# What is the most shameful lending criteria you have encountered?



## Kerrigan

My partner works for a debt management practice and came across a case recently were a builders laborer with a yearly income of 33k gross was offered a mortgage of 300k during the boom.  Needless to say the are majorly in the hock.  One of the worse cases of mis-selling of a product I have heard of.


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## Fat Boy

Someone I know got €5000 loan from the local Credit union to go on a holiday to Thailand.
They had no job at the time - still don't. Had/have no intention of ever working, or paying back a cent. Do not have any other assets etc. Basically told the CU to stuff it, and got away with it.


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## Wishes

I'd say 99% of mortgages, personal loans, car finance and credit cards were made from crazy decision making during the boom. 

I laugh when people say, 'well so and so must have inflated their salary etc'. Absolute nonsence. The banks never bothered checking the vast majority of P60's, payslips etc. Surely they knew that unskilled workers weren't earning the wage they claimed.  No sympathy whatsoever for the banks.


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## Brendan Burgess

A friend of mine asked me for advice some years ago when they wanted to buy a house. They had an offer accepted for €180k. I reckoned that their salary was around €30k . At the time the salary multiples were only about 2.5. I strongly advised him against buying. He showed me his p60 - his salary was €60k . I was really surprised he was earning that much and I told him so. He told me that his employer ran a separate payroll system to generate false p60s for employees. He was actually earning only €30k.

Bank of Ireland had approved the loan in principle but refused it when the bank statements were produced.  He went back to the auctioneer who said "no problem" and introduced him to a local mortgage broker. The mortgage broker said that IIB (now KBC) was the only lender not to check bank statements so he got the loan from IIB. 

Of course the house doubled in value. He subsequently remortgaged it for a deposit on an investment apartment. He has now lost his job and is calling for debt forgiveness.

I am sure that others have similar examples of shameful borrowing.


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## Bronte

I know someone who went into a credit union and asked for 45K to put on a horse. They laughed at him and then helped him to fill it out for a valid reason, they gave him the money and he duly put it on the 3.15 at Kempton. He was on the average industrial wage. Later he took redundancy and spend two or so years slowly gambling and drinking his way though that and now works in a pub. He was always a hard worker, had two jobs but no good with money. 

A relation told me it was easy to falsify P60's. At one time they used to be hand written, I got the impression that during the boom everyone was at this. Self employed people also seemed to be able to produce wonderful accounts. 

A relation of mine went into the AIB for a loan, cannot remember the amount, probably about 300K and they told him they would give him 700k, that he should be living in a house of that value, luckily my relation did not take up the offer. Since unemployed. I'll double check the figures on that later.


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## 44brendan

Did the horse win??


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## bugler

44brendan said:


> Did the horse win??



Personally I'd be surprised if a (high street) bookie took the bet!


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## tvman

Bronte said:


> I know someone who went into a credit union and asked for 45K to put on a horse. They laughed at him and then helped him to fill it out for a valid reason, they gave him the money and he duly put it on the 3.15 at Kempton.



really? I find that difficult to believe.


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## moneyhoney

This is an interesting story (I think). My sister (who earns about 30k/year and has done so for the last 10 years) was talking to a friend of hers back during "the boom", who is a Chartered Accountant (and now earns her keep acting as a liquidator). Chartered Accountant asked my sister why she hadn't bought a house, she was in her 30s & really should cop herself on & buy a place etc etc. To which my sister said, I don't earn enough money to pay a mortgage. Chartered Accountant said: just get a false P60. It's easy - I can help you get one. 

Thankfully, my sister didn't take her advice.


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## demoivre

Interest only mortgages on PPRs, 100% mortgages, mortgages of 5 and 6 times salary, 3 and 5 year fixed rate mortgages given specifically to avoid the more strict stress tests associated with variable rate mortgages. All criteria came with the blessing of the Central Bank, Regulator and the Government.


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## Protocol

Note that legal limits on LTVs and loan durations have still not been introduced.

100% mortgages are not illegal, as they should be, to prevent this ever happening again.

The max should be 80-85% LTV over 25 years for mortgages.

That may force house prices down, but people would have less debt.


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## ANORAKPHOBIA

Bronte said:


> I know someone who went into a credit union and asked for 45K to put on a horse. They laughed at him and then helped him to fill it out for a valid reason, they gave him the money and he duly put it on the 3.15 at Kempton. He was on the average industrial wage. Later he took redundancy and spend two or so years slowly gambling and drinking his way though that and now works in a pub. He was always a hard worker, had two jobs but no good with money.
> 
> A relation told me it was easy to falsify P60's. At one time they used to be hand written, I got the impression that during the boom everyone was at this. Self employed people also seemed to be able to produce wonderful accounts.
> 
> A relation of mine went into the AIB for a loan, cannot remember the amount, probably about 300K and they told him they would give him 700k, that he should be living in a house of that value, luckily my relation did not take up the offer. Since unemployed. I'll double check the figures on that later.



