# Letter of court proceedings other party to mortgage in the process of going bankrupt



## FoxCatcher (14 Dec 2017)

Hi,

Just want to see advice in how to proceed with the situation I currently find myself in, just wondering how this will play out and has anybody got similar experiences.

My partner bought a house 10 years ago with her then husband with mortgage of €350k, soon after buying their marriage ended and she was left with a mortgage of €1,800 per month, one child to support and a job whereby her salary was €2,000 per month. She paid the mortgage in full for sometime through the help of her parents but it was unsustainable in the long run and ran into arrears approx 8 years ago, the mortgage arrears continued to grow until 4 years ago when we met and I moved into the home, and started paying €900 in lieu of rent directly to the bank, this amount was based on rental rates in the area for a similar sized house. By this time the arrears were roughly €90k with €310k outstanding on the principal.

 We have continued to pay this for the last 4 years and have continued to send EBS Standard Financial Statements outlining my partners income and my rent. EBS sent a letter approximately 6 months ago saying that the arrangement was not viable there were 3 possible options, cant remember exactly from memory but I think it was voluntary surrender, voluntary sale or repossesion.

Last year we had the property valued at €275k through an auctioneer, a simlar sized property has been up on the market at that price for the last 2 years and is still unsold, we have had several phone conversations outlining that the house is in negative equity in excess of €100k and could we come to an arrangement where by we remove the other party to the mortgage (partners ex-husband) from the mortgage and have a new mortgage put in place with terms that are more favourable, we have no problem paying the mortgage amount if there was no negative equity but my partner doesn't want to knowingly sign up to a mortgage when we are €125k in arrears and stuck there.

We have recently been advised that the case was now being taken over by a third party who have wrote us a couple of letters looking for full payment or surrender of the property, the last letter a month ago advised that they were filling for repossession of the property and this week we have received a court date for the circuit court appearance for March. In the meantime for the last 18 months the ex-husband has been going through the motions (albeit slowly) to go bankrupt. He is hoping for a court appearance in January and has said all documents are with the courts, he has several debts and the mortgage being part of that debt.

We have engaged a PIP to advise us and he has said we are best waiting until the bankruptcy goes through and the OA washes his hands of the property due to the massive negative equity and says it would be easier to do a deal with EBS directly then, our concern that we now have a court date and that process seams to have momentum will it be too late in the game at that stage to do a deal.

So my questions are, what are our options here:

Should we wait for bankruptcy to go through from the other party?
What will be the outcome if/when the Official Assignee agrees there is no equity in the home?
Has anybody got experience of dealing with EBS? Is this an extremly slow process and are we silly being hopeful of a positive outcome?
Should we continue to pay the €900 per month? Worried that we cannot save much in case we have to surrender the home we will have no savings to purchase a home
Is there any other similar cases out there and what was the outcome?
Should my partner look at a PIA, our PIP advised that she isnt a candidate and bankruptcy would be her likely route, if we have to go this route how does this impact court proceedings and what happens the home during this time?

Apologies for the long winded thread just wanted to outline the scenario and cover it fully, any advice would be greatly appreciated.

Thanks


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## dereko1969 (14 Dec 2017)

Keep paying the €900. This will stand to you in court case.
Probably best to wait on bankruptcy of ex.
Your first court appearance will end with an adjournment, see Brendan's key post on process.
Decide what your desired end outcome is, you don't seem to have stated that - do you want to stay in this house, come what may, or only if you can get a "deal" with EBS.
What is your partner's current income and outgoings, could you pay more than the €900.
Is your partner's ex paying child maintenance? Does he owe any back payments?


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## FoxCatcher (14 Dec 2017)

Thanks for your reply Derek,

Ideally we want to stay in the home, along with the 10 year old going to the local school, we have had 2 kids since meeting and one due to start in the local school in September coming so dont fancy the upheaval if possible but if we need to leave we will. My partner is now a stay at home mother and I am the sole source of income in the home apart from the maintanence (no back payments outstanding) and childrens allowance, I could probably pay €1200 but at the time we started making the payments the rental market was €800 to €900 for similar house and we felt paying the top end of this was a fair amount also it was 50% of mortgage in lieu of my partners half....

Are you saying i should increase would that have any bearing on an outcome when in front of a judge?


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## Brendan Burgess (14 Dec 2017)

1) Is the mortgage a tracker by any chance? If not, what interest rate are you paying?
2) What is your income? 
3) I am confused by the figures. 
How much is outstanding on the mortgage today?  If it was €310k 4 years ago. And you are paying €11,000 a year in repayments, then it should be still around €310k. 
If the value is around €275k, then the negative equity is only around €35k 
4) 


FoxCatcher said:


> We have recently been advised that the case was now being taken over by a third party


Who is that third party? I assume that the mortgage is still with EBS and has not been sold to a vulture fund. 
5) Has EBS offered any restructuring arrangement?   If you are paying €900 a month, they should be able to offer your wife an arrangement. However, if her ex is not cooperating, then they probably can't. 

