# Likely outcome after vulture fund repossession



## Lucyloo (20 Apr 2021)

I have a BTL that a vulture fund is selling through a Receiver.  My loan balance is €180k and the property is up for sale for €75k. There will be costs of sale to come from this too, so it will leave a balance of over €110k which I'll still owe. 

I took out this mortgage in 2005 with UB and have only ever been able to afford interest only repayments. Even though I was receiving rent, which was less than interest, I needed the money to live on. 

Im married but the property is in my sold name. My husband and I have a family home (balance €200k value €370k). We have 3 kids and I work 30 hrs a week. We have no surplus income at the end of the month and are not big spenders either. We have no savings and live month to month. I have no other debt. 

I have 3 questions:
1. After the vulture fund sells the property what likely action will they take? I take it that it wouldn't be worth their while obtaining a judgement against and then a judgement mortgage on my family home? (ie the cost of obtaining a judgement against unlikely to receive anything) 
2. If after they sell the property I was able to get a loan of €5k from my parents do you think they might accept this as full settlement? 
3. Should I consider personal insolvency options?


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## Brendan Burgess (20 Apr 2021)

> I have a BTL that a vulture fund is selling through a Receiver. My loan balance is €180k and the property is up for sale for €75k. There will be costs of sale to come from this too, so it will leave a balance of over €110k which I'll still owe.
> 
> I took out this mortgage in 2005 with UB and have only ever been able to afford interest only repayments. Even though I was receiving rent, which was less than interest, I needed the money to live on.
> 
> ...



You do need to talk to an insolvency practitioner on this.

You owe them €110k.

You have €170k equity in your home, so I don't see why they would not get a judgement for the shortfall and register it against your home.  They won't seek to repossess it, but if you ever try to sell your home, half the net proceeds would have to be used to clear the debt.



Lucyloo said:


> though I was receiving rent, which was less than interest, I needed the money to live on.



And contribute to your pension scheme?






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Who says that there are no strategic defaulters in Ireland?


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## The Horseman (20 Apr 2021)

Brendan Burgess said:


> You do need to talk to an insolvency practitioner on this.
> 
> You owe them €110k.
> 
> ...


I hope the vulture fund do place a charge on the property. You are looking after yourself by investing in AVC's rather than dealing with your responsiblity. 

Selfish Ireland is alive and kicking. No wonder people get annoyed with these type of cases.


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## NoRegretsCoyote (20 Apr 2021)

Brendan Burgess said:


> You have €170k equity in your home, so I don't see why they would not get a judgement for the shortfall and register it against your home.


Excuse my ignorance, but does any interest accrue on this?

If not, a 40 year old could sleep easy with this assuming 1) they were in their forever home; 2) inflation.


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## The Horseman (20 Apr 2021)

NoRegretsCoyote said:


> Excuse my ignorance, but does any interest accrue on this?
> 
> If not, a 40 year old could sleep easy with this assuming 1) they were in their forever home; 2) inflation.


Yes it does at 8% simple interest. The % fig may have changed. The judgement just needs to be renewed every 6 yrs.


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## NoRegretsCoyote (20 Apr 2021)

The Horseman said:


> Yes it does at 8% simple interest. The % fig may have changed. The judgement just needs to be renewed every 6 yrs.


Wow. Even without compounding that's pretty steep. I wouldn't want this hanging over me.


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## Brendan Burgess (20 Apr 2021)

It was reduced from 8% to 2% in 2017.

And, I think it's simple interest. Although that doesn't matter that much with a rate of 2%.

So less than most mortgages.

Brendan






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RATE OF INTEREST ON JUDGMENT DEBTS REDUCED​The rate of interest on judgment debts has been reduced from 8% to 2%, with effect from 1 January 2017, pursuant to the Courts Act 1981 (Interest on Judgment Debts) Order 2016.
This means that the interest accruing and payable by the debtor, once a judgment has been awarded in respect of a debt, will be significantly less at 2% rather than the 8% which was in place since 1989.
This will also impact on those situations where a judgment mortgage has been registered and the debtor wishes to have the mortgage discharged. In these cases, interest on the judgment sum from the date of judgment up to the date of payment is payable by the debtor and this interest amount will now be calculated at the reduced rate of 2% with effect from 1 January 2017.


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## NoRegretsCoyote (20 Apr 2021)

Brendan Burgess said:


> was reduced from 8% to 2% in 2017.
> 
> And, I think it's simple interest. Although that doesn't matter that much with a rate of 2%.


Then in real terms it's kind of like an interest-free loan that only needs repayment when your house is sold which could be in 40 years.


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## The Horseman (20 Apr 2021)

Brendan Burgess said:


> It was reduced from 8% to 2% in 2017.
> 
> And, I think it's simple interest. Although that doesn't matter that much with a rate of 2%.
> 
> ...


Its been a good couple of years since I was involved in them so was not sure of the current interest rate.


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## Lucyloo (20 Apr 2021)

Sorry this situation is written on behalf of a friend and the avc was related to me and not this situation, I'm just giving advice. I previously worked in debt recovery and going legal in these situations wouldn't have been considered worthwhile or an option always pursued. Would a vulture fund be more likely to sell the debt on again rather than pursue a judgment mortgage for the cost of c4k. Judgement mortgages are only in place for 12 yrs.


