# Split Mortgages and Long Term Deals



## Alwyn (15 Sep 2012)

We have approached our lender to come to some sort of deal or to split our mortgage. Again we have been asked to provide paperwork which we have provided umpteen times before, most recently eight weeks ago. We went into our local branch and explained that we have issued paperwork countless times and felt they were purposely delaying matters and asked to speak to the manager.

We were told to put in writing what we were asking of the bank because they were not allowed give advice???

Would somebody have any pointers in how we should approach the lender with our offer of splitting the mortgage or how to come to an agreement that both the bank and us the debtors are happy with?

Thanks.


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## Brendan Burgess (15 Sep 2012)

Hi

Has your bank published a split mortgage scheme?  Some banks are pilot testing them at the moment. Have you some information that you are included in this pilot?

I gather that the banks will be announcing their new plans over the coming months. I think you need to wait until then to see what sort of schemes they are considering.


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## Alwyn (15 Sep 2012)

Hi Brendan,

We jumped the barrel so to speak after reading an article in one of the national newspapers.

The bank have not published the the split mortgage scheme as yet but from what we have read they are one of the banks that are in the line up to introduce such a scheme.

No, we have no information that we are included in this pilot.  How does one become included?

While we are waiting on such a scheme should we continue to meet the interest (what we are currently paying) on the mortgage?

If we cannot resolve the matter we will go to the UK and file.


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## mark12 (16 Sep 2012)

Well, the less you pay, the more pressured the bank will feel into accepting any deal. Deal with them as a business man would.


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## Alwyn (16 Sep 2012)

Its tough going Mark12.  They seem afraid to make deals???  I think you are right we are going to have to take a tougher stance with them.


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## mark12 (16 Sep 2012)

Its not tough at all for those in negative equity boomtobust, Business is Business, anything more than the current house value is better for the bank and for the taxpayer as well, and will save us a fortune on repossession costs. 
If they don't accept your offer, than we will pay for the shortfall, your not to blame for that, they are, for not accepting a genuine realistic offer of more than the property market value, and for making you go for the nuclear option of going to the UK.


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## Wishes (17 Sep 2012)

mark12 said:


> Its not tough at all for those in negative equity boomtobust, Business is Business, anything more than the current house value is better for the bank and for the taxpayer as well, and will save us a fortune on repossession costs.
> If they don't accept your offer, than we will pay for the shortfall, your not to blame for that, they are, for not accepting a genuine realistic offer of more than the property market value, and for making you go for the nuclear option of going to the UK.


 
This is the best bit of sense I have read on here in a while.


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## Alwyn (17 Sep 2012)

Hi Mark,


We have heard through a reliable source that our provider are looking to close up shop and are making crazy decisions based around their decision to 'possibly close their Irish division' within the next ten years. 


We are looking to stay in our home but pay back what we owe. We have spoken to an accountant who told us that it was not possible to repay all the mortgage and that we needed a write down on the debt. He also said that we should not ask the bank for this yet as they are not in a position to hear it.


We were annoyed by this because as you say business is business and we are not in a position to mollycoddle a bank.


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## Brendan Burgess (17 Sep 2012)

Boomtobust said:


> we are not in a position to mollycoddle a bank.



What mollycoddling is there? 

You owe them money for your home, for an investment property and for an overdraft for unspecified purposes.  

They have not changed the contract, I presume? 

Your ability to repay has changed. You are asking to be mollycoddled, not them.

brendan


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## mprsv1000 (17 Sep 2012)

Brendan Burgess said:


> What mollycoddling is there?
> 
> You owe them money for your home, for an investment property and for an overdraft for unspecified purposes.
> 
> ...


 

Life is not so black and white, it never has been or will be. The banks took a risk lending out vast sums of money, that's called business and a fundamental of capitalism, the key here being "risk", well the risk is not paying off.
There is a whiole lot of  "mollycoddling" going on. The best solution for the country as a whole is to get this mess sorted out, that means, all involved taking stock and sharing the pain. I'm fed up of seeing my local shops/cafe etc closing down because the 30 something generation have to give every spare penny to the banks  Oh the wisdom of that logic


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## Brendan Burgess (17 Sep 2012)

Hi mprsv

My objection was to boomtobust saying that he could not "mollycoddle" a bank. He is not being asked to. He is being asked to repay his loan. 

