# Voluntary Sale for Loss, Shortfall Settled, Advice for next steps



## DublinBroke (8 Nov 2015)

Hi, My wife and I purchased a 2 bedroom apartment in 2006 in Dublin 18. Price was €475k and we had a downpayment of €50k, so with a Mortgage of €425k. We were provided with a low "introduction" type variable interest rate for the first year and by the time this was up for review, my wife had taken leave from work with (initially) stress and exhaustion, which actually turned out to be Cancer. At the time of this rate review trackers were not on offer, so some security with a fixed rate mortgage seemed like a reasonable idea (we were up to end of 2007 now).

We didn't know it at the time but my wife would, after first brilliantly getting her health back, not return to work until 6 years later (earlier this year in fact) and in a part-time capacity. Due to an erosion of income during these intervening years, and of course high taxation, we had been on the back foot trying to cover our mortgage during this time. Interest only was offered to us as a "short term" option and we availed of this option until middle of 2013 (5 years of I.O. payments), until the bank stopped this, which is when the arrears started to begin pile-up. They then offered us a split-loan arrangement, which brought our monthly mortgage payments down from approx. €2,200 down to €1,550 euros. Of course, a caveat to this agreement was that we would be accumulating of a portion of our mortgage into a "warehouse", which would be due following the final payment of the mortgage (28 years later). We estimated this amount would finally be upwards of €200k.

As we felt this was an unworkable solution, we got some advice from two qualified financial advisers and, as the QFA's advised us to, our solicitor. Following the legal advice and some reflection on our part, we decided to request a voluntary sales for loss on the property. We did this in conjunction with our solicitor and pro-actvily marketed the property and took it to the bank as a finalised option for them to make a decision on (i.e. by the time we approached them we had a buyer and could explain exactly how much the final proceeds of the sale would be for them). All they needed to do was grant permission.

** One of the points I was adamant about during this process was to gain agreement re: the shortfall amount, in respect of the mortgage, with the bank PRIOR to the sale being completed. We got this in writing and it constituted a monthly amount paid by ourselves to the bank for the next 7 years following the sale. They took a while to decide on the first offer (late 2013) and as a result, we lost our first buyer, but in early 2014 we put it back on the market and got new buyers and an extra €5k on the asking price.   

When the sale went through, I was curious as to what our ICB report would look like so I requested this and noticed that the shortfall had not been written down following the sale of the property. In fact to would be written down, as agreed in the contract, but what they didn't specify, was that they would do this only after final payment of the compromise payment (i.e. 7 years after sale of property. For those who do not know, a bad credit score on your ICB report actually stays in place for 5 years and, adding 7 years to this, would mean 13 years in the financial dog house.

As fortune would have it, We were in a position to completely pay the outstanding amount, (which had been due over the 7 years), in one final payment and, following another contract, we finalised payment of the shortfall in early 2015. So in effect, from this stage we no longer had a property , a mortgage, owed anything against any mortgage, and had no further bad credit scores being sent against our ICB report (but of course this will take a min. of 5 years from this date to be sanitised).

I wrote this post to explain what we have been through and how it played out for my family and I. As recent figures and statistics suggest, this may be a journey that some other families and people are also embarking on. If this is you reading my post, I hope it helps in some small way and may I please wish you the very best of luck.

But I also wanted to check if there was any advice from any experts out there for us in terms of next steps and options in getting another shot at home ownership? I've done some research recently on this and I'm not exactly seeing any options. We are of course in the Dublin rental market presently, have some savings (we maybe could scrape together a 10% deposit but 20% will take much longer), and with a compromised ICB for foreseeable future.

Upon reading the Central Banks guidance on new lending recently I noticed that there wasn't really anything which would be pertinent to cases like ours, but I think there must be thousands of people affected similarly like us. That's a lot of people to effectively take out of the property market. Negative equity cases are mentioned in the report but only in respect of these cases looking for access to credit in the future etc.


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## epicaricacy (8 Nov 2015)

Hi DublinBroke

Did you pay the actual shortfall amount or the reduced amount agreed with the bank?


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## DublinBroke (8 Nov 2015)

epicaricacy said:


> Hi DublinBroke
> 
> Did you pay the actual shortfall amount or the reduced amount agreed with the bank?



Hi Epicaricacy,

The full amount of the compromised amount which was agreed (as you say, the reduced amount). We would not have had a hope of paying the actual shortfall. This agreed amount was something like 5% of the total amount which the bank wrote off (i.e. the total of 7 years of agreed payments).


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## Lone Star (8 Nov 2015)

Sounds like they paid the agreed amount - id be interested to know what percentage this amount was of the shortfall. It would be helpful for people who are in negotiating situations.


