# BOI have declared my mortgage 'unsustainable' but I am not in arrears



## Danmo (15 Jan 2015)

Hi

I have a mortgage with BOI which is *not* in arrears (yet) but I am finding it extremely difficult to pay. I am currently on interest only and seriously don't know how I will manage when it reverts to the full amount in March 2015 again. The details are as follows:

*Personal and income details*
Net (i.e. after tax) Public servant. Takehome pay is €562 weekly after deductions. 
*Income history:* Net income partner/spouse: 0 (single parent)
*Income history: *In public service 10 years. Salary was €43K at time I took out mortgage in 2009 and is now €40K less USC and pension levy (€80 a week). Bought house for €250K plus stamp duty. Borrowed €225K and put in 25K own money (divorce proceeds).
*Number of children:* 1 two year old
*Amount of Mortgage Interest Supplement received:* 17e TRS per week
*Home loan*
Lender: BOI
*Amount outstanding:* 207K approx
*Value of home: *150-160K
*Interest rate:* specify whether tracker or SVR or fixed rate: Variable Rate – 4.5% approx
*Monthly repayment:* I actually pay weekly - €260 per week less €17 TRS so total is €243 weekly. Currently paying €172 a week interest only until March 2015.
*Amount in arrears: *None. 


*Other loans and creditors *
Overdraft: €1000 (always in the red)
Credit Card AIB €460 
Bank Loan AIB Bankloan of €750 – pay €10 weekly
Car loan: €1850 (Credit union)

*Other savings and investments *
€850 Credit union (secured against car)

*How important is retaining the family home to you? 
Which of the following best describes your situation?*
Either of these apply to me but ideally I would like option 2
1. I would like to keep it, but will get rid of it if it means I can get rid of the mortgage associated with it although it would cost roughly the same to rent as the full mortgage.
2. I really want to keep the family home even if it means having a large mortgage and negative equity for years to come but would like some quality of life too.

*Summary of discussions and agreements with the bank: *Have had three different interest only periods over life of mortgage totaling 30 months. The most recent period was/is from March 14 - March 15. The bank contacted me by letter and phone said if I envisaged any difficulties making full repayments in March to contact them asap with a new SFS which I did in late Dec. A representative from the bank called on 5 Jan and asked for a meeting. I had suggested a split mortgage and a means of paying the lump sum (public service PRSA lump sum on retirement). 

I met with the rep in early Jan and he started going through the split mortgage figures and then announced that I couldn't afford it. He said the board has declared my mortgage 'unsustainable' and they will be writing to me regarding same and I have the right to appeal. He suggested I put together an appeal and proposal outlining my circumstances etc and suggested I try and reduce my outgoings further (even though he accepted at the meeting that there really is nothing else left to cut back on). He also said if I underpaid the mortgage i.e. continued to pay the current amount rather than the full amount that they would start legal proceedings. 

What does 'unsustainable' actually mean. Can the bank take my home or force me into a voluntary sale when I have no arrears and if I continue to make the full repayments?


----------



## Brendan Burgess (15 Jan 2015)

Hi Danmo

Here is a Key Post on the topic:

*What to do if you get a letter saying your mortgage is unsustainable*




Danmo said:


> Can the bank take my home or force me into a voluntary sale when I have no arrears and if I continue to make the full repayments?



While you are not in arrears, you would be in deep arrears had Bank of Ireland not allowed you go interest only for 30 months.
So the _legal _position is that in March, they will put you back to capital and interest which you can't afford.
You will then go into arrears.
They will issue you letters.
And, eventually, they will issue legal proceedings.

If you pay the full capital and interest, then the bank will not want to force you into a voluntary sale.


Park that for a moment, and let's look at your figures.
You are paying €172 a week for your accommodation.  If you were to sell the house, presumably you would have to pay at least this in rent to get somewhere suitable.

It's not just that your mortgage is unsustainable, the alternative of renting is also unsustainable.

You would also have a €60k shortfall after the sale of your home. Bank of Ireland will not write this off but they might not pursue it too vigorously either.

So, no matter what BoI says, you have to try to hold onto your home.

Continue paying the interest only on your mortgage. Do your very best not to miss a payment.

When they send you a letter deeming the mortgage unsustainable, you will have a right of appeal, and you should appeal it. They probably won't uphold the appeal but you have nothing to lose by trying.

