# On what grounds is a mortgage deemed unsustainable?



## Kerrigan (22 Feb 2014)

Hi All,

I was asked to support a friend of a friend at a meeting with their bank regarding a mortgage that has been deemed unsustainable.  

Their mortgage is being paid in full each month but arrears of 8k had previously mounted on the loan when they were out of employment.  

I asked the banks advisor; on what grounds was the debtor perceived to be unsustainable?  Was it because of the 8k arrears?

His answer was simply, no. 

He followed the conversation on by saying that criteria had enormously changed and banks were no longer looking at the arrears but looking at long term sustainability i.e. Job prospects etc. etc.    

This debtor is now fully employed with a gross salary of €60,000 + per annum.  

Mortgage owed: 140K
  Unsecured debt: 20K   

Debtor told advisor that he would repay the arrears but was still advised that the bank may well see the home loan as being unsustainable.

What signal is this warped thinking sending out?  

Are we as TAX payers becoming liable for properties that are well within the range of the debtors to repay; just because the banks want instant sales and quick cash no matter how low they are? 

Are the banks breaking the original T&C’s of the home loan?


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## so-crates (22 Feb 2014)

That does sound a bit daft frankly - has he got a detailed explanation in writing as to why they think it is unsustainable?


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## Brendan Burgess (22 Feb 2014)

Kerrigan said:


> Are the banks breaking the original T&C’s of the home loan?



In what way? Your friend is not paying the agreed repayments, so it would seem that he is in breach of the Ts&Cs. 

Can you provide some more information? 
1) Which lender
2) Interest rate - e.g. is it a tracker? 
3) How old are the arrears? 
4) What does the €8,000 represent in terms of months of arrears?
5) What value is the property? 
6) How long is he in his current job? 
7) What are his expenses? Is he supporting an ex and children? 
8) What is his history of engagement with the lender? Was he in MARP or did he just bury his head in the sand. 
9) Has he appealed the decision? 

If  he has engaged with the bank, and kept up  some level of repayments at all times, prioritising his mortgage over his unsecured creditors, then he will have a good case. 

However, if the guy has messed the bank around, e.g. diverting MIS and paying his unsecured creditors ahead of the mortgage, and is now only engaging because the resrictions on the CCMA have been eased, then I would be with the bank on this and he deserves to lose his home. 


For some time, I have been calling for a definition of "sustainable mortgage" and arguing that the absence of a definition leaves borrowers vulnerable. 

From my experience, the lenders just deem a mortgage to be unsustainable and give no explanation, even when asked.


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## robert 200 (22 Feb 2014)

A bank loan is unsustainable if the borrower cannot meet FULL principal and interest repayments as per the loan offer that your friend would have signed . I suggest that your friend borrows that 8k from some other source and clears his arrears immediately .
The banks are playing hardball now - they are taking no prisoners . As I have said before 
on this site there will be thousands of properties repossessed later this year (especially buy to lets )


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## Brendan Burgess (22 Feb 2014)

robert 200 said:


> The banks are playing hardball now - they are taking no prisoners . As I have said before



This is too general a statement. 


If you blame the banks for everything and avoid all personal responsiblity, you will lose your home. 

Most of the banks bend over backwards most of the time to facilitate borrowers who are engaging with them. Split mortgages, interest rate reductions, term extensions, etc. 

The OP will have to establish why the bank is not facilitating this borrower. There is not enough information, but non engagement by the borrower is probably the reason.


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## Kerrigan (22 Feb 2014)

Hi Brendan,

To answer your questions 

Can you provide some more information? 

1) Which lender
TSB

2) Interest rate - e.g. is it a tracker? 
Tracker 

3) How old are the arrears? 
2 yrs approx.

4) What does the €8,000 represent in terms of months of arrears?
Approx. 10mths

5) What value is the property?

€120,000.00 to €130,000.00

6) How long is he in his current job? 

1yr

7) What are his expenses? Is he supporting an ex and children? 

Lives a very modest lifestyle.  No dependents.  No large outgoings.    

8) What is his history of engagement with the lender? Was he in MARP or did he just bury his head in the sand. 