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## Lone Star (8 Nov 2015)

5 %


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## epicaricacy (8 Nov 2015)

Wow - that's very impressive. Well done!!! I'm not aware of any bank offering anything to people with a damaged credit rating. Most banks won't even allow discharged bankrupts - like ourselves - to open a bank account.


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## DublinBroke (8 Nov 2015)

epicaricacy said:


> Wow - that's very impressive. Well done!!! I'm not aware of any bank offering anything to people with a damaged credit rating. Most banks won't even allow discharged bankrupts - like ourselves - to open a bank account.



Thanks for the feedback, I guess I'm a bit naive in my thinking that - particularly given that WE are so numerous - there might be something out there as an option for getting back onto the ladder (so to speak). Guess we'll just have to keep on keeping on !!


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## Brendan Burgess (8 Nov 2015)

Hi Dublin

*Part 1*

Could you put some figures on this for us? 

Balance outstanding at date of sale: 
Sale price: 
Mortgage shortfall: 

Amount of settlement: 


*Part 2*
They then offered us a split-loan arrangement, which brought our monthly mortgage payments down from approx. €2,200 down to €1,550 euros.

What was the mortgage balance at the time and how much were they putting into the warehouse? 
What interest rate were they charging on the warehouse? 
What rent are you paying now? 

Brendan


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## DublinBroke (8 Nov 2015)

Brendan Burgess said:


> Hi Dublin
> 
> *Part 1*
> 
> ...



Hi Brendan, 

In the interest of providing a fast answer the figures below may not be 100% exactly accurate to the last euro.

*Part 1*

Could you put some figures on this for us? 

Balance outstanding at date of sale: €440k
Sale price: €200k
Mortgage shortfall: €240k 

Amount of settlement: €230k 


*Part 2*
They then offered us a split-loan arrangement, which brought our monthly mortgage payments down from approx. €2,200 down to €1,550 euros.

What was the mortgage balance at the time and how much were they putting into the warehouse? I do not have this to hand but all of the arrears which were on the mortgage account at that point in time, plus the monthly shortfall for the remaining years on the mortgage. Overall in the region of €220K would have been warehoused (rough estimate) which would have been due in final year of the mortgage. 

What interest rate were they charging on the warehouse? no interest would have been accruing over final 28 years.

What rent are you paying now? €1,550 per month


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## Lone Star (8 Nov 2015)

so they took 5% Off
as opposed to 5% 'of'  the shortfall?!


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## Brendan Burgess (8 Nov 2015)

It's still not clear.

Did they write off €230k or €10k?  I presume that they wrote off €230k.

Which lender was it? 

Brendan


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## DublinBroke (9 Nov 2015)

Brendan Burgess said:


> It's still not clear.
> 
> Did they write off €230k or €10k?  I presume that they wrote off €230k.
> 
> ...



Hi Brendan,

My apologies If I wasn't clear. The write down by the EBS was in the order of €230k. The smaller amount was an amount we had agreed to pay over 7 years. In order to have any (even small) hope of home ownership again we borrowed from family to clear this smaller amount in one go. This allowed us to draw a line in the sand so to speak with regards to our ICB report.

Brendan, I would appreciate your thoughts or advice on possible future options for similar cases such as ours (which I'm sure you're seeing in your professional life). Do you see anything coming which may offer hope. It was my understanding that our case was one of the first addressed in this way but that were many more to come. Perhaps you have some further experience which you could offer some insight on. Thank you.


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## DublinBroke (9 Nov 2015)

Lone Star said:


> so they took 5% Off
> as opposed to 5% 'of'  the shortfall?!


 
Hi lone Star,

Please see below, answer to Brendans' question.


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## Lone Star (9 Nov 2015)

Thanks Dublinbroke.


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## Brendan Burgess (9 Nov 2015)

That is an astonishing write off.  I asked about the split mortgage, because many people don't understand what a great deal it is.  But a write-off of €230k is even better. 

The ICB record has a very good purpose. You had this huge debt written off. Of course, no one one should lend to you again within 5 years.  You are in a great position compared to where you were and compared to many other people. Lots of people who are paying their mortgage are stuck in NE and will never be able to move home. 

You are free to rent anywhere and completely free of NE and the mortgage shortfall.

Brendan


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## DublinBroke (9 Nov 2015)

Brendan Burgess said:


> That is an astonishing write off.  I asked about the split mortgage, because many people don't understand what a great deal it is.  But a write-off of €230k is even better.
> 
> The ICB record has a very good purpose. You had this huge debt written off. Of course, no one one should lend to you again within 5 years.  You are in a great position compared to where you were and compared to many other people. Lots of people who are paying their mortgage are stuck in NE and will never be able to move home.
> 
> ...



