wrong. It might be only 95%. But, of course, it could be 100%. 

What I would say to any of you who doubt their existence is to go down to your local Circuit Court and look at the large numbers who are paying nothing and not showing up. They are not even going into MABS or FLAC or New Beginning.  They are just not paying and not caring. 

Brendan


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## Sarenco

Brendan Burgess said:


> I estimate that around 3% of the 600,000 mortgages are deliberate defaulters.  They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money.



Hi Brendan

My point is really that the 20,000 figure is just an estimate and there is absolutely no way of verifying this number. It's really nothing more than an educated guess on your part and every time you bring it up you are instantly met with a chorus of protests that you cannot verify that figure - which, in fairness, is true - so why waste precious media time debating something that is essentially unknowable?

Just to be clear, I am not doubting for a moment that there is a significant cohort of defaulting borrowers that could afford to make the scheduled repayments on their mortgage (as per its original terms or as subsequently modified) but have made a rational decision that it is not in their financial interests to continue doing so.  It would be truly extraordinary if this was not the case given the prevalence of negative equity and the lack of any apparent consequences for defaulting before an extended period of time has passed.  However, I don't see any point in trying to quantify the number of defaulting borrowers that fall into this category.

I've said this a number of times on here before (and I suspect we disagree on this point) but it doesn't make any difference to me whether a default is deliberate or accidental, strategic or accidental, cynical or genuine.  

If a borrower can't or won't repay a loan (in accordance with its original terms or as may be renegotiated to the satisfaction of both parties), then the borrower should be entitled (and, in my opinion, encouraged) to exercise the remedies agreed under the terms of the mortgage or as provided for by statute, within a reasonable timeframe and at a reasonable cost.  In my opinion, the ability to enter into bargains with each other and to have those bargains recognised and enforced by our legal system is an important freedom.  

I really don't understand why anybody with an unsustainable mortgage on a property in negative equity would make any payments whatsoever to their lender.  What's the point?  They will ultimately lose the property anyway so making any further payments to their lender is akin to setting their money on fire.  

Given the generosity of SVR mortgage holders to continue funding the accommodation needs of those who can't or simply won't repay their mortgages, a much more logical reaction for a defaulting borrower would be to stop all repayments and simply save the amount that would otherwise have been spent on housing.  

Who knows, in a few years you might get one of those sweet "mortgage to rent deals", thereby overtaking those poor fools on the social housing list.  When you think about it, mortgage repayments are really only for suckers under our system!

You are absolutely correct that strategic defaulters have no reason whatsoever to consult with debt campaigners or politicians.  However, such defaulters regularly consult with solicitors for advice on the terms of their mortgages, court procedures, etc.  Solicitors are paid to give honest advice on a confidential basis and not to offer moral or ethical judgments to their clients.


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## Delboy

Well, Noeleen Blackwell of FLAC on Primetime tonight believes there may be just the 500 out there deliberately not paying!!!


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## Sophrosyne

Brendan Burgess said:


> OK, we will conduct a survey of the 64,000 borrowers in arrears over three months and ask them if they are deliberately defaulting?
> 
> Denying the existence or failing to estimate the numbers is not helping to solve the problem.
> 
> We have a poor record in Ireland of paying our taxes, water charges,  Local Property Tax etc.  Why would it be any difficult for people with mortgages? Especially when they reckon that there is no penalty and probably actually an incentive to default?
> 
> I reckon that around 97% of people act responsibly. But that could be wrong. It might be only 95%. But, of course, it could be 100%.
> 
> What I would say to any of you who doubt their existence is to go down to your local Circuit Court and look at the large numbers who are paying nothing and not showing up. They are not even going into MABS or FLAC or New Beginning.  They are just not paying and not caring.
> 
> Brendan


 
Brendan,

I am not denying that there are defaulters, strategic or otherwise. Indeed, there are few who would.

My point is that your fixation on and your disparaging portrayal of defaulters coupled with an inability to provide credible proof, allows your views to be easily dismissed as waffle but more importantly, to cast doubt on anything else you say on the matter.

Sometimes discretion is the better part of valour.