Surely we are not expected to take this post seriously.I have not heard such creative recall since Bertie took the stand at the Tribunal.


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## truthseeker

moneyhoney said:


> just get a false P60. It's easy - I can help you get one.



Yeah, I was offered the phone number of someone who would 'fix my documents, but sure its all legit - dont you pay him a fee?'


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## Alwyn

There were also 'agents' being met in hotel lobbies who were capable of getting mortgages through 'the net'.  These called themselves the 'Patron Saint of no hope-ers'.  You would laugh out loud if it wasn't so serious.


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## oldnick

In 2000-6 I ,and almost anyone, could have borrowed incredible amounts.  I did ,and was far too experienced  and supposedly mature to have done so. My fault. So I feel honour bound to pay back every penny. 
If I was young ,inexperienced and relatively poor and the banks were throwing money at me I'd feel less obliged, and I wonder whether I'd repay them.


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## SarahMc

Falsifying P60s was not a new exercise in the boom/bubble. It was common enough in the 90s too.  It just spread from the professional classes down.


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## Mrmr

oldnick said:


> If I was young ,inexperienced and relatively poor and the banks were throwing money at me I'd feel less obliged, and I wonder whether I'd repay them.



I was young, inexperienced and relatively poor. A broker friend assured us we could get a mortgage despite no savings or assets, 'all' we had to do was amass a large deposit of 'gifts' from family. That was the end of that.
But I believe that was the norm to, sure there were even products and ads based around making your family feel guilty enough to lend to you to borrow


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## Bronte

I didn't expect to generate so much heat on this story, to clarify, the money was not used on one bet, I just flurished it a bit for emphasis, sorry for that. My husband does the odd horse himself, particularly when we are in Ireland or when they are big racing festivals, St. Stephen's day, Cheltenham, Aintree etc. I used to work many years ago in a pub so would have a fair idea of punters etc and gambling in general. Pre boom people used to do 5 Euro and 10 Euro bets, during the boom this went up to 50 Euro a pop and more, nobody seemed to be doing any less. I know people who would lay more than that, in the thousands. I also know people who take bets in pubs, become the bookie as it were. My first cousins husband who owns a pub for example does this as does a cousin of my husband from time to time. Anyone who's been to Cheltenham or Galway knows how crazy the betting world was, but it went mad altogether during the boom. Still today, just take Galway, the serious gamblers don't just gamble on the horses, there are huge card games going on all night. We are talking serious money. 

The person in this story boom or no boom, would despite being on the average industrial wage do 500 Euro bets, this I saw myself, many times. When the money was gone he went home and didn't gamble again until the next pay check or income (which he got from a second job working in pubs). Sorry if the story is far fetched to some of you. 

I also know a professional whose sister re mortgaged (took out equity 3 times) to fund lifestyle, cars holidays etc. I know someone who borrowed to build 2 houses, still has the houses, cannot sell them, cannot pay the mortgage, this person would have been on I'd say about 60K, one income. And some of my own family also got the celtic tiger bug, (which I'm not going to go into) but some others did not, one of those (PAYE)is hopping mad at having to pay for everybody else mistakes.

You only have to look at some of the stories on AAM to see how much people managed to borrow to see how crazy it all was. I bought in 2005 at the height of the boom, the bank was in such a hurry to give me the money they decided instead of giving me a normal mortgage that it was easier to dish it out as a commercial loan so as to avoid paperwork. It was so easy for me to borrow money it was unbelievable. No life insurance needed, no long form filling, no grief from head office in Dublin. To this day there is very little paperwork on it and I believe the bank doesn't have proper records as they were so eager to lend and get commissions. Recently they telephoned me about interest rates, for various reasons we had a dispute and somehow the bank discovered I had overpaid (I haven't gotton to the bottom of this yet) and they repaid me a 5 figure sum. Every January I get a bank statement showing account balance in previous January, my monthly repayments, the interest taken and balance owing as of December and despite this I apparently overpaid. To me that's a crazy story but it's true.


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## itsallwrong

Most shameful loan?
Wasn't there a case highlighted in AIB when they did an audit of internal staff loans of someone being lent 500k and on a wage of 30k a year?

Priceless..


