# IBRC - shortfall post sale of mortgaged property



## jpoc (16 Feb 2014)

We sold our family home, some months ago, with permission from the IBRC. Many months were spent liasing with them, to secure a mutual agreement, that we could service the shortfall on a monthly basis under the remaining term of the mortgage. Never missed a repayment on house and have begun monthly repayments on shortfall as agreed. We are happy to continue this agreement but wonder if there might be a better solution or wonder if we are exposed in our agreement. We have not received an agreement in writing despite being assured one would be issued on sale of our home and transferring of deeds to new owners etc. I am left feeling ill informed, frustrated, exposed, and unprotected here...

My questions are: 
1. Are the IBRC legally obliged to furnish us with our *agreement in writing* post sale of house upon our request? If so, what would be the best way to illicit a response?
2. What *paperwork* is a bank obliged to provide us with post sale of a house when a shortfall situation exists?
3. We may be in a situation where our parents will gift us some money, which would amount to roughly half the amount of the shortfall. Should we offer this to IBRC a.s.a.p. in hope it will clear the shortfall or wait until our loan will be taken over to offer? Or should we retain it for purchasing our new home? 
4. Would our loan be categorised as performing or non performing when it is unsecured? It is now being managed under shortfalls and arrears section in IBRC. Would this affect us either way?
5. Does having an unsecured loan affect a new mortgage application?
6. How will a new institution taking over our loan in a worst case scenario affect us?
7. Can we be forced into a new agreement i.e. IBRC asked us to complete an income assessment 'to see if we could afford more', but we refused under grounds that it is contradictory to the agreement that we made. We were not informed it would be subject to review or to any new terms and conditions, just that it was acceptable to them that we continue to service it over the remaining term of mortgage. Do they have any right to this information as long as we keep servicing loan as agreed?

Help is appreciated on any of these questions. This is totally unchartered territory for us and them, and I would appreciate you highlighting any other points that need consideration here, thatI haven't myself suggested.


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## Brendan Burgess (16 Feb 2014)

1) After you sold your home, you were legally liable for the shortfall.
2) You still are.
3) No particular legal agreement is made as you are liable for this shortfall anyway.
4) You say you reached an agreement with them to pay it off over the remaining term of the mortgage at the existing mortgage rate. It would be hard for them to get any more as they have not issued an agreement claiming it was subject to review. 
5) Performing or non-performing doesn't come into it. This is an unsecured loan and not a mortgage. Just like a credit union loan or other bank term loan. 
6) If you are applying for a new mortgage, the new lender will take into account your repayments on existing loans in determining your affordability. 
7) I don't think that they can force you to complet a new income assessment as you are complying with the terms of your alleged agreement. 

8) This loan will be sold to a vulture fund, or possibly NAMA.  They will see that you have the capacity to repay it, so won't be under any pressure to do a deal with you. However, they will probably buy the loan for around 30% of the outstanding amount, so they might accept 50% for a quick deal. 

9) Your loan is on a variable rate or a standard variable rate. The new lender can ramp this up at their discretion, and probably will.


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## jpoc (16 Feb 2014)

Thank you Brendan, very concise and useful. So, should I wait for loan to be purchased or offer 50% of the value now asap. Are they still negotiating with customers or just concentrating on selling up at this stage?
Also, without the shortfall agreement in writing, a vulture fund may claim it doesn't exist. Just to clarify please, are they not obliged to provide this to me if I request it? As you mentioned, it is no longer a mortgage, surely that would create the need for some new paperwork? Why would they not issue this automatically...I think I need to have some form of proof?


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## Commercial (21 Feb 2014)

jopc, in my opinion they will look seriously at a lump sum offer. I would offer 30% and take it from there.
Offer it now and if they can't accept it, your offer will be noted on your file.
Whoever takes over the loan should contact you at a later stage in order to complete the deal if IBRC don't.


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## Brendan Burgess (21 Feb 2014)

It's certainly worth trying and maybe they will go for a quick settlement.

However, if you can afford to pay the loan in full, they will probably be happy with that. 

Brendan


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## Bronte (21 Feb 2014)

I too would be worried that they have not written you a letter confirming what was agreed, which is that you continue with mortgage rates and current term. How was this negotiated, was there an intermediary. I suggest that you write a letter to whoever you were dealing with and confirm to them your understanding of what has been agreed, and also write in the letter that in the absence of disagreement from them this is what was agreed. Put in the amount outstanding, the type of interest rate and the term. It just might be enough, but it is certainly better than nothing. 

If IBRC are sold than everything changes.  If it's Nama, because it probably wouldn't be acceptable to the public, I'm assuming nothing would change for you and others.  For the vulture funds, well the name says it all.  

Legally IBRC could go to court and try and secure a higher repayment from you.  Your original mortgage no longer exists, nor do it's terms, what you have is the bank agreeing to treat it as though it's continuing.  

I agree with Commercial, offer 30% in the hope of paying 50%.  Well done on coming to an agreement with your bank.  Hope this is working out for you.