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## Sarenco

Delboy said:


> Well, Noeleen Blackwell of FLAC on Primetime tonight believes there may be just the 500 out there deliberately not paying!!!



To be fair Delboy, she did say that there could just as easily be 5,000 or 500 as 20,000 and, when asked, she readily accepted that her assumption was that there was a proportion of defaulters that were strategic in nature.


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## WizardDr

No evidence of the figures.
No spokesman for Banks ever appear on these programmes
BB could have leverage to ask Banks to confirm figures.
Banks staying silent on these matters is to be questioned.
Absolute indifference of Central Bank should see Consumer Protection er protected by other than a fox.


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## robert 200

*Some people appear to have an obsession about these " defaulters " the reality is the 
actual number of them can never be proven.*

*Can we now move on and put our energy into something more positive.*


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## robert 200

I would totally agree with Noeleen Blackwell's figure . Noeleen has been in the firing line with FLAC for 7-8 years
now. She has been dealing with people in difficulty paying their mortgage on a daily basis.
Who better to estimate the number of defaulters.


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## Fella

What's the benefit of defaulting? So people have money coming in to there bank account but are not paying off the mortgage ? I don't see the benefit surely they will have to pay some day when they sell it on or when they die the bank will just take it ? Seems like a lot of hassle not paying mortgage you would presumably have to keep all your cash under your mattress and it be hard to get a loan again .


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## Brendan Burgess

robert 200 said:


> Noeleen has been in the firing line with FLAC for 7-8 years
> now. She has been dealing with people in difficulty paying their mortgage on a daily basis.
> Who better to estimate the number of defaulters.



Hi Robert 

Actually, FLAC does not advise that many people on mortgage issues.  Here are the figures from their most recent annual report. 



So that is about 1,500 people with debt.  Many of their callers are about unsecured debt, so in fact, they are not very active in the mortgage arrears area.  

Which is why they get this wrong. From a theoretical standpoint, it can be argued that the banks should have a veto.  But, in practice, it's completely irrelevant. 90,000 mortgages have been restructured after discussions between the lenders and the borrowers. The lenders have vetoed 90 proposed PIAs involving family homes. It's simply not an issue holding up resolution of the mortgage arrears problem. 

Even if Noeleen were dealing with 10,000 mortgage arrears cases every year, it would still not make her a good estimator of the level of deliberate default.  The people who go to FLAC probably are engaging and they will be told to make mortgage payments. There are thousands who are paying nothing. They are not talking to the banks. They are not talking to FLAC. They are not talking to New Beginning or any of the other groups.   So they can say that they don't know of any deliberate defaulters. 

But just go down to your local Circuit Court County Registrar hearings and see for yourself.  They are paying nothing and they are not showing up in court to explain why.  

Brendan


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## Brendan Burgess

robert 200 said:


> Some people appear to have an obsession about these " defaulters " the reality is theactual number of them can never be proven.
> 
> Can we now move on and put our energy into something more positive*.*



Hi Robert

That is the problem.  Until people accept the unpalatable fact that there are 20,000 deliberate defaulters, then we can't deal with them. 

The banks are dealing with the people who are attempting to pay. They have restructured 90,000 mortgages. 

If we want to fix the arrears problem, we have to recognise the cause.  It's not the banks' lack of action, it's the borrowers' lack of action.


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## IMHO

Hi Brendan,

I applaud you for continually raising the strategic defaulter point, but it is unfortunate that it can so easily be dismissed.

Whilst it is impossible to be precise I think you can justify stating there are significant numbers of strategic defaulters with the undeniable fact that the levels of arrears in Ireland are so high compared to elsewhere.

Eg Jim Brown CEO Ulster Bank told the finance committee:

"_The measure of that can be seen in England and Wales where the court system is faster. The most serious arrears have hovered between 0.2% and 0.25% of the total mortgage stock while in Ireland that equivalent number is nearly 10%, which equates to 50 times higher levels of serious arrears. The simple answer for that being the case is that no repossessions are taking place."_

Ireland's mortgage arrears statistics are completely out of kilter with every other developed mortgage market in the world. 