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## NoRegretsCoyote (20 Apr 2021)

Lucyloo said:


> and given they have likely recouped their money from the sale of the property they are unlikely to go down this route


I have no idea hof these vulture funds work, but two errors in that thinking:

it was an average price for a portfolio of loans, not just yours;
sunk cost fallacy, the money is spent anyway and there is no downside to them for pursuing you.


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## PIPPOP (22 Apr 2021)

OP, you should absolutely ask your friend to talk to MABS or an Insolvency Practitioner. Worth noting, is that if the vulture fund seeks to get a judgement mortgage registered on their family home, it can be reversed if a protective certificate is granted (as part of a Personal Insolvency Arrangement) within 90 days.


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## Steven Barrett (22 Apr 2021)

Lucyloo said:


> Sorry this situation is written on behalf of a friend and the avc was related to me and not this situation, I'm just giving advice. I previously worked in debt recovery and going legal in these situations wouldn't have been considered worthwhile or an option always pursued. *Would a vulture fund be more likely to sell the debt on again* rather than pursue a judgment mortgage for the cost of c4k. Judgement mortgages are only in place for 12 yrs.


Only if it is a performing loan. They want to restructure the repayments, including possible write offs. Then can then sell it onto a bank.


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## PIPPOP (22 Apr 2021)

Lucyloo said:


> Sorry this situation is written on behalf of a friend and the avc was related to me and not this situation, I'm just giving advice. I previously worked in debt recovery and going legal in these situations wouldn't have been considered worthwhile or an option always pursued. Would a vulture fund be more likely to sell the debt on again rather than pursue a judgment mortgage for the cost of c4k. Judgement mortgages are only in place for 12 yrs.


A judgment mortgage isnt the only option open to them. They could seek a payment order, send the sheriff or petition for bankruptcy...


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## Susie2017 (23 Apr 2021)

Just wondering what can MABs or an insolvency practitioner really offer in this circumstance? I have a pal in a similar boat with multiple BTLs and large negative equity who has approached a practitioner and was asked for 300 euro for a consultation. Also what can the sheriff do ? And what is a payment order for if a person has no income other than the BTLs.


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## PIPPOP (23 Apr 2021)

Creditors could appoint a receiver to the properties for example. Sheriff can seize goods (if any).

If he is in arrears on his family home he may be eligible for a free consultation with a PIP. If not, then its worth the money. By meeting with a PIP he could look at a PIA which would deal with all his debt with a view to keeping them in their family home. All circumstances are different of course, but at least by getting professional advice he will know where he/she stands.


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## Raging Bull (20 Aug 2021)

I am a PIP and yu really need to speak to a PIP before the property is sold. One advantage of the PIA is you go through an official valuation process. The property would still be surrendered as before but at its proper value not with the Receiver selling for peanuts. You can use this process to reduce the losses as I haven seen plenty of receivers selling significantly undervalue in one case a 170k property for 25 k.

Its likely they will come after you for a judgement given your Equity


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## AlbacoreA (22 Aug 2021)

Raging Bull said:


> .. I haven seen plenty of receivers selling significantly undervalue in one case a 170k property for 25 k....



Why do they do that. Never understood that.


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## vandriver (22 Aug 2021)

AlbacoreA said:


> Why do they do that. Never understood that.


Mates?


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## Raging Bull (23 Aug 2021)

vandriver said:


> Mates?


Usually, plus you can get paid on the double when you go after the equity. It needs regulation.


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## Jim Stafford (23 Aug 2021)

Raging Bull said:
.. I haven seen plenty of receivers selling significantly undervalue in one case a 170k property for 25 k....

I have never seen a Receiver knowingly sell a property at an under value.  Selling a property in such a way would expose them to legal action for negligence. I am unaware of a single Irish High Court judgment which found a Receiver liable for selling at undervalue. Receivers rely on their auctioneers for professional guidance.

Sometime properties could be sold at auction for considerably less than what the owner expected. However, in many cases the lesser amount achieved is attributable to issues such as incomplete title, planning, fire safety certs, asbestos, environmental contamination,structural defects etc

Jim Stafford


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## Raging Bull (24 Aug 2021)

Jim Stafford said:


> Raging Bull said:
> .. I haven seen plenty of receivers selling significantly undervalue in one case a 170k property for 25 k....
> 
> I have never seen a Receiver knowingly sell a property at an under value.  Selling a property in such a way would expose them to legal action for negligence. I am unaware of a single Irish High Court judgment which found a Receiver liable for selling at undervalue. Receivers rely on their auctioneers for professional guidance.
> ...


Hi Jim, I have one Im afraid sold in a big 4 accountants portfolio sale that was never brought to the market or auctioned even through an estate agent. There was no auctioneer and have admitted the same !!


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## Brendan Burgess (24 Aug 2021)

Raging Bull

You are completely misleading people and feeding their prejudices. 

You said you saw a €170k house being sold for €25k.  

Now you are talking about a portfolio sale which I presume means that the receiver sold a bunch of houses to the same buyer.  So you can't say that one of the houses in the portfolio worth €170k was sold for €25k. 

Brendan


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## Raging Bull (24 Aug 2021)

Brendan, 

Sorry I am a regulated provider Im misleading nobody. The house was worth €170k it was one amongst a portfolio sale. Its value can be ascertained from a similar sale on the Property Price register at the same month. It was sold for €25k because I have the statement and costs. Teh Creditor chased them for the shortfall on the sale despite being in positive equity on an OMV It was not marketed so the Receiver is open to significant liability and they are being sued. The portfolio was substantially bigger running into millions.


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