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## Bronte

I've now clarified the other story. The couple had a meeting with AIB, and the lady there told them they should be living in a million Euro house and they were prepared to loan them 750K on a salary of 150K, one of which was in construction. That they should sell the house they were living in and the bank official thought they were idiots and laughted at them for not taking up the offer of 750K. In addition they had built another property to sell and that they should keep that and rent it. Another pre mad boom investment property was also to be kept. 

This couple would have been in their late thirties about this time.  

Remember this is not a Dublin home but an ordinary large town in the country. An hours drive from a major city. 

They sold the newly built house for a large profit, kept the investment, it's performing well and I think about 10 years to go on it. They kept their home and recently put about 70K into doing a large extension to suit the family rather than moving. Needless to say the construction job went a few years ago, but has recently secured employment.


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## terrontress

itsallwrong said:


> Most shameful loan?
> Wasn't there a case highlighted in AIB when they did an audit of internal staff loans of someone being lent 500k and on a wage of 30k a year?
> 
> Priceless..


 
I used to work for AIB Group and got a staff mortgage in 2005 with joint incomes of about 75k and I did not encounter that sort of lending.

At that time though I was holding AIB shares through salary foregone / freebies which were worth the guts of 40k after i had worked in the bank for 5 years. Nearly all bank staff had tens of thousands of euro worth of shares. Maybe lending decisions were made based on those holdings.


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## Chris

demoivre said:


> Interest only mortgages on PPRs, 100% mortgages, mortgages of 5 and 6 times salary, 3 and 5 year fixed rate mortgages given specifically to avoid the more strict stress tests associated with variable rate mortgages. All criteria came with the blessing of the Central Bank, Regulator and the Government.



Not just blessing it was encouraged. Year after year more and more subsidies were given to home buyers in order to make sure that more people that couldn't afford to buy actually did buy. And all the opposition had to say was that too little was being done for struggling home buyers. What the banks were doing is exactly what politicians wanted them to do.


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## RMCF

To be honest, I would take some of the stories on here with a pinch of salt. 

The CUs in RoI must be a lot different to those up North, cos there's no way its as easy to get a loan from them, even during the good times. I am not a member but family are, and I think they have already had to jump through hoops to get money out of them.

I think as the decades pass the stories from the boom will get more extreme. I can see it now as I sit at the bar in my retirement, listening to a guy saying "I remember a mate of mine in 2006 on €20k getting a €3million mortgage".


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## honest

Its become clear in recent times how some financial institutions were noticeably less prudent than others. Sometimes its obvious that mistakes were made, things were rushed and for whatever reason proper procedures not followed. Sometimes it may have been excused by an oversight, or by the "wink wink" , or a rush to get things done by a bank holiday weekend, or the borrower being a friend / acquantaince, or the lender geting a bonus / kickback, lack of experience of the lender or whatever. I remember one particular lender diversifying in to an area ( commercial lending through brokers ) they had no experience in, and little expertise as it proved. I would image lending staff sometimes got commission / bonuses / promotion for reaching or exceeding targets they advanced? 


To answer the OP's question, the most shameful lending I know of is a loan for 90 times the persons income. The borrowers own bank did not give him a loan at all when he asked for one, but another bank lent a 7 figure sum which was over 100% of the property cost, for 90 times his income. The borrower (who was medically unwell ) had closed down his old business / sold old stock etc, and the broker knew that, but the financial institution either did not know or did not care. Should'nt the financial institution have phoned up / checked to see if the borrower had the means to make 20 years of monthly repayments? The building society used a "buy-to-let" mortgage application form, for this 209 year old property! No proper valuation was done - the valuation which was done valued the property ( a derelect property of an eleventh of an acre in the west of Ireland ) at 17 million an acre! The nearest record within a 130 mile radius was a fraction of that. The borrowers life has been destroyed since, and his life made a hell. Sleepless nights, 7 years without holidays or new clothes, losing assets built up over many years, secondhand Santy toys, a miserable lifestyle and future etc

No wonder many of the banks and building societies in Ireland got in to so much trouble, and destroyed the country in the process. Not all financial institutions acted imprudently or shamefully though. Some "bankers" have a lot to answer for. None have gone to jail and few have lost their jobs or pensions as a result of their mistakes. Not yet anyway.

The banks and building societies had a duty of care to their customers, and to society in general. After all, society has bailed them out. The financial institutions should have ensured loans were sustainable and the borrower had the capacity to make 20 years monthly repayments if that was the terms of the loan. They should have ensured that the property was fairly and properly valued by a competent, qualified and experienced valuer, not known to the property vendor, buyer etc.