The only possible reason for the huge disparity is that it is government policy to solve the problem by encouraging the banks to do deals on the arrears rather than the mortgage holders to pay them.

This policy inevitably encourages high levels of strategic default.


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## breakonthru

Sarenco said:


> strategic defaulters have no reason whatsoever to consult with debt campaigners or politicians



I would disagree there with that..  IT IS in the interests of strategic defaulters to improve their prospects post bankruptcy, whenever that move is made by the bank..

Having 'payment orders' brought down to one year to match proposed one year bankruptcy term - would release 1000's of properties onto the market - so that same could be bought by FTB's at a reasonable price.

Not only did solicitor give impartial advice as to my current strategy but the banks rep. himself couldn't argue with my position that paying any capital above interest would amount to 'indentured servitude'.

As the only beneficiary would be the banks themselves while - I - on the other hand would have nothing to show for it..


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## Brendan Burgess

Hi IMHO

I am confused by the wording of your post.

You are saying that my argument "can be easily dismissed."

Then you are saying that there are high levels of strategic default. 

I don't want to put words in your mouth, but do you mean "It is unfortunate that so many people are dismissing your argument, although it is obviously correct"? 

Brendan


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## IMHO

Brendan Burgess said:


> Hi IMHO
> 
> I am confused by the wording of your post.
> 
> You are saying that my argument "can be easily dismissed."
> 
> Then you are saying that there are high levels of strategic default.
> 
> I don't want to put words in your mouth, but do you mean "It is unfortunate that so many people are dismissing your argument, although it is obviously correct"?
> 
> Brendan



Hi Brendan, sorry should have been clearer, but yes your words in my mouth is essentially what I meant. But if for some reason it is not obvious to others I think you need to state what the estimates are based on.

I saw prime time last night, and it was frustrating that when you said your figures were just estimates that it was dismissed.

What I also meant was if you said well they are estimates based on the figures relative to other mortgage markets, anyone trying to dismiss your argument would have to offer a reason of why our figures are so high if not due to strategic default.

But I don't wish to put words in your mouth either! I think you are doing a great job and well done.


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## Brendan Burgess

Thanks for the suggestions IMHO

I am astonished and frustrated that so many reasonable people seem to think along the lines "We can't get a definite figure, therefore there are no deliberate defaulters".  

Your approach of comparing things to other mortgage markets, is a good one. So maybe instead of just saying 3% of 600,000, I will come up with a few other ways of estimating it. 

For example, in every other country, there is a direct link between unemployment and arrears. Around 6 months after unemployment starts to fall, mortgage arrears start to fall. But not in Ireland. It continued to rise.

Brendan


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## IMHO

Brendan Burgess said:


> Thanks for the suggestions IMHO
> 
> I am astonished and frustrated that so many reasonable people seem to think along the lines "We can't get a definite figure, therefore there are no deliberate defaulters".
> 
> Your approach of comparing things to other mortgage markets, is a good one. So maybe instead of just saying 3% of 600,000, I will come up with a few other ways of estimating it.
> 
> For example, in every other country, there is a direct link between unemployment and arrears. Around 6 months after unemployment starts to fall, mortgage arrears start to fall. But not in Ireland. It continued to rise.
> 
> Brendan



The unemployment point is valid, and another I think Jim Brown made. Also David Duffy told the Finance committee that there were 2000 account holders with more funds on deposit than the balance of their arrears!

Another area I think worth focussing on is the fact their was an uptick in accounts arrears back when the government started to announce details of PIAs etc. What I mean is that when the government first indicated that policy would be keep people in their homes, there was a coincidental spike in arrears!

I also heard the Claire Byrne radio show last month when David Hall rubbished your suggestion there maybe strategic defaulters. He seems to have forgotten he very publicly recommended not paying the mortgage in order to avail of a better deal!

http://www.independent.ie/business/...ithout-debt-deal-says-imho-head-30363173.html

What is your email? I cannot see a facility to PM you here.


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## demoivre

D Hall does himself no favours by not acknowledging strategic defaulters. Those paying nothing on their mortgages would have to contribute something in any other type of accommodation be it rented or a local authority house. However I can think of a few very good reasons for strategic default, but that is an entirely different matter.