I see the problem for both boomtobust and the bank, which is why I gave a detailed view of his situation and a suggestion for how he should proceed in the other thread.


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## Alwyn (17 Sep 2012)

Hi,


We had the property valued recentely and it is worth even less than envisaged. If the property were to be sold we would be left with one very large personal loan.


The obvious answer is to go to the UK and declare ourselves bankrupt. We tried to avoid this happening by paying interest on our mortgage. We have also made deals with all our creditors on unsecured debt. 


Quite a lot has been achieved but there is no move on our mortgage provider. Never once have we asked for a write down to present day values (which would make the repayments affordable) but have committed ourselves to pay the mortgage debt in full, down to the very last cent we owe. 


We personally believe they are angeling for a repossession that is why they will comply with nothing.


Brendan, unfortunatly we cannot make the full repayments on our loan at present.  Some small tweaking or a simple agreement on their half would make this disaster less toxic than it already is.


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## mark12 (17 Sep 2012)

Hi Boomtobust, give it one last try, walk into your bank, ask to speak to a manager. Sit down face to face and ask the following question: 
How much do you want for the house? If it's worth say 150K, offer to pay say 200K for it.
Tell them, i propose to pay you 200K in monthly installments for the next say 20 years, forget interest rates, €833 per month for 20 years.
If they agree fine, if they don't, off you go to the UK for a new life.

Bottom line is you offered 50K more than the current value which is in fact still falling, you tried to minimize the taxpayers loss, so no regrets, business is business.


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## wbbs (17 Sep 2012)

Great theory but I don't think these sort of deals are being done in any great number.  Different if you were intending selling and wanted some of the shortfall written off, you might have a better chance.  I have yet to come across anyone who has managed to get debt amount outstanding reduced and stay in the house.


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## Bronte (18 Sep 2012)

wbbs said:


> I have yet to come across anyone who has managed to get debt amount outstanding reduced and stay in the house.


 
Maybe it is happening but it's confidential.


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## Brendan Burgess (18 Sep 2012)

mark12 said:


> i propose to pay you 200K in monthly installments for the next say 20 years, forget interest rates, €833 per month for 20 years.
> .



That is the equivalent of €150,000 @3% over 20 years.

The bank would have no interest in such a deal. 

While the principle of making an offer as an alternative to banruptcy is fine,  I think that the offer would need to include the orderly sale of the home to have any chance of success.


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## Alwyn (18 Sep 2012)

Bronte said:


> Maybe it is happening but it's confidential.


 
We recently sat down with a well respected accountant who deals in this particular field. We asked him were there write downs or undisclosed deals happening. He said no and advised us not to go ahead and ask the bank for a write down as this infuriates mortgage providers; his words not mine. 

We had been advised to keep quiet, pay interest and say nothing until next year as it was envisaged there would be a further avalanche of mortgage defaults,"you've seen noting yet" etc. etc. 

The banks apparantly are not around to the idea of writing debts down by X percentage but some have no problem in having the house sold at auction at a loss and lob the TAX payer with the deficit, though in our case the bank are not calling for a sale.

We have jumped the barrel so to speak and have pre-empted the potential downward spiral in the economy that maybe 2013.

Brendan, I respect your opinion but unless somebody comes waving cash there is not much hope of a sale. The stastics say 1 in 5 is not being approved for a mortgage. We are based in a working class suburb of Dublin so no great sales potential.


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## Alwyn (18 Sep 2012)

mark12 said:


> How much do you want for the house? If it's worth say 150K, offer to pay say 200K for it.


 
Hi Mark,

We asked them a similar question and they told us that they could not advise us in any aspect of the mortgage and that we would have to approach them with an offer and they would either say yes or no.

We approached them with an offer to pay off the full amount owed but over a much longer term.  They were not happy with this but neither said yes or no.  They have since requested the same paperwork we issued them with just weeks ago.


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## Brendan Burgess (18 Sep 2012)

If you are paying the interest on your mortgage, and the bank is not putting you under any pressure for more, and you want to stay in your house, then you don't need to do anything? 