Oddly enough MARP was never mentioned to him.  This is the part I do  not understand myself.  Bank were never proactive in chasing the  arrears.  This has all been very sudden. He has made regular contact with the bank.

9) Has he appealed the decision? 

The decision is currently being appealed.


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## Kerrigan (22 Feb 2014)

so-crates said:


> That does sound a bit daft frankly - has he got a detailed explanation in writing as to why they think it is unsustainable?



No detailed explaination in the letter just a general formal letter declaring that the loan was unsustainable based on his figures provided.

Robert 200, he has offered to the pay the arrears but having sat in on the meeting I would be very skeptable whether he should clear arrears or not.  Are they still going to deem him unsustainable even with the arrears paid?  

That might sound like a stupid question but that is what the banker insinuated during the meeting.  As he said criteria has changed and they are looking at long term afordability rather than short term.


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## Brendan Burgess (22 Feb 2014)

Hi Kerrigan

Sometimes the guys in the Arrears Support Unit make poor decisions, which are reversed by the Appeals Board. On the face of it, this will be reversed.

However, has he been preferring his unsecured creditors? 

He has a right to be in MARP, and should make sure he is processed under MARP. 

It could be an effort to get him off his tracker. He should stop paying his unsecured creditors immediately and use the proceeds to reduce the arrears. 

If he loses his appeal, he can appeal to the Financial Ombudsman that they did not follow the MARP.  

If the Ombudsman rejects it, then they _might _try to repossess him. But if he is reducing the arrears and paying the current repayments, it's very unlikely that the court would allow him to be repossessed. 

How long has he been paying his mortgage in full? He should ask for the arrears to be capitalised, although they might refuse as it's a tracker mortgage. 

Brendan


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## Wishes (22 Feb 2014)

Brendan Burgess said:


> He should stop paying his unsecured creditors immediately and use the proceeds to reduce the arrears.



Wise words but I tried this move myself, before I finally got the unsecured debts paid off.  My mortgage bank were non to pleased with me not paying my unsecured debt even though they would have been benefiting!  

They will look at the over all picture, not just the money that is owed to them.  They will inveigle into other areas of your financial affairs even if you are currently paying P&I each month. They will want to know are you clear with Revenue and how long is it going to take you to clear the unsecured debt?

It is absolutely crazy what is going on out there.


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## Brendan Burgess (23 Feb 2014)

Hi Wishes



> It is absolutely crazy what is going on out there.



Agreed.  Crazy borrowers are paying off their credit union and then complaining when the lender tells them that their mortgages is not sustainable. 

If someone wants to keep their home, they need to pay their mortgage and stop paying other debts. 

If someone chooses to prioritise their other debts, then they should not complain if the lenders deems the mortgage unsustainable.


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## robert 200 (23 Feb 2014)

Bankers are your friend , they will bend over backwards to facilitate you ..........

AND PIGS CAN FLY 

Brendan , please go to the CRIMINAL COURTS next Wednesday and find out what some of the most respected bankers in this country got up to - then maybe you will change your opinion and stop being so naive .


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## robert 200 (23 Feb 2014)

Kerrigan , if your friend clears his arrears and continues to pay full capital and interest repayments TSB cannot and will not look for a repossession order.


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## Wishes (23 Feb 2014)

Brendan Burgess said:


> Hi Wishes
> 
> 
> 
> ...



Hi Brendan,

From my own case, it is not that simple.  I was scolded for insinuating that I would cease all payments on my unsecured debt in favour of my mortgage.  It's a no win situation.  The mortgage institutions simply want you paying it all.


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## Brendan Burgess (23 Feb 2014)

Wishes said:


> .  I was scolded for insinuating that I would cease all payments on my unsecured debt in favour of my mortgage.  It's a no win situation.  The mortgage institutions simply want you paying it all.



Hi Wishes

Who "scolded" you? 

I would prefer to be scolded than to lose my house. 

Many people pay off their credit union in full on the grounds that the CCMA protects them from their mortgage lenders.  This is the wrong strategy.

You must prioritise your mortgage if you want to keep your home.  If repossession is inevitable, then it might make sense to pay off the other creditors ahead of the mortgage. 

It's often a balancing act. Prioritise your mortgage but pay something to your unsecured creditors as well. 

Brendan


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