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## Sarenco

Brendan Burgess said:


> am astonished and frustrated that so many reasonable people seem to think along the lines "We can't get a definite figure, therefore there are no deliberate defaulters".


 
Fair enough but have any reasonable people actually said this?  I'm guessing you wouldn't consider Mr Hall to be reasonable in the context of this debate.

I think there is a danger that you might be misinterpreted as suggesting that anybody who doesn't agree with your 20,000 estimate is denying the existence of the phenomenon of strategic defaulters completely.  I know that is not what you are saying but I do think there is a danger that people will conflate the two issues.

Ms Blackwell is a very able lawyer and you can see almost see a smile forming on her face every time you mention the 20,000 figure because she knows that all she has to do is say that you can't prove that figure (which is obviously true) and then the debate becomes about how many strategic defaulters there are rather than the most appropriate way to resolve this issue.  Ultimately, Ms Blackwell's aim was to force the government into establishing a form of personal examinership, which will be a boon for personal insolvency lawyers, and it appears that she has been successful in this regard.

Let's be clear - this process will not be cheap or fast and the costs will be largely met by the banks' other borrowers.

Ultimately trying to categorise defaulting borrowers is a futile exercise.  If a loan can be re-structured to the satisfaction of both borrower and lender, well that's obviously ideal.  But if it can't then pretending that any solution other than the obvious will work is a waste of time and resources.

For the record, I would like to commend you for swimming against the tide on this issue.  It seems extraordinary that you seem to be the sole public commentator that wants to deal with the reality of this issue and you deserve great credit for taking this stance.


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## elcato

tunnellight said:


> I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.
> 
> I took legal advice on the situation - & the legal advice was *to strategically default , stay in the property for as long as possible & when eventually it would be repossessed , then I would have a nestegg built up. Was advised that I would never get another mortgage anyway as the property was so deep in negative equity*.



I don't see the problem with this. While it fits under the banner of 'strategic' default, it also highlights the problem of the banks not willing to sort it out themselves i.e. putting onus on you to do their debt collection on the joint debtor. I'm not a legal person but I have given this advice here many a time.


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## Gerry Canning

Delboy said:


> Well, Noeleen Blackwell of FLAC on Primetime tonight believes there may be just the 500 out there deliberately not paying!!!


Delboy.
Noeleen Blackwell , could well be correct , in that only 500 (deliberately) not paying.I think she means 500 that can well afford to pay full mortgages but just do not.
......................................................................................................................
But that does not include those who have (logically)come to the conclusion they are damned in any event and make decisions to slow payments/withhold payments etc. What they are doing  is morally dubious but then they can sort-of reasonably say Banks are screwing people on Standard Variable Rate Mortgages (SVR) .
Banks have screwed people on Payment Protection Insurance (PPI)
Banks have placed savings at risk and sold improper products to pensioners.
Banks pumped up the property markets.

I think the biggest issue was that Banks in 2008/9 hadn,t a notion of what to do. So in the vacuum people muddled along and found quasi-solutions just to keep going.

I hope the phoney wars are over and those that are genuine are helped and the leg lifters are hammered.


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## WizardDr

It just needs to be pointed out that we never see a Bank representative ever supporting or contradicting these figures.

As an example - the alleged issue that Credit Unions were being paid ahead of Mortgage was simply anecdotal.

What the Central Bank did was hammer the loan process in Credit Unions.

Is it not the case that if the Central Bank were examining files on a regular basis that they should be highlighting the findings.

Credible data could be achieved - er if it were true.


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## Sarenco

What findings or data exactly are you looking for?  We have the mortgage arrears data and credit union arrears data is available - what do you think you're missing?


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## jdwex

IMHO said:


> I also heard the Claire Byrne radio show last month when David Hall rubbished your suggestion there maybe strategic defaulters. He seems to have forgotten he very publicly recommended not paying the mortgage in order to avail of a better deal!
> 
> http://www.independent.ie/business/...ithout-debt-deal-says-imho-head-30363173.html



Maybe we should call that Tactically Defaulting


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## Brendan Burgess

That is why I use the expression "deliberate defaulting".  Many are simply choosing not to pay without thinking too much about it. They know that it will take years to lose their home so they spend money on instant gratification rather than worrying about what might happen in 5 years.