In a hypothetical case, if a man off the street was mad enough to want to pay 200k for a secondhand ford fiesta, and was enticed by an interest only loan for the first few years, the financial institution should not lend 210k if his salary was 4k. The financial institution should have checked to see if the figures added up before lending the money. The man off the street was not the financial expert : it was the banks job to evaluate his ability to meet monthly repayments over the term of the loan, and the bank should not lend money to be repaid over 20 years when it knows it will not be repaid over 20 years. And the secondand fiesta should not have been valued at 200k if other fiestas were worth nothing like that - even if the valuer knew the borrower well, and the borrower wanted that particular fiesta. 

The truth will out yet, and thank God it will. If it does not, bankers will repeat the same mistakes again at some point in the future. We must all learn from the past. Some have not felt the pain yet.


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## Gerard123

Call the above for what it is.Difference between reckless lending/borrowing and falsifying documents to borrow.  Falsifying P60s and documents or facilitating someone borrowing on the back of fraudulent documents is fraud pure and simple. Its much more than shameless borrowing.  Its a crime and should be reported to the Guards. Banks should have been much more vigilant and had a duty to check properly also to prevent it. 
Reckless lending, allowing ridiculous multiples of salaries happened and should not have but it should not be equated with borrowing or lending based on fraudulent documents.Finally i don't believe some of the above.  Anecdotes tend to turn out quite different when the full facts are known, though of course the lending may still be ridiculous.And.......  contrary to the feeling one might get from reading Several posts above.  The vast majority of the people did not engage in these practices so it was not the norm. That is simply a reason cited to excuse behaviours or to suggest its was somehow the done thing. It was not!  Crying wolf, etc......


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## DerKaiser

Chris said:


> Not just blessing it was encouraged. Year after year more and more subsidies were given to home buyers in order to make sure that more people that couldn't afford to buy actually did buy. And all the opposition had to say was that too little was being done for struggling home buyers. What the banks were doing is exactly what politicians wanted them to do.



Thanks Chris.

For some bizarre reason I hadn't thought about it in such a clear way for a long time, what with all the other noise.

The key point is that it was an active policy of government and opposition to encourage hundreds of thousands of first time buyers to enter the market over a short few years.

I still maintain that the one simple and necessary lesson from all of this is to look at the demographics. If 25,000 couples marry in a given year, more than double that number are coming into the market as first time buyers and supply increases to these levels, the government needs to think 'how on earth that is sustainable?'.

In fairness, we are a country that never had a housing surplus in its history. That won't be an excuse for ignoring the demographics again.


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## Bronte

Gerard123 said:


> . Falsifying P60s and documents or facilitating someone borrowing on the back of fraudulent documents is fraud pure and simple. . Its a crime and should be reported to the Guards. Banks should have been much more vigilant and had a duty to check properly also to prevent it.
> .


 
We don't do white coller crime in Ireland so you'd be wasting your time reporting it to the Gardai.

As for the duty of banks, looks like they had carte blanche from the central bank, regulator and government to dish out money by the wheelbarrow to people who should never have been approved.


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## zxcvbnm

The most ludicrous lending I heard of happened to me. I was on 35k and said including overtime it can be up to 40k. I applied for a mortgage of 439k - they rejected but instead gave me a mortgage of 409k along with an unsecured personal loan of 30k to make up the shortfall. 
They also said I needed a guarantor for 100k to be fair. 
But even so - how could I possibly have paid that back on that salary. (That didn't stop me taking it of course. Live and learn I guess !)


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## RichInSpirit

Brendan Burgess said:


> A friend of mine asked me for advice some years ago when they wanted to buy a house. They had an offer accepted for €180k. I reckoned that their salary was around €30k . At the time the salary multiples were only about 2.5. I strongly advised him against buying. He showed me his p60 - his salary was €60k . I was really surprised he was earning that much and I told him so. He told me that his employer ran a separate payroll system to generate false p60s for employees. He was actually earning only €30k.
> 
> Bank of Ireland had approved the loan in principle but refused it when the bank statements were produced.  He went back to the auctioneer who said "no problem" and introduced him to a local mortgage broker. The mortgage broker said that IIB (now KBC) was the only lender not to check bank statements so he got the loan from IIB.
> 
> Of course the house doubled in value. He subsequently remortgaged it for a deposit on an investment apartment. He has now lost his job and is calling for debt forgiveness.
> 
> I am sure that others have similar examples of shameful borrowing.



Lol.! 
It's amazing the parallels between mortgage lending (and general lending) and spread betting.
Both let you borrow way over your weight.
You may make a fortune if things go right for you.
You may lose more than your initial deposit if things go the wrong direction for you.
Both have a magic "safety" ratio of 3:1.


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