Hi Brendan,

Ok, thank you, and I agree with everything you have said above. The split loan was good option for us (and one which we were grateful for) but we felt that the sheer amount being warehoused, just regarding our case only, was so high that it made the option unworkable. When we challenged this point with the bank they did take our point and agreed with our view (which brought us to the next stage).

The only advice I would give to anyone in a similar position would be to engage early with your institution, and where practical, seek advice from a qualified financial advisor and if required, a legal representative. On a personal level, it was a very difficult few years for us. We're down the road a couple of years, and it's easier now to gain some perspective, but I still believe we took the right decision.


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## Bronte (9 Nov 2015)

DublinBroke said:


> Ok, thank you, and I agree with everything you have said above. The split loan was good option for us (and one which we were grateful for) but we felt that the sheer amount being warehoused, just regarding our case only, was so high that it made the option unworkable. When we challenged this point with the bank they did take our point and agreed with our view (which brought us to the next stage).
> 
> The only advice I would give to anyone in a similar position would be to engage early with your institution, and where practical, seek advice from a qualified financial advisor and if required, a legal representative. On a personal level, it was a very difficult few years for us. We're down the road a couple of years, and it's easier now to gain some perspective, but I still believe we took the right decision.



It's good to hear a postive outcome and that you are now free of debt and can eventually start again.  I think that's very good advice about the advisor and perhaps you could send posters who ask that advisors name by PM.

I must also say I'm impressed with the way the EBS were so pragmatic and actually managed to deal with the situation without making you pay for the rest of your lives.


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## Lone Star (9 Nov 2015)

DublinBroke: You now have a great deal of peace of mind. That's priceless. I'm fighting a tough one with Danske bank on a residual of what was originally a 100,000 debt - after 700€ in arrears they forced me to sell. They took a hard stance across the board and would not entertain a write down - now the big guns in Copenhagen are finally realising litigation is costing them too much. I've hardly concentrated on my job in the last year - so there's a cost to my own career, health, mental health and the State/Taxpayer with loss of productivity and drive for new projects, my wages come from the government. I've given up on feeling guilty though. Peace of Mind for tens of thousands stuck in House Hell would lift this economy no end. 
Best of luck to you DublinBroke.


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## DublinBroke (9 Nov 2015)

Bronte said:


> It's good to hear a postive outcome and that you are now free of debt and can eventually start again.  I think that's very good advice about the advisor and perhaps you could send posters who ask that advisors name by PM.
> 
> I must also say I'm impressed with the way the EBS were so pragmatic and actually managed to deal with the situation without making you pay for the rest of your lives.



Thanks Bronte, Yes I must commend the EBS to be honest. I certainly didn't think I would ever find myself is such a position but we built up a level of communication with the arrears support people and, as I mentioned in an earlier post, tried to be as pro-active as we could under the circumstances.


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## DublinBroke (9 Nov 2015)

Lone Star said:


> DublinBroke: You now have a great deal of peace of mind. That's priceless. I'm fighting a tough one with Danske bank on a residual of what was originally a 100,000 debt - after 700€ in arrears they forced me to sell. They took a hard stance across the board and would not entertain a write down - now the big guns in Copenhagen are finally realising litigation is costing them too much. I've hardly concentrated on my job in the last year - so there's a cost to my own career, health, mental health and the State/Taxpayer with loss of productivity and drive for new projects, my wages come from the government. I've given up on feeling guilty though. Peace of Mind for tens of thousands stuck in House Hell would lift this economy no end.
> Best of luck to you DublinBroke.



Thanks Lone Star, I really do hope common sense prevails for your case and they help you to reach a suitable conclusion. I totally hear you on the personal cost of what you and I (and thousands of others) have gone through.


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## TigerDebt (4 Dec 2015)

Hello DublinBroke,

This post has given me some hope. We succumbed to a Voluntary Sale for loss scheme which left a residual debt of 160K with EBS. 
They wouldn't entertain a deal on this shortfall at the time of sale so we've had an unworkable repayment plan for the last year. In our experience, we didn't get anywhere dealing with EBS on our own. 
Have you got any advice for us?

Thanks


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## DublinBroke (21 Dec 2015)

TigerDebt said:


> Hello DublinBroke,
> 
> This post has given me some hope. We succumbed to a Voluntary Sale for loss scheme which left a residual debt of 160K with EBS.
> They wouldn't entertain a deal on this shortfall at the time of sale so we've had an unworkable repayment plan for the last year. In our experience, we didn't get anywhere dealing with EBS on our own.
> ...



Hi TigerDebt,

Sorry for the belated reply. We addressed the residual prior to the sale, we had in written into the contract which was agreed (I understand it's different for your case though). We employed a solicitor to assist in engaging the the banks during this time. Perhaps that would be good advice for you also (even you haven't do so already). Hope you get to the resolution that you want.


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