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## Sarenco

Opportunistic defaulters?


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## breakonthru

"Debt Defying Defaulters"


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## WizardDr

We have been statements being made on strategic defaulters.
I am not aware that there is any credible source to this.
I would be delighted to be cured of my ignorance.
Perhaps you would point me to the source.


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## Gerry Canning

Dear WizardDr,

1. Ask the Banks ? whoops, they don,t know ,yet they own the Mortgages.
2. Ask the Central Bank ? whoops see 1.
3. Ask me ? whoops I havn,t even a Mortgage.

Methinks it is so bad no-one wants to reveal it !,


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## WizardDr

Methinks:

It is a mythical figure without credible foundation.


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## Delboy

It's a time like this that I always like to throw in a graph to really illustrate to some folk what they just cannot see in front of their noses






Now that's only up to late 2012 so would love to see an update.
And how would it look if we overlayed Unemployment rates on the above!!! Spain's crash was bigger than ours and their unemployment is much higher than ours.
But we don't have Strategic Defaulters in Ireland, no siree!


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## demoivre

Delboy said:


> It's a time like this that I always like to throw in a graph to really illustrate to some folk what they just cannot see in front of their noses
> 
> 
> 
> 
> 
> Now that's only up to late 2012 so would love to see an update.
> And how would it look if we overlayed Unemployment rates on the above!!! Spain's crash was bigger than ours and their unemployment is much higher than ours.
> But we don't have Strategic Defaulters in Ireland, no siree!



How many of the countries in the graph, excluding Ireland, engaged in reckless lending with the full support of their respective central banks/ financial regulators? I would say there is very strong positive correlation between late stage mortgage arrears and reckless lending. Yet the borrower should pay the price for the collective madness that was the borrowing/lending during the celtic tiger - right?


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## Delboy

Spain has had over 300,000 repossessions at this stage v's a few thousand here. I'd be fairly certain that there was plenty of 'reckless' lending over there as well.
Plus it takes 2 to tango in a lot of cases...manys the borrower included bonuses, potential rent a room income, sale of part of garden etc etc into their estimates when looking for a mortgage...and some even threw in the price of a new SUV, fancy holidays or plush furnishings as advised by expensive Interior Designers!!!


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## breakonthru

I have no time for anyone who wishes to deny their own concious deliberation in signing up to a mortgage..

Added to that, I can completely understand why folk - like me, would strategically default on agreements made, in light of the 'present' circumstances in their life.

As i've stated before - the material preservation of a decent standard of living for my family comes WELL before any opinion my neighbors, banks or indeed the state may have. 

Like it or not!


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## Sophrosyne

breakonthru said:


> I have no time for anyone who wishes to deny their own concious deliberation in signing up to a mortgage..
> 
> Added to that, I can completely understand why folk - like me, would strategically default on agreements made, in light of the 'present' circumstances in their life.
> 
> As i've stated before - the material preservation of a decent standard of living for my family comes WELL before any opinion my neighbors, banks or indeed the state may have.
> 
> Like it or not!



What if repossessions in Ireland were more speedy - say within 6 months of falling into arrears or restructured arrears - how would that affect your situation?


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## WizardDr

@Dellboy - apparently there is continuous debate at this site: http://www.irisheconomy.ie/index.ph...-mortgage-arrears-the-smoking-gun/#more-15759
about 'strategic defaults' One sample comment was that AIBs was 2%. Brian Lucey is quoted as saying we don't know and on it goes.


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## WizardDr

Have we got the source of 'strategic defaulters'?
Maybe I am hallucinating, but that chart up there - could merely be confirming that the country with the least houses for its population  in substantially most of Europe, had the biggest rise in property prices because of the dumbest planning laws on the planet, and each buyer found they could afford the loan with what they were actually earning (interest rates had dropped substantially meaning your € paid off a bigger mortgage than previously that is until the a large number of people lost their jobs at same time ....and so the dumbest country in Europe then has the highest ratio of late stage arrears probably on the planet. (If you were repossessed you would not be in the stats).