I don't see why a bank would split a mortgage, where the borrower can pay the interest on that mortgage?   Their loan is being serviced. Over time, the value of the property may come back or the borrower may be able to pay more. The bank does not need to do anything and the borrower does not need to do anything.


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## mark12 (18 Sep 2012)

Ok i agree, interest only is a relief for many, but soon Boomtobust will want to know will he ever actually own his home? Or will he be kicked out at 60 when the value of his home may be a bit closer to what he still will owe by then? 

If the answer is never, is it not prudent to start again somewhere else while he can still work? Also what effect does being in limbo for so long have on his mental health and who pays for that?


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## Wishes (18 Sep 2012)

Mark12, you have made some very valid points on this thread.

Boomtobust, you can bet your last Euro that the bank will never agree to any proposal you you but fort to them within the next five years. Currently you are no more than a mere tenent of the bank. Once you are paying for the cost of the loan which is the interest, the bank are happy. You are also keeping their house/apartment safe from squatters moving in and generally maintaining its upkeep.  I am also presuming you have insurance on the property and a life policy to booth. If so they generally wont come near you.

Now, if the Celtic Tiger raises its ugly head once again, then you have a problem - along with another few hundred thousand distressed mortgage holders around the country. Mr Banker will then want his keys back.

My own guess regarding were this is all going to lead is similar to what happened in 1988 when Dublin Corporation allowed tenents to purchase their homes at more than reasonable prices to the tenent. 

I believe today mortgages are available to City Council tenents to purchase their homes at also reasonable costs. Funnily enough a neighbour of my sisters is purchasing her house via this mortgage scheme for €50k off the DCC. My sister currently has a mortgage of €275k on exactly the same type of property two doors down! 

Getting back to my point, I believe that the banks are currently trying to sit this recession out and from their warm cosy offices believe that in another 5-10 years that this doomsday scenario will be over and they can go and collect their pound of flesh. This time I don't think its going to be so easy. My guess is there will be offers on the table similar to what Dublin City Council proposed over two decades ago.

Your accountant is right, say nothing, pay interest and don't show your hand.

Good luck.


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## mark12 (18 Sep 2012)

Valid points yourself Wishes, boomtobust is a tenant, it's not boomtobust's house, and it will never be as he stands, if he wants to buy it, he should make his best offer to the bank taking into account what he has already payed, if not accepted, off he goes to the UK, but the bank will lose more than he will.

The Government is seeking for a reduction on the banking debt yet Boomtobust is not entitled to look for a reduction on his? Double standards do exist.


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## mprsv1000 (19 Sep 2012)

mark12 said:


> Ok i agree, interest only is a relief for many, but soon Boomtobust will want to know will he ever actually own his home? Or will he be kicked out at 60 when the value of his home may be a bit closer to what he still will owe by then?
> 
> If the answer is never, is it not prudent to start again somewhere else while he can still work? Also what effect does being in limbo for so long have on his mental health and who pays for that?


 

Good point and putting aside the sociological long term implications for Boomtobust, the massive financial loss incured over time by not just him but potential family. The impact of these situations for many in Irish society today, the thirthysomethings with young families, the people we need to have disposable income, not just to spend now but in the future by them and their growing children,  a generation with no money to dispose into the ecomony and with a psychological fear or reluctance to do so in the future. And heaven forbid they do have money in the future, well lets just pump that back into the bank again, not the local shops etc.It's not just sociologists but lateral thinking economists who are seriously concerned about this. The simplistic view that you borrowed so you pay is just that too simple and why it's never going to solve anything, it's a punishing attitued devoid of any creative resoning or moral/social insight into the complexities of society. And what of the case where you did not borrow but you pay regardless, the people of today and tomorrow who'll in one way or another be baying for the wreckless gambling of not just our bamks but other nationalities also. This machevillian attitude of only the little man pays/looses out because he can be made to do so is, well simple rubbish and shows a lack of intellegence by those in power to do other than the simplest thing, squeese the middle earners because they are powerless to do anything about it.

In America they looked at peoples interest rate and adjusted according to their ability to pay, with the view that lets get people spend into the local econonies again, they are extremely frustrated by europes inability to deal with our massive debt issues, where once again it's the simple approach cut   cut cut. Now I have a five year old son who could come up with that simple solution. Hard decisions indeed!


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