# Bank imprudent lending 90 times salary / incorrect "buy-to-let" valuation €17m / acre



## honest (2 Feb 2013)

What responsibility have building societies to ensure borrowers are capable of repaying loans? This happened to someone I know in 2004 / 2005, when he was on medication (anti depressives and lithium etc ), out of work and not thinking straight, having got an unsolicited sales call from a mortgage broker. 

He got a loan for a buy to let mortgage, in a country town, for 90 times his annual income. How did that slip though the net, or was that usual?

The property in the "buy to let" was valued incorrectly - it was a run-down 100 year old property and, for example, the building society valuer said it had 3 utility rooms etc, which it did / does not. The valuer for the building society valued the 3 terraced run-down, unoccupied cottages on an eleventh of an acre site at approximately one and a half million - thats €17.000,000.00 an acre!

Other valuers before and since have valued it at a lot less, but the borrower did not know that when he took out the loan. He does have the benefit of those written valuations now though, thank God. Shouldn't the valuer for the financial institution have valued the property correctly? Should not the financial institution have checked to see if the borrower had a job or business when taking out the loan, and should not the financial institution have checked to see if the borrower had the means to make repayments?
Should some sort of even basic financial projections not have been sought?

The borrower has never made a monthly capital repayment, has the derelict "buy-to-let" on the market since 2006 without any offers, and it has recently been valued at about 3% of cost. The borrower has had a very frugal lifestyle over the past 8 years and has used the proceeds from the sale of other family property to pay some of the mortgage to date. There is a big shortfall.

He has a few options. He could, and possibly will, go to England and seek bankruptcy there. He has no 3rd level qualifications, getting old and cannot get a decent job. Alternatively, as a business project, he is currently undertaking a viability study in to opening the houses as a tourist attraction.....to show how some people lived over 100 years ago ( 5 ft 6 inch high doorways in the cottages etc ), through to the absurdity of the 2004 / 2005 celtic tiger years when these "buy to lets" were valued by the building soc valuer at €17 million an acre, in this quiet side-street in a country town. He is also writing a book / has it half written on his dealings with the financial institution, the numerous correspondences and their inability to answer questions etc. He finds writing the book quite theraputic and in any case has little else to do now. 

Given the uniqueness of the case - €17 million is arguably the highest price paid per acre for land outside of Dublin (does anyone know of any higher? ) - do you think there would be a market for such a book? It is one persons tale of how his life was ruined by a financial institution lending money when it clearly should not have. He has to take some responsibility for his actions as he signed on the dotted line, although he does feel very misled. Surely someone apart from the young lady in the mortgage brokers should have met him / checked his loan? Lots of people have suffered during the downturn but surely 90 times income + €17million / acre for a "buy to let" mortgage valuation is a record? He thinks the tourist attraction / book may generate some income...any thoughts? At the very least it may get him meeting other people who may feel they have been exploited by an unscrupulous lender / valuer, maybe form a support group etc.


----------



## Brendan Burgess (2 Feb 2013)

> He got a loan for a buy to let mortgage, in a country town, for 90 times  his annual income. How did that slip though the net, or was that usual?



The source of repayments for buy to lets is from the rental income.  The lender would probably have been happy to lend if the rent covered the mortgage repayment.

I have seen this " Shock ...horror ...They lent me 20 times my income" argument before when it's a lot less relevant as it's a buy to let.  I have seen it used when the purchaser had substantial other assets as well, so his salary was just irrelevant.


----------



## mercman (2 Feb 2013)

OP, I would say that if the Bank were aware of the borrowers medical condition, there is a case for careless and reckless lending. If no capital repayment have been made yet and the loan was taken out in 2004, he would probably be best off by speaking to his solicitor. Lenders do have a process of having matters ticked in a row of authority. If it was kept a secret about his condition then he would be liable.


----------



## SarahMc (2 Feb 2013)

I don't think there would be a Market for the book to be honest. Of course it depends on how good a writer he is, but the premise of the book is not one I think many people will be interested in.

I'm not sure about the visitor attraction idea either. He should cut his losses and head to the UK.

By the way I think it is very unfair for you to imply the banks should not have lent to a person on anti depressants, or such medication impaired decision making.


----------



## honest (2 Feb 2013)

Brendan Burgess said:


> The source of repayments for buy to lets is from the rental income. The lender would probably have been happy to lend if the rent covered the mortgage repayment.


 
Thanks for your comment, but the problem is the rent would not have had a chance of even paying 5% of the mortgage, as the property was basically unrentable, it being so old and in need of modernization, and the price paid so high. The 3 terraced old cottages may be good for animals or something. It is derelict, with tiny rooms, small windows, internal doorways 5 ft 6 inches high, low ceilings, structural cracks, no heating etc. The mortgage including interest over the term of the 20 year loan was two and a half million euro. How high would the rent have needed to be to pay the building society an average of €125,000 per year out net of taxes / expenses? Why did the building society lend so much without checking could it be repaid as per loan agreement? The "buy to let application form" - of which the borrwer recently got a copy, after much per perseverance, does not appear to be filled in properly, with for example the box for the "projected rental income per annum " left empty. Why was that?

The lender offered the initial years interest only, to get the borrower hooked on his "pension". The borrower was fobbed off / not allowed look at the inside of 2 of the 3 cottages until it was too late / the mortgage was signed and drawn down, and the borrower got an awful shock then. He was assured by the lady in the mortgage brokers who he solely dealt with that the property was in good condition. The borrower has it in writing "that the underwriters will request a Valuation of the house by a local valuer...just to confirm the house is in good shape and is good security." It was very far from being in "good shape or good security", as confirmed by other valuations from reputable professional valuers before and since. The valuer for the financial institution was a home based valuer who had spent decades of his previous working life in a completely different trade / business. The mortgage incidentally was for over 100% of the purchase price. ( about 40k more).




SarahMc said:


> I don't think there would be a Market for the book to be honest. Of course it depends on how good a writer he is, but the premise of the book is not one I think many people will be interested in.


Thanks for your comment. I'm not so sure - in the west of Ireland people are very interested in property and the price of property. Think of JB Keanes play "the Field". As its the most expensive land known outside of Dublin who is to know maybe the whole saga could be made in to a play one day....based on a true story!




SarahMc said:


> By the way I think it is very unfair for you to imply the banks should not have lent to a person on anti depressants, or such medication impaired decision making.


He was attending a consultant psychiatrist and on a cocktail of other medication such as lithium as well as anti-depressants when he bought the buy-to-let, having being told that "property was his pension". He was doing part time menial work like delivering leaflets door to door, and had not a proper job or business when he took out the loan. When the mortgage brokers cold called trying to sell a "normal" pension, he told them he did'nt believe in pensions / could not afford one. Then he was told about the importance of providing for his future etc. His excuse then was about the stock market crash and how he was afraid to buy one because shares could fall like on black Monday etc. If only he had bought a normal pension instead of this buy-to-let investment he was told would be his pension. Or even any other buy to let - properly valued - would have been better.


I do not think his decision making was unimpaired when he took out a mortgage for 17 million an acre for an old "buy to let", do you? Other professional valuations before and since indicate it was not remotely a viable "buy-to-let". While the broker is believed not to have had much experience or dealings with the building society in question, and does not deal with them now, surely it was up to the building society to ensure certain standards were adhered to? Should not someone from the building society have looked at the "buy- to-let" application form before granting the mortgage? Or if they did, why did they grant the mortgage, given the borrower never remotely had the income to make a monthly capital repayment? 

SarahMc, maybe the borrower attending the consultant psychiatrist and being on a mixture of serious medication did not impair his decision making, maybe it did ; but surely the building society should have checked was the borrower capable of making the repayments, if the property was " in good shape and is good security" etc? I think this case is a lot different to the normal "buy-to-let" mortgage.


----------



## wbbs (2 Feb 2013)

The broker can't be as innocent here as it sounds, have you seen all the documentation the bank underwriters were furnished with before they made a decision?


----------



## honest (2 Feb 2013)

wbbs said:


> The broker can't be as innocent here as it sounds, have you seen all the documentation the bank underwriters were furnished with before they made a decision?


 The building society finally, after many requests over a few years, released a copy of the "mortgage loan application" and the property valuation.   Is their other documentation dating back to the time of the mortgage which the bank should release?


----------



## Brendan Burgess (2 Feb 2013)

> The borrower was fobbed off / not allowed look at the inside of 2 of the 3 cottages until it was too late



Hang on. The borrower was not forced to buy.  This is crazy. People buying stuff without inspecting them. 

I suppose the only issue here is if the guy was so obviously vulnerable that the broker should not have "sold" him the loans. 

However, I suspect that you are hearing only one side of the story.

Brendan


----------



## Dermot (2 Feb 2013)

I certainly would not belong to any grouping defending bankers or their agents. I just find it hard to believe it that a purchaser was not allowed to inspect a property to his satisfaction. I also find it difficult that your acquaintance never discussed this with any friend or family member. Would his solicitor not have had a word with him if he was on so much medication. What has he done about this in the 8/9 years. I just think there is more to this than has been furnished so far. It just looks a bit far fetched


----------



## leroy67 (2 Feb 2013)

Dermot said:


> I certainly would not belong to any grouping defending bankers or their agents. I just find it hard to believe it that a purchaser was not allowed to inspect a property to his satisfaction. I also find it difficult that your acquaintance never discussed this with any friend or family member. Would his solicitor not have had a word with him if he was on so much medication. What has he done about this in the 8/9 years. I just think there is more to this than has been furnished so far. It just looks a bit far fetched




plus 1


----------



## Brendan Burgess (2 Feb 2013)

Dermot said:


> I certainly would not belong to any grouping defending bankers or their agents. I just find it hard to believe it that a purchaser was not allowed to inspect a property to his satisfaction. I also find it difficult that your acquaintance never discussed this with any friend or family member. Would his solicitor not have had a word with him if he was on so much medication. What has he done about this in the 8/9 years. I just think there is more to this than has been furnished so far. It just looks a bit far fetched



+ 1 

I completely forgot about the solicitor - unless he was conspiring in the scam as well?


----------



## honest (3 Feb 2013)

Brendan Burgess said:


> Hang on. The borrower was not forced to buy. This is crazy. People buying stuff without inspecting them.


 
Thanks for your replies. You could say the borrower was _crazy_ - indeed his own bank thought he was mad when he tried to borrow money off them in 2004, and refused him. He knows himself now he was not well at that time.

As regards inspecting them, the borrower was fobbed off by the lady in the brokers and was given excuses like keys not available etc. The borrower trusted the assurance from the valuer he paid approx 500 euro. The borrower knew the valuer over a few decades when the valuer had worked in a different line of business. This was the valuer approved by the building society, who said the valuation was necessary to ensure the property was "in good shape and is good security". The borrower then trusted the people in business suits - they were the experts.

Of course the borrower should have inspected the property, if he was in a fit state of mind, and the solicitor should have suggested if not insisted a second valuer inspect the property. Whatever about "People buying stuff without inspecting them", surely it was the job of the building society to inspect the people it lent money to / wonder how it was going to be repaid? All it would have taken was a correct phone call or two. It would have taken very little to see the borrower had no means to repay the 2.5 million net of tax in monthly repayments. Therefore no loan, end of story, we would not be discussing this. However, that would have meant various professionals missing out on commission and bonuses.



Dermot said:


> I also find it difficult that your acquaintance never discussed this with any friend or family member.


 
He did discuss it with a few others, and they were shocked but nothing was done to stop him. He thought it was his pension - in fact he was told by the solicitor that property was his pension and congratulated him accordingly. 




Dermot said:


> Would his solicitor not have had a word with him if he was on so much medication.


 
The solicitor made about 25 grand on the conveyancing. The borrower was thanked and warmly congratulated on doing the right thing. 




Dermot said:


> What has he done about this in the 8/9 years.


 
In 2005 after he drew down the mortgage and got the keys, and saw the inside of the properties fully, he realised he made a mistake. In 2006 he put it on the market with a leading firm of estate agents, who advertised it nationally and locally, at a cost of many thousands to the borrower. It did not sell. In Autumn 2006 the property market stalled as people waited for changes in the budget. Some years later he gave it to another estate agent - it did not sell. It has recently been valued at 3 to 4% of purchase price. Of course hindsight is a wonderful thing now. 

As regards the solicitor, to went to another firm of solicitors just before the 6 year statute of limitations ran out, and paid for and got a barristers opinion. The barrister was of the opinion the property was never worth what the borrower paid for it, or what the building society valuer valued it at. No surprises there.  17 million euro an acre for a quiet side street in a country town in 2004 was simply off the richter scale in comparison to all other comparables. Legal proceedings commenced against the solicitor involved in 04/05. The new solicitors had the file from the borrower, but he was told the next step was to get the file from the solicitor who advised / conveyanced in 04/05. I am not sure of the latest on this end of things, but last I heard was despite many requests from the new solicitor to the solicitor in 04/05, they have refused to hand up their file - perhaps this indicates they have something to hide? 

As regards the building society, the borrower is currently halfway through writing a book about the whole thing, and it contains copies of valuations, correspondence etc. It may never get published, but at least it will be a record. In the past year or so he has finally succeeded in getting a copy of the valuation and the buy-to-let mortgage application. He was shocked the valuer included 3 utilities when there were none, and other major discrepancies. The building society refuses to answer some questions he has put to them many times, and he has correspondence from them showing that. The building society refuses to indicate if their home based valuer had any valuation qualifications, or experience in working for others valuing property, or why he valued the property at the equivalent of 17 million euro an acre. 

When the borrower contacted the ombudsman / financial regulator etc there was always some excuse - it was just outside the 6 year statute of limitations or whatever.

Rather than fleeing to England to seek bankruptcy, which he may still do, the borrower sees a gap in the market for a tourist attraction / shrine to the Celtic Tiger property era. What else can he do - retail and manufacturing are very difficult, and the borrower has no qualifications to get a job, especially at his middle age. Elsewhere in the west there is a museum of country life etc, but nothing much locally. The 3 terraced cottages are close to some surface open car parks, and there is a tourist office not far away. Rail and bus links are nearby. In wet days in the summer, tourists are looking for something to do / see. 
He envisages leaving one cottage more or less as it is, to show how people lived 100 or 120 years ago. Maybe a few mannequins could be dressed in old clothes. Tall foreigners would think the 5ft 6 inch high internal doorways very quaint, how the little people of Ireland lived all those years ago in such tiny dark rooms! Another of the terraced cottages - say the one with the worst structural cracks - could contain the valuations on the wall - the one from the nineties, the infamous one from Jan 2005, the one from late 2005, and one or 2 others. A copy of the "buy to let mortgage application" could also be displayed. People would be standing on the most expensive land ever valued / sold in Ireland outside of Dublin.
The third cottage could contain perhaps a coffee area, and a place where people could buy copies of the book, even meet its author,the borrower.

People in Ireland and further afield seem fascinated with property prices in Ireland, and its envisaged p.r. / free publicity for the venture will not be difficult to get. Tourists would wonder how did an Irish building society value and lend so much money for so little, and they may be able to understand a little bit better why the banks and building societies in this country got in to trouble. It would be an education for the youth of today, who will be the adults of tomorrow. Having been to the very much visited Anne Franks house in Amsterdam, where visitors are taught history must not repeat itself, maybe people seeing the most expensive property in Ireland ( outside of Dublin ),and the state of it, will see first hand the craziness that happened during our tiger period, and how we must endeavour not to make the same mistakes in future generations. 

It would be a way of getting some use out of the 3 cottages. It may also be a way of trying to pay more interest to the building society? It may be worth a try? The borrower has already used proceeded from the sale of family property to repay some of the capital, after coming under pressure from the building society some years ago, when the initial interest only period expired. The borrower has taken a lot of blame and pain himself.

Incidentally, anyone know the next most expensive piece of land outside of Dublin? The borrower contacted the IAVI / RCIS, the CSO etc and none could think of any that were €17 million an acre in 2006, never mind 2004, but he wants to be certain.


----------



## Brendan Burgess (3 Feb 2013)

Hi honest

Can you give us some hard data on this? 

How much did he pay for the three houses?   They were valued at €1.5m

He would have signed the mortgage application. He was doing "menial work". What income did he put in? 

How much was the mortgage?  Around €40k more than the valuation it seems 

Did he have a family home? How much was it worth and how much was his mortgage on that? 

What other assets had he at the time, if any?   " has used the proceeds from the sale of other family property". Was this his property or did it belong to other family members? 

Was there a guarantor for the loan? 



I can't find any mention of an estate agent is all this? Was there no estate agent involved? 

He was cold called by a mortgage broker? That is a bit unusual. Did he know her from before? "Surely someone apart from the young lady in the mortgage brokers " So he took his advice from a "young lady" 

What was the basis of his legal action against the solicitor?   If the fees were paid, the solicitor has no basis for not passing on the files.  His new solicitor and barrister would know that.


----------



## honest (3 Feb 2013)

cashier said:


> I am sorry but I really think this story is just too far fetched to be true. I have seen old cottages sell for over inflated prices during those boom years ie €100,000 to €150,000 with maybe an acre or two thrown in for good measure, when prior 1995 they would possible have sold for 10 grand.


Alas it is true.  The property was not in the middle of the country.  I do not want to identify it on a public forum, but the property is in a town in Ireland, one of its bigger towns.  It is a block from the main street in the town.  Its a side street, with 3 shops facing on to the street, other derelict properties, a few open (not multi-level ) car parks etc.  That said, the price it sold for was so exceptional that it made its own headline in the local newspaper in Nov 2004.
Some test marketing has been done and some foreign visitors were absolutely astonished at what the property was valued at / the size of the mortgage. It would never have happened in their own countries, and they found it very interesting.


----------



## honest (3 Feb 2013)

cashier said:


> What was your friend's annual income at the time, I persume if he was psychiatrically unwell, he was on sickness Benefits.


no he was not on sickness Benefits. He had been self employed for decades and I know he would not have been entitled to the dole : as he had assets I doubt if he would have been entitled to sickness benefit either. He was a hard worker all his life and unaccustomed to claiming anything off the government. I'll p.m you his annual income as verified by his accountants for the financial year during which he took out the mortgage if you want. Shouldn't the building society have checked to see if he had a proper job or business when he took out the mortgage?



Brendan Burgess said:


> Hi honest
> 
> Can you give us some hard data on this?


 Hi Brendan, if ever you are in the west of Ireland I can arrange to have you shown the properties and original documents. Hard copies of valuations etc could be posted to you before then if you wanted.



Brendan Burgess said:


> How much did he pay for the three houses? They were valued at €1.5m


 
I wrote in the initial post it was valued at "approximately one and a half million - thats €17.000,000.00 an acre". He paid €1.410,000
plus stamp duty plus solicitors fees plus valuation fee etc for the property. The valuation valued the 3 cottages at a total of €1,410,000. The mortgage was for €1.450,000. 




Brendan Burgess said:


> He would have signed the mortgage application. He was doing "menial work". What income did he put in?


I do not want to disclose that on a public forum, but suffice to say he was self employed, never employed anyone and certainly never had the means to repay the total mortgage repayments of approx 2.5 million out of after tax income over 20 years. I can p.m you some more specific details on this if you want. His income during the financial year in which he took out the mortgage was less than the average industrial wage, although it was higher in the preceding year, due to sale of old stock and giving up a business. Still not enough to remotely pay the mortgage.



Brendan Burgess said:


> How much was the mortgage? Around €40k more than the valuation it seems .


mortgage was 1,450,000. Property value was 1,410,000.




Brendan Burgess said:


> Did he have a family home? How much was it worth and how much was his mortgage on that? .


yes. The broker knew the area the house was in, and wrote in her writing on the buy to let application form it was worth 1 million ( and her eyes lit up! ). No mortgage on it, as it was bought many years previously. It was valued by the same valuer for the building soc. as security for the mortgage at €800,000.