*So where is the source? *


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## Gerry Canning

WizardDr said:


> Have we got the source of 'strategic defaulters'?
> Maybe I am hallucinating, but that chart up there - could merely be confirming that the country with the least houses for its population  in substantially most of Europe, had the biggest rise in property prices because of the dumbest planning laws on the planet, and each buyer found they could afford the loan with what they were actually earning (interest rates had dropped substantially meaning your € paid off a bigger mortgage than previously that is until the a large number of people lost their jobs at same time ....and so the dumbest country in Europe then has the highest ratio of late stage arrears probably on the planet. (If you were repossessed you would not be in the stats).
> 
> *So where is the source? *


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## Gerry Canning

DELBOY.
1. we agree there must be strategic defaulters, but figures quoted are not matched by facts.
Your graph on Late Stage Mortgage Arrears is not the issue. What the graph shows is we have a hell of a problem.
2. I think most people would have little time for leg-lifters who can, but choose not to pay.
BRENDAN.
1.I like your {deliberate defaulting } as it sorts out the can,t from the won,t pay.
DEMOIVRE.
1.We all agree that reckless lending by (professionals) has played a large part in this mess.
2.I thought we had funded the Banks to sort the bulk of arrears?

So if Repos become common we will have already funded Banks to sort, then the rehousing of the Reposseded will be funded by us, then the (lovely) market will buy repo,d homes at a discount .
In short mass Repo will re-re-cost us again! 

BREAKONThru.
Inclined to agree.


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## Delboy

Gerry Canning said:


> DELBOY.
> So if Repos become common we will have already funded Banks to sort, *then the rehousing of the Reposseded will be funded by us*, then the (lovely) market will buy repo,d homes at a discount .
> In short mass Repo will re-re-cost us again!
> 
> BREAKONThru.
> Inclined to agree.


Thats not true- it has been pointed out time and time again that most of those in arrears have jobs. So they won't qualify for social housing and they'll have to go and rent in an area they can afford rather than default in an area/house thats beyond their current circumstances i.e. no cost to us again in most cases


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## Gerry Canning

Delboy said:


> Thats not true- it has been pointed out time and time again that most of those in arrears have jobs. So they won't qualify for social housing and they'll have to go and rent in an area they can afford rather than default in an area/house thats beyond their current circumstances i.e. no cost to us again in most cases


................
From what I read , it appears that Rents are too expensive in Dublin.
So someone moves , might be ok if that is where kids go to school or reasonably close to work.Might be ok if person can afford rent, might be ok if in so doing he isn,t left with large residual mortgage debt.Most of those in arrears are in jobs but have they enough to get beyond the working poor.

Yes they can move to Donegal.
1. Rent a good house for 600 per mth.
2. If they get a job, a good wage here is k25.
3. Won,t get a job = dole = housing costs that land on us !.
.......................


I have heard you frequently on AAM and do state that Moral Hazard means everyone should honour their debts, but what is the point in hanging people?.

This thread is about STRATEGIC DEFAULTERS , I take that to mean those who can but will not pay.
I do not think any poster has time for these boyos.


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## Delboy

OTT again. It is possible to commute to an existing job in Dublin from Kildare, Meath even Laois!
You don't have to pack in your job and move to Outer Donegal!


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## WizardDr

So we don't have a source for this information.
And the chart merely reflects inaction on repossessions.


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## Delboy

And all repossession cases are a reflection of....

See also recent threads on court sittings and levels of no-shows


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## WizardDr

All I want is a source for the figures.

There isn't one is there?

Repossession activity now reflects the fact that the soaring price of properties means the banks may not lose as much as they thought if at all.