If they write to you then giving you notice that they will take legal action against you, you should write to them telling them that you consider your mortgage sustainable and that you will fight the repossession in the court.

It will take them a few years to gain repossession, which gives you time. Your income might improve. You may get a lump sum from somewhere else. But you will have some time.

*The risk in all this is that the sale of a repossessed house will get less than a voluntary sale. *
I am not sure that this is a big issue for you. At the moment, you will be left with a €60k shortfall which you can't pay. Does it really matter if it's €80k because of legal costs?

If the value of your house increases and it looks as if they will get a repossession order, then you might consider a voluntary sale if it were close to getting you out of negative equity. But that is a few years down the line.

*You could also apply for the Mortgage to Rent Scheme *
http://www.citizensinformation.ie/e...mortgage_arrears/mortgage_to_rent_scheme.html

If you would qualify for social housing, a housing association would buy your home from you and rent it back to you.

Very few have gone through, but you should explore this avenue with Bank of Ireland. 

If they refuse, then you will be able to show this to the judge. 

*You should make an appointment with New Beginning or the IMHO to discuss the matter further. *
New Beginning may well represent you in court free of charge.

*You are also a victim of the outrageously high mortgage rates in Ireland *
If the rate you are being charged were closer to the Euro area average of 2.5%, you might have a sustainable mortgage.


----------



## Danmo (15 Jan 2015)

Thank you for responding Brendan. 

I have sent my details to the IMHO and am waiting on them to get back to me/to see if they will take me on or not. Apparently they review your case and will only take you on if they think they can help. They charge a once off fee of €350.

Mortgage to rent is not an option as there are strict income guidelines (usually reserved for social welfare recipients or people eligible for social housing). Very few of these have actually happened.

I don't see how I can continue paying €172 past March as AIB pay the mortgage to BOI out of my account even when I am overdrawn up to the limit. How do you pay less than the DD amount? Do you cancel the DD and pay in cash at the branch?? I queried this with AIB before and they said they always honour mortgage payments regardless so it appears the full payment will come out of my account anyway.

I don't see the point in a voluntary sale and being left with a debt. Even if the debt were written off, (unlikely) it would cost just as much to rent if not more coupled with the insecurity of renting. 

The only thing I can do is try to hang on to my home at all costs.

Say, I do manage to make the full capital and interest payments come next March. Will the bank 'park' the issue?


----------



## Brendan Burgess (15 Jan 2015)

Danmo said:


> I don't see how I can continue paying €172 past March as AIB pay the mortgage to BOI out of my account even when I am overdrawn up to the limit. How do you pay less than the DD amount? Do you cancel the DD and pay in cash at the branch?? I queried this with AIB before and they said they always honour mortgage payments regardless so it appears the full payment will come out of my account anyway.



I don't think that is correct. You notify AIB to discontinue the Direct Debit. A Direct Debit is where BoI "pulls" the money from your account. You set up a Standing Order to pay the €172 per week to BoI.  With a Standing Order, you "push" the money to BoI, so it's under your control. 

You should, of course, tell BoI, what you are doing so that they stop presenting the direct debit. 

http://personal.aib.ie/ways-to-bank/aib-direct-debits-and-standing-orders

_*AIB Direct Debits*
_

_You can cancel a Direct Debit through AIB Internet Banking, or by calling AIB Phone Banking on 0818 724 724. You can also cancel a Direct Debit via any AIB Branch during opening hours by submitting the request in writing, including the Direct Debit name, reference number and the Direct Debit amount._
_While AIB will cancel your Direct Debit it is your responsibility to inform the Originator of this cancellation and to make any alternative payments arrangements necessary._


----------



## Ceist Beag (15 Jan 2015)

Would it be at all an option to rent a room in the house Danmo? I know it would be far from ideal given you have a two year old child but it might help towards repaying the capital if needed. Would there be any family or friends who would be happy to share the house and who you would be happy to have as a paying tenant?


----------



## Danmo (15 Jan 2015)

Thanks Ceist Beag. I tried renting a room before. I live in a rural area so it was virtually impossible before I had the child to find someone. I can't envisage someone wanting to rent with a toddler in the house nor me letting a stranger into the house either. I have explored everything, backwards, forwards and sideways in my brain. I can't see a way out of this bar a lotto win, inheritance or large payrise. All unlikely. :-(


----------



## Brendan Burgess (15 Jan 2015)

Hi Danmo

What age are you? 
What is the remaining term of your mortgage? 
Have you or they  raised the possibility of a split mortgage? 

Brendan


----------



## Danmo (15 Jan 2015)

I am 42 in May. The mortgage runs until 2039.

I have raised the possibility of a split mortgage with the Bank in a letter when I returned the SFS and proposed paying the end lump sum with a public service PRSA lump sum on retirement. The part I cannot understand, is that the BOI rep started the meeting by taking me through the split mortgage figures and extending the term to age 70. This would mean me paying an affordable amount of €200 a week. I was really excited about this possibility as interest only is only a short term solution. However, he then said, that on paper I cannot afford it - that the board were working with strict criteria and on paper, I cannot even afford what I AM paying. I pointed out that the proof is in the pudding, that I have never missed a payment and have no arrears. It was like, 'and here's what you could have won'. So they want me to pay the full amount (an extra €90) and probably fall into a arrears rather than extend the term, split the mortgage and ask me to pay an extra €28 a week which I could totally do. Then he said, the board feel my expenditure for a household my size should look more like 2051 instead of 2214 so I invited him to go though the SFS again and he agreed, there was nothing 'outlandish' on it and nothing left to cut. The only conceivable thing left is wifi, but I have no SKY TV.  The heating goes of at 7pm when the child goes to bed and I go to bed with a hot waterbottle.

Anyway, I have been trying to educate myself out of recession (have done two degrees at night) and am looking for promotion. I have a permanent pensionable job and I don't plan on doing the role I am in forever - am earnestly seeking to move up the ladder. I think my proposal is reasonable and I have been a very engaged customer.

Anyway. We ended up talking in circles. It's like they want me to default. I don't get it.

I am waiting on the IMHO to get back to me. This is bigger than me now. They have the balance of power and I think BOI in particular, seem difficult to negotiate with. Needless to say, it's all very stressful.


----------



## Danmo (15 Jan 2015)

Thanks Gerry and Brendan. Keep you posted.


----------



## ashling (23 Feb 2015)

Anymore updates on this as i am in the exact same position and i dont know that to do?


----------



## Bronte (24 Feb 2015)

ashling said:


> Anymore updates on this as i am in the exact same position and i dont know that to do?


 
I suggest you do a thread of your own, it would be rare indeed for someone to have the 'exact same position'.


----------



## Danmo (14 Apr 2015)

Hi...following on from my previous post, I appealed BOI's decision via the IMHO who prepared a proposal for me. I got notification yesterday from BOI that the appeals board have rejected my proposal on the grounds that:  'the Board concluded that there is insufficient income evident, now or in the forseeable future, to allow us to offer your client an alternative repayment arrangement or to identify a long term sustainable solution'. The Bank have done little or nothing in my opinion, to come to some long-term solution.

Just to remind you, I was on interest only until March and have been paying full capital and interest since 22nd March. There are no arrears on my account. I am still waiting on the IMHO to get back to me but would appreciate input on where I go from here bearing in mind I want to stay in my home at all possible. My questions are:

*1. Can BOI start legal proceeding once I am paying full capital and interest with no arrears, just because they think my mortgage is 'unsustainable'? *

2. Should I apply for social housing? I am just within the income guidelines and I have done some web research and apparently having your mortgage deemed unsustainable entitles you to be _assessed _for social housing. I rang my local co co and they were spectacularly unhelpful and rude and advised me the waiting list is 8 years but I suppose there is no harm in applying.

3. What happens next? Will BOI write to me again reiterating their first list of 'options' i.e.
- voluntary sale
- voluntary surrender
- mortgage to rent etc.?

BTW, I am a SVR customer. I want to fight the bank on this. I have a full time permanent, pensionable job with a lump sum due on retirement (I had proposed split mortgage but BOI dismissed this). In my view, although the mortgage is crippling me right now, it is sustainable in the long term. I would consider mortgage to rent if I thought the bank would be amenable but from media coverage, this seems to happen seldom in reality, am I right?


----------



## Matthew Moore (14 Apr 2015)

Danmo said:


> 2. Should I apply for social housing? I am just within the income guidelines and I have done some web research and apparently having your mortgage deemed unsustainable entitles you to be _assessed _for social housing. I rang my local co co and they were spectacularly unhelpful and rude and advised me the waiting list is 8 years but I suppose there is no harm in applying.



Yes apply for social housing regardless of what the waiting list length is. Nothing will happen fast with BOI or your house so in the worst case scenario it could be at least a couple of years before you are seeking housing support. Another thing to bear in mind is that Voluntary Housing Associations (VHA) take people from the list on a recommendation basis rather than length of time on the list. I imagine you would need to be on the list for a couple of years before a recommendation would be made.




Danmo said:


> 3. What happens next? Will BOI write to me again reiterating their first list of 'options' i.e.
> - voluntary sale
> - voluntary surrender
> - mortgage to rent etc.?



Probably so. Then, if they decide to pursue legal action, there are a series of letters they send, all automatically; calling in the mortgage, notifying of intention to pursue legal proceedings, confirmation of legal representation, letter from solicitor etc.... There's a long way to go till it gets to court.




Danmo said:


> I would consider mortgage to rent if I thought the bank would be amenable but from media coverage, this seems to happen seldom in reality, am I right?


The bank have to put you forward for MTR. No harm doing the application if they offer it, it looks as though there may be something coming some to make it more successful. Nothing moves fast with this process either and even if it was a succesful application it would be at least a year before ownership transferred to a VHA. I know that one requirment is that there must be a need for social housing in the area where your house is located, otherwise the VHA won't be interested in buying it, if you are very rural this may be an issue.


----------



## Sophrosyne (14 Apr 2015)

Brendan,

In your contribution to the Last Word on Monday last you said;

“Anybody who makes an attempt to pay their mortgage will genuinely be looked after and will have no fear of losing their home.”

and

“Anybody who goes in and if the bank is unfair to them they are not going to have their home repossessed as long as they are making some sort of payment and doing their best.”

What do you think has gone awry in Danmo’s case?

Genuine question


----------



## Danmo (15 Apr 2015)

Thanks Pat2. Are you the same Pat2 that went through the MTR process with BOI? I was considering that option this morning until I read your post. :-( It looks like BOI aren't particularly amenable to getting it over the finish line. I am not that rural. I live in a commuter belt town so yes, I think there would be a need for social housing. There is a large waiting list in the area.


----------



## demoivre (15 Apr 2015)

Danmo said:


> *1. Can BOI start legal proceeding once I am paying full capital and interest with no arrears, just because they think my mortgage is 'unsustainable'? *



I don't know if they can start proceedings but I can't see any judge giving a possession order against you if you're making full repayments.


----------



## 44brendan (15 Apr 2015)

There must be historic arrears or some other "breach of contract" evident for any loan facility to be called in. Full P&I repayments should include P&I on the current balance outstanding to either current maturity date of the loan or to be sustainable to date of your retirement from employment (usually age 65).
You must be in default in order for any bank to take proceedings against you. Unsustainability is not an event of default!!


----------



## Danmo (20 Apr 2015)

There is no breach of contract at all or no arrears. I was only interest only (I have had a couple of periods of this). Towards the end of the agreed interest only period, I got a very polite phonecall asking me about my circumstances. I said nothing had changed re income etc so I was invited to submit SFS again which I did. Next thing I get a call asking for a meeting to discuss my 'options'. Had meeting next day. Went through SFS. Discussed split mortgage. BOI rep went through all the split mortgage figures. Then said I couldn't afford it and announced that the Board had deemed my mortgage 'unsustainable' and that unless I made full repayments, they would move to reposess. So I am not in breach of contract. I was only asking the question i.e. could we come to some other more long term, sustainable arrangement and I got slapped with this.


----------



## Matthew Moore (21 Apr 2015)

Danmo said:


> Thanks Pat2. Are you the same Pat2 that went through the MTR process with BOI? I was considering that option this morning until I read your post. :-( It looks like BOI aren't particularly amenable to getting it over the finish line. I am not that rural. I live in a commuter belt town so yes, I think there would be a need for social housing. There is a large waiting list in the area.



Sorry Danmo, I just saw this now. 

Yes, we got considerably far through the MTR process with BOI. I didn't intend to put you off MTR, it's a fantastic solution if you meet the criteria. In fairness to BOI, they moved as fast as they possibly could through the process and didn't show any reluctance. The delays come from the sheer number of stakeholders, the borrower, lender, Housing Association, the Housing Agency, whoever funds the purchase, the local county council, and then there's the professionals involved. It is just a really cumbersome process. 

Our application fell down because the Housing Association did not have a budget large enough to nake the repairs to our house which are necessary to bring it up to social housing standard.


----------



## Danmo (21 Apr 2015)

That's a pity Pat2 and must have been very disappointing after jumping through all those hoops. I wonder if anyone makes it through the process successfully. There's not much about it on the web...


----------



## Matthew Moore (21 Apr 2015)

Danmo said:


> That's a pity Pat2 and must have been very disappointing after jumping through all those hoops. I wonder if anyone makes it through the process successfully. There's not much about it on the web...



Just one from a number of false starts to solutions but sure that's the nature of the beast.

I believe around 100 have got across the line. No harm in giving it a try, nothing to say you won't make it 101! Here's some information I had saved, it's a little dated but might provide some idea of the workings. The second link is very insightful.

http://www.housing.ie/Housing/media/Media/Mortgage to Rent Scheme/Mortgage-to-Rent-Scheme.pdf

[broken link removed]


----------



## Danmo (21 Apr 2015)

Thanks.


----------



## Brendan Burgess (21 Apr 2015)

Hi Danmo

This is a very frustrating case. 

The Central Bank rules are probably preventing Bank of Ireland from offering you a sustainable solution. When they run the figures, they show that your mortgage is unsustainable, so they must tell you that.  As far as I am concerned, you are a perfect candidate for interest only - indefinitely. 

€207k@4.5% = €9,300 a year or €770 per month. 
You are paying this and therefore there is no advantage to the lender in repossessing your home. 

Continue paying it and don't worry too much about it.  I have been visiting the courts recently, and out of over 400 cases, we saw oly two repossessions where the borrower actually showed up in court. And they had paid nothing at all since 2011 and 2012. 

One woman who showed up had paid nothing at all, not a red cent, since 2009, and had her case adjourned. 

You may get a letter from their solicitor telling you that they will be issuing proceedings. If you do, then write back saying that you are not in default and you are paying the agreed repayments in full. 

Bear in mind that you may at some stage appear in court. Make sure that you have built up a very good file.  Based on what we have seen, you are in no danger whatsoever of losing your home. You may get a lot of legal letters, you may even have to go to court, but you will not lose your home. 

You should not be trying for Mortgage to Rent in my opinion either.  You lose ownership of your home. 

By the way, if you were paying Eurozone average interest rates, your interest would be €400 a month. 

Brendan


----------



## advice (5 May 2015)

Central bank has confirmed that interest only payments on a mortgage is a long term sustainable solution, tell the bank this, also tell them that no court in Ireland will grant a possession order against your principal residence if you can prove affordability of interest only payments. Tough luck Mr Bank.


----------



## Sarenco (5 May 2015)

advice said:


> Central bank has confirmed that interest only payments on a mortgage is a long term sustainable solution, tell the bank this, also tell them that no court in Ireland will grant a possession order against your principal residence if you can prove affordability of interest only payments. Tough luck Mr Bank.



That is correct but only in circumstances where "the sale of the property provides sufficient surplus funds on death to redeem the outstanding mortgage balance".

In other words, in order for lifetime interest-only payments to be considered a sustainable loan modification, the borrower must be in a position to demonstrate that:- (a) he/she will be in a position to meet the interest payments throughout their lifetime (in practice this means that there will have to be substantial accrued pension entitlements in place to meet the interest payments post-retirement); and (b) that there is sufficient equity in the relevant property to discharge the loan from his/her estate (normally this means that the borrower would have to be in positive equity at the time of the loan modification but if the borrower will be entitled to a lump-sum on retirement that would be sufficient to clear any negative equity then I don't see why this couldn't be taken into account under the Central Bank Guidelines)

I appreciate that Brendan is of the view that if a borrower can simply meet the interest payments on a mortgage at the time of the loan modification then that should be considered a sustainable mortgage.  I happen to strongly disagree with this viewpoint but, more importantly, the Central Bank does not agree with Brendan's opinion that this arrangement constitutes a long-term sustainable mortgage.

Based on the facts as presented, I would have thought that the OP would have an uphill battle trying to demonstrate that his/her mortgage is sustainable once the current interest-only period comes to an end.

Edited to add:  Apologies, I've just realised that the OP is currently making full principal and interest payments.  For as long as that continues there's obviously no problem although I'm sure it's tough going.  Would trading down to a smaller property be possible?


----------



## robert 200 (19 May 2015)

Hi Danmo ,

Any word back from IMHO?


----------



## Danmo (19 May 2015)

Hi Robert
Better still. I got word from the Bank. They are looking at a longer term arrangement for me.


----------

