# Will the Court Reviews of PIAs make much difference?



## Sophrosyne (9 Mar 2016)

Sarenco said:


> 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).



Why do you think applications, in those circumstances, would be rarely successful?


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## Sarenco (10 Mar 2016)

Sophrosyne said:


> Why do you think applications, in those circumstances, would be rarely successful?



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?

There may well be cases where an individual bank official acts irrationally or unreasonably in these cases but the prospect of engaging in a public court process has a wonderful way of focusing the minds of more senior line managers.


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## Sophrosyne (10 Mar 2016)

Sarenco said:


> 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).*





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?
> 
> There may well be cases where an individual bank official acts irrationally or unreasonably in these cases but the prospect of engaging in a public court process has a wonderful way of focusing the minds of more senior line managers.



That doesn't quite answer my question, which was why would you think that successful applications _to the Courts_ would be very rare.


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## Sarenco (11 Mar 2016)

Sophrosyne said:


> That doesn't quite answer my question, which was why would you think that successful applications _to the Courts_ would be very rare.



You asked me why I suspected that successful applications under Section 115A would be rare and I gave you a pretty detailed explanation as to why I have formed that suspicion.  

Time will tell whether my suspicion is unfounded or not.

Perhaps I can ask you a question now?

Do you agree that there are a very significant number of non-performing mortgages outstanding that can never be restructured on a sustainable basis?

I look forward to hearing your views.


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## Sophrosyne (11 Mar 2016)

Actually, you didn’t.

My question specifically related to why you think that applications to the Court would rarely be successful.

Your reply was “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?”  

Your suspicions in this regard, whether right or wrong, are irrelevant regarding cases that actually progress to the Court.

Why would you give the impression that those cases would be rarely successful?

In answer to your question, I don’t know and anecdotal evidence aside, I doubt that anyone really knows with any degree of certainty.


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## Brendan Burgess (11 Mar 2016)

Guys, I have deleted the posts containing personalised comments.

This is a very interesting issue, so I have removed it to a separate thread.

I have no idea how this works in practice.  

Whether the courts will approve PIAs generally which have been rejected, I don't know.

The banks have behaved fairly reasonably, and I suspect that the threat of a Court Review might make them a bit more flexible.

I attach the relevant section of the Act.

Arthur Cox has a briefing here: New Court Review Process


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## Brendan Burgess (11 Mar 2016)

Based on my experience of the Repossession Courts, almost all of the cases would have been thrown out by "consideration of the conduct of the debtor". They were generally paying nothing and not engaging with the bank.

I presume that if a property is in positive equity, the court would not impose a write down.


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## Brendan Burgess (11 Mar 2016)

Sophrosyne said:


> Actually, you didn’t.



Sop

To be fair to Sarenco, he has answered the question. I will spell it out for you.

1) Banks have generally behaved reasonably in the restructuring of mortgages. 
2) If a borrower is unhappy with the bank's offer, they can apply for a PIA
3) If the lender vetoes the PIA, the borrower can apply to the courts under this Section 
4) However, if the lender has behaved reasonably, then the court is not going to impose a PIA.

The proof of the pudding will be in the eating. How many cases have been taken under this section?


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## Brendan Burgess (11 Mar 2016)

Sophrosyne said:


> Your reply was “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?”
> 
> Your suspicions in this regard, whether right or wrong, are irrelevant regarding cases that actually progress to the Court.



I agree with Sarenco that that banks have generally been reasonable.  If they are being unreasonable, then the courts can impose the PIA on them. 

If Sarenco and I are wrong and that the banks are being unreasonable on a frequent basis, expect to see a lot of PIAs imposed. 

Brendan


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