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## dereko1969

Interesting to see one of the main points from Dan O'Brien's piece in the Indo on Fingers appearance was the legacy of his and others decisions.
http://www.independent.ie/opinion/c...ongestlasting-legacies-of-crash-31498654.html

*"More unwelcome news came from the huge number of landlords who remain in arrears.
Known in the jargon as "buy-to-let" mortgages, there are more than 30,000 of these loans in arrears, representing nearly one in four of the total.
Amazingly, the non-performing share of buy-to-let mortgages has not fallen since the authorities starting counting them three years ago.
More astounding still is the fact that there has been a huge increase (from 4pc of the total three ago, to 11pc as of June 2015) in the share of buy-to-let mortgages which are in arrears for more than two years."
*
I'm sure that some of these buy-to-lets are empty but I'm also sure that there must be a large number of them where the landlord has been continuously collecting rent and not passing it on to the banks. Time to repossess these properties.


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## KOW

Sarenco said:


> On a separate note, you might consider whether it is wise to continue arguing that circa 20,000 borrowers are strategic/deliberate defaulters.  I don't see how you could ever stand up this figure and I would suggest that it is something of a distraction from the core issues.



Brendan is spot on. I know of two separate couples who had a number of investment properties. They got into serious arrears kept collecting the rent. Spent the rent on lifestyle. Eventually the banks have taken back the properties after years of spending and paying no loans.


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## Sarenco

DCD said:


> Brendan is spot on. I know of two separate couples who had a number of investment properties. They got into serious arrears kept collecting the rent. Spent the rent on lifestyle. Eventually the banks have taken back the properties after years of spending and paying no loans.



Hi DCB

I think I made it clear in my earlier posts that I wasn't for a second denying that there are borrowers that make a conscious, rational decision to stop making mortgage repayments by choice.

My argument is that there is absolutely no way of verifying the 20,000 figure.  it's pure guess work and serves as a distraction in any discussions on the slow pace of repossessions.


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## Delboy

Can't find the report on the Indo site yet so how many 'thousands' are there actually assumed in the report, I don't know. But it only confirms what most rational people thought when it came to strategic default in Ireland
*
Thousands of people stopped paying their mortgages once they knew their houses wouldn't be repossessed.*



> A Central Bank report has found a direct link between an increase in the number of people going into arrears and a High Court judgment which blocked banks from reclaiming homes.
> In 2011 a High Court judge made a ruling to block the repossession of homes. This was based on a legal loophole which was addressed two years later.
> A new report from the Central Bank has found that during this time, people stopped paying their mortgages.
> The Irish Independent reports that some of these people could have continued to pay, but chose to go into arrears instead, because they knew they couldn't be evicted.
> The Central Bank report has found a direct link between the High Court judgement and an increase in the number of people defaulting.
> Ireland has some of the highest mortgage debt in Europe with almost 51,000 residential mortgages more than three months in arrears.


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## MrEarl

I wonder how many are still not making their regular repayments ?

I would imagine quite a few, given the level of long term arrears that the Banks still refer to, the various loan portfolio sales taking place (or due to take place) etc.


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## Delboy

David Hall was on the radio earlier dismissing the CB report and telling them to do some worthwhile work! 
He talked about the margin of error on opinion polls and if applied to an academic reports like this, there'd be nothing to talk about so move on.

He's coming up on the Ciara Kelly midday show on Newstalk soon


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## Protocol

https://www.centralbank.ie/news/art...ssession-risk-on-mortgage-default-08-feb-2018

An Economic Letter by Terry O’Malley, published today, considers whether reducing the risk of repossession resulted in more Irish borrowers defaulting on their mortgages. An Economic Letter, entitled Did the Dunne Judgement Lead to More Mortgage Defaults? specifically considers the impact of a high court ruling in 2011, known as the “Dunne judgment”, which temporarily removed a bank’s ability to lawfully repossess a home.

The key findings are:


Borrowers defaulted on mortgages after the judgement at a higher rate than if the repossession regime at the time had been legally upheld.
Borrowers who defaulted were more likely to be in negative equity, more likely to have missed payments before the judgement, more likely to have slightly lower incomes on average and were more likely to face higher interest rates and be on a variable rate mortgage.
The default rate is found to have been one half a percentage point (0.5%) higher on average in each quarter after the judgement than would have been otherwise expected, given the difference in the default rates before the judgement.


01/RT/18

https://www.centralbank.ie/docs/def...k-on-mortgage-default-(o'malley).pdf?sfvrsn=4


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