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## Brendan Burgess (21 Feb 2014)

Good thinking Bronte. 

As they have not written to you, you should confirm the agreement with them in writing. 

They will probably not be organised enough to contradict it.

You could say something along the lines of 

"I was surprised to receive a call from Ms X on such and such a date asking to review my affordability. 

As part of the agreement to sell my house, I reached the following agreement with you: (telephone call on such a date with such a person) 

To pay the shortfall over the remaining term of my mortgage at the rate of. 

Despite my current restricted financial circumstances, I have paid every payment in full and on the agreed date. 

Please note this on your file, so I receive no further calls from you."


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## Bronte (21 Feb 2014)

Brendan Burgess said:


> They will probably not be organised enough to contradict it.


 
Forgot to add, make sure it's sent by registered post.  

But I'd start it along the lines of I'm disappointed you have not put our agreement in writing, so I'm setting out the terms agreed....

I really think banks could be a lot more proactive here, people have lost their homes and are doing their best and getting a simple lettre from them is such hard work.  Shame on the people in the banks that agree over the phone/ at meetings and promise the sun moon and stars to get the debt deal done and then don't put it in writing as promised.  That's underhand, sly and unbecomming of professional behaviour.


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## Brendan Burgess (21 Feb 2014)

Hi Bronte

In practice what happens, is that they write off the shortfall on their books as they don't expect to get anything.  So they don't spend any time on it. 

jpoc is being honorable in doing the right thing and paying his contractual obligations. 

Brendan


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## jpoc (10 Mar 2014)

Thanks for the advice, I have written to them again as suggested and I clearly *set out the terms of our agreement* (I know it takes time, but I can't stress the importance of people keeping a notebook to log any communications made with a bank if you are negotiating something, as it may be necessary to prove the communication took place at a later stage.I  *requested all paperwork* pertaining to us, and again *made an offer of 50%* (which our parents are willing to give to us to enable us a fresh start) to which they have *not replied or contacted us.* 
I really am not so much being honourable, but fear my credit would be affected if I don't pay, we need to apply for a new mortgage. If I currently had a mortgage, I'm really not sure I would service this debt without so much as a written agreement as to the terms and conditions of the loan from the bank?!  
When we do get a mortgage it is going to be difficult to service the debt. *Question : Should I really be servicing this debt  without any acknowledgement of our agreement?* I know legally I owe the shortfall but when they have not confirmed ANYTHING in writing the arrangement feels too unofficial at present.


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## Dr.Debt (11 Mar 2014)

Hi OP, I think you would be well advised to get professional advice on how to handle this matter.

You are to be commended on your brave efforts to repay this mortgage and its shortfall.

Unfortunately you are now a victim of your own success. Let me explain it like this :

If you had made no payments to the bank in the last three years and had not co-operated so well in the sale of your home, I believe the bank would be biting your your hand off now at the chance of a 50% deal.

The opposite is actually true in your case. You have been bending over backwards to please the bank. Because of this the bank will see no need to offer you a deal. Yes you are in a net debt situation after selling your house but you are up to date with your payments. I cant think of one good reason why the bank might consider cutting you a deal.

Let me asssure you that deals are only available to the most desperate and hopeless cases. They are not available to individuals who are up to date on their payments, negative equity or not. Its slightly ironic but true that the ones who cooperate best with the bank will come out worst. Those who haven't paid their mortgages in three years will emerge with the best deals.


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## Brendan Burgess (11 Mar 2014)

I think you should forget, for the moment, about getting a new mortgage. 

IBRC won't do a deal with you. They are simply not doing deals. 

If the loan is sold to a vulture fund, they may do a deal. 

If the loan is sold to NAMA, I don't think that they will do a deal with you. 

So you could have this unsecured loan for a long time.

You haven't given any figures, but why should IBRC do a debt write down, if you can afford your repayments?  There is no indication from you that you are insolvent. If you are insolvent, then it would be different.


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## jpoc (11 Mar 2014)

Thank you for your replies. Dr. Debt, I couldnt agree more, as a person who has always done what is perceived as "the right thing" and saved all my life to naively buy a home at 21, now having a debt to repay is depressing to say the least. On the plus side, we are so much happier in our rented accommodation and feel as if we are really living now. 

 Being an honest consumer in Ireland is costly to say the least. But onwards and upwards. I am not insolvent Brendan, but would certainly avail of a discount if I felt I could get one from a vulture fund (who has been given a discount on the purchase of my loan). I do not feel that this is wrong, Im sure some people will disagree. Dr Debt. from whom could I get professional advice, had a solicitor to communicate with Ibrc, it was not useful. Can you elaborate on why should I not apply for mortgage, Brendan?


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## Brendan Burgess (11 Mar 2014)

> Can you elaborate on why should I not apply for mortgage, Brendan?



Well, you haven't given any figures - either for the shortfall or for your income, but I had assumed that it was a relatively large amount.  

But if it's a small amount, then maybe you would qualify for a mortgage. However,if you can get a deal on the shortfall, you would be better waiting until after that to apply for a mortgage. 

Brendan


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