Brendan


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## FoxCatcher (14 Dec 2017)

Hi Brendan thanks for reply answers below 

1) not a tracker it is interest at 3.9%
2) my income is 75k per year
3) I was factoring in arrears of 90k into the negative equity figure as that is the amount owed to the bank, if OA takes it as 310k and deems it in negative equity surely my partner is liable for the 400k not 310k?
4) OMS is the third party not a vulture fund
5) no alternative arrangement proposed


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## Brendan Burgess (14 Dec 2017)

FoxCatcher said:


> 3) I was factoring in arrears of 90k into the negative equity figure as that is the amount owed to the bank, if OA takes it as 310k and deems it in negative equity surely my partner is liable for the 400k not 310k?



This is really important. If she took out a mortgage of €350k and paid at least the interest, then the balance is not €400k.   Have you a statement? The balance should be stated clearly. The arrears figure is just a notional figure. 



FoxCatcher said:


> 4) OMS is the third party not a vulture fund


What is OMS? 

Brendan


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## FoxCatcher (14 Dec 2017)

Apologies it autocorrected the third party is OSM Partners

The total debt as per the affidavit  is 405k of which arrears is 82k the balance on mortgage is 323k

Apologies for the wrong info in first post was writing from work and didn't have all the info to hand


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## Brendan Burgess (14 Dec 2017)

OK. The balance on your mortgage is €405k.  End of story.  (If your partner had made the full repayments, the balance today would be €323k,but that is purely academic.) 

The house is worth €275k. 

EBS still owns the mortgage. OSM is merely a firm of solicitors. 

The bankruptcy is good news for your partner.  It should be possible to get his name off the mortgage.

The problem is that you have a mortgage of €405k on a salary of €75k - that is 5.4 times your salary, so it's completely unsustainable. 

The best option you could hope for would be for EBS to give your partner on her own a split mortgage of €275k with the balance warehoused at 0%. That is still 3.6 times your salary which is high but doable.  275k @ 3.9% over 20 years is €1,650 per month.  Over 30 years, it's down to €1,300 per month. 

You need to contact the Irish Mortgage Holders Organisation who have a special relationship with EBS.  
The deal you will be asking for is as follows: 
Take his name off the deeds and the mortgage - he should agree to that and if he doesn't, the Official Assignee probably will. 
Add your name to the deeds and the mortgage - but it would have to be a split mortgage.  
It's a bit risky for you in that you will be taking on a mortgage of €405k on a house worth €275k. 

An alternative to investigate, but I don't think it could be achieved. 
Your partner applies for a PIA using your income. 
That might impose a mortgage write down. 

The other option to explore with the IMHO is their new iCare Mortgage to Rent. 
iCare would buy the house from your partner and rent it back as social housing. 
EBS would write off the shortfall. 
The Local Authority would pay rent to iCare and charge your partner a rent based on her income. 
However, the fact that you are living with her and earning €75k might make that difficult. 

The final option is to agree with the EBS a voluntary sale in exchange for writing off the shortfall.  
Then you would rent a house and both be free of debt. 

The question is how much would it cost you to rent an equivalent house in the locality? 
Could you find a friend to buy the house which is for sale for €275k or who would buy your house and rent it back to you? 

Brendan


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## Brendan Burgess (14 Dec 2017)

FoxCatcher said:


> We have engaged a PIP to advise us and he has said we are best waiting until the bankruptcy goes through and the OA washes his hands of the property due to the massive negative equity and says it would be easier to do a deal with EBS directly then, our concern that we now have a court date and that process seams to have momentum will it be too late in the game at that stage to do a deal.



Don't worry too much about the court proceedings. They will be adjourned again and again.
Your partner should show up in court and explain the situation. 

I think you should continue to pay the €900 per month.  It will give your partner good standing with the court and shows the EBS that you can and will pay something. 

Brendan


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## FoxCatcher (14 Dec 2017)

Thanks Brendan, will continue to pay €900, meanwhile I have penned a letter stating that we are hoping for a resolution once the bankruptcy goes through, I guess that after reading the indo article about shoreline case where a couple had a PIA and ended up with an agreement where the mortgage was at the current market value although the circumstances are different I was hopeful of a better outcome where we aren't crippled by mortgage debt and can stay in the home. I will get in touch with the IMHO tomorrow and see where it goes.


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## TLO (15 Dec 2017)

Here is a thought to add to the mix.  Did your partner divorce her first husband?  And are you willing/able to marry your partner?  It's just that if she is stay at home, and you are working, if you marry you would be able to utilise her tax credits thus increasing your take home pay (although it might have an impact on her social welfare payments).  Also, if you were married, it might be easier to structure a PIA for her based on your income.

Also, there is confusion as to the amount outstanding on the mortgage.  Okay so the affidavit says €405k but the original mortgage was €350k.  It appears that two years of full payments were made and annual payments of €10.8k have been made for some time.  The €405k figure may not be correct.  It may be worth having an independent audit performed on the mortgage to satisfy yourselves as to the accuracy of the €405k figure.


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## Jim Stafford (15 Dec 2017)

You should provide more information to benefit from a complete reply.  Other essential information would be:


1) Is your partner formally separated or divorced?
2) How much maintenance is the husband paying, if any? is he likely to keep up any such maintenance payments?
3) How many more years will you be able to continue to work?
4) Will you be able to access a pension lump sum id due course
5) Can any friends or family help with a lump sum?
6) Are you due pay increases/promotion?



FoxCatcher said:


> We have engaged a PIP to advise us and he has said we are best waiting until the bankruptcy goes through and the OA washes his hands of the property due to the massive negative equity and says it would be easier to do a deal with EBS directly then, our concern that we now have a court date and that process seams to have momentum will it be too late in the game at that stage to do a deal.



It is possible to do a PIA for a separated/divorced partner at any stage.  The husband's bankruptcy does not necessarily make the PIA easier, as whilst his debt is written off, he will still be a registered owner of the property. The long term ownership of the property should be part of a divorce settlement.

Your partner should consider doing a PIA now, using your income as the bedrock.  Under the PIA the mortgage could be written down to market value.

Even if the court granted a repossession order, your partner could still do a PIA at that time.

Jim Stafford


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## FoxCatcher (15 Dec 2017)

Thanks Jim/TLO for your replies, answers to your questions and some other commentary below

1) formally divorced and he has remarried, we are due to marry in 6 months
2) €100 per week maintence and is very likely to continue to pay
3) 30 years
4) Only started paying into pension recently so no lump sum available for a number of years
5) Unfortunately not
6) some moderate increases likely in line with inflation or slightly less, typically get 2% year on year

I dont have a copy of the settlement but as far as i read the divorce settlement covered that she would own the property, I dont think there was any contest as the property had the outstanding arrears and was in negative equity.

I will speak with our PIP on a PIA using my income, my issue is if it isnt written to market value, right now at a push I have the ability to pay some small capital + interest payments (only covering interest at the moment) while having reasonable living expenses. My issue is that if I have to pay the full outstanding amount when the house is only worth 275k.... why would I knowingly buy into a property where I owe 405k on a property worth 275k. Ideally we would just surrender the property in lieu of a full settlement and start fresh however we have no savings to buy again and saving a lump sum of 55k (20% of 275k) would be next to near impossible on current earnings with rental costs and living expenses.

I know there are people in far worse scenarios but my reluctance is to be burdoned with massive monthly repayments on something which realistically has a market value of 66% of what I am paying, probably being a bit pessimistic on this but given I am the sole earner in the house, if a scenario arose whereby I lost my job I would be also forced down a bankruptcy/PIA route.


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## LS400 (15 Dec 2017)

FoxCatcher said:


> Last year we had the property valued at €275k through an auctioneer, a simlar sized property has been up on the market at that price for the last 2 years and is still unsold,



Then its not worth €275k, if it was, it would have sold long ago. 



Brendan Burgess said:


> Don't worry too much about the court proceedings. They will be adjourned again and again.



Makes it sound like a merry go-round, a game or what-ever. Some one is making money out of this, with all this going to court, when you know the outcome before you even enter the room, sound like an ever ending ordeal.

Why cant situations like this be expedited without years of torture, towing and frowing the courts, you can never get these years back. I really do feel for the op, doing his best to rectify what looks like a hopeless situation.

I can see why some will just hand back the keys and walk away.


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## Jim Stafford (15 Dec 2017)

If the current market value is €275,000, then it would be very difficult for EBS to oppose a PIA that paid €275,000 over 30 years at a monthly cost of €1,367, as the PIA is guaranteed to produce a better outcome to EBS than a bankruptcy. That is how PIAs work!

Jim Stafford


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## Waver (15 Dec 2017)

If your credit is good can you just not get a mortgage for say €250k and she does a voluntary sale of the property to you? She can go bankrupt and get any residual debt written off?


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## FoxCatcher (15 Dec 2017)

Thanks Jim,

I have requested that my PIP looks at this approach for us to see if it would be a good solution, I am open to anything right now, I want to avoid the stress of court and any repossesion order for my partner and my family.



Waver said:


> If your credit is good can you just not get a mortgage for say €250k and she does a voluntary sale of the property to you? She can go bankrupt and get any residual debt written off?



My credit is good but I dont think it is that simple, 1) I dont have a 20% deposit to get a €250k mortgage also our PIP had advised that EBS dont make it as simple as that, 2) he said had dealt with a case where they had to sell a property and the purchaser had no relationship with the person in arrears.


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## Brendan Burgess (15 Dec 2017)

FoxCatcher said:


> 4) Only started paying into pension recently so no lump sum available for a number of years



If you do not own a house, you should not be contributing to a pension, unless your employer's contribution is dependent on your contribution. 

You need cash now - not in 30 years' time.

Brendan


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## Alan1962 (16 Dec 2017)

The most important advice above is contact the Irish mortgage holders association NOW

Forget your own PIP

The IMHA is free and I have just exited bankruptcy with their help

Also get a proper valuation on the house


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## FoxCatcher (17 Dec 2017)

I need cash now and in 30 years time... not contributing to a pension was short sighted from me.

I have called the IMHO and they have sent me out a pack to fill in. I also spoke to my PIP and he says we will wait until the bankruptcy is adjudacated on before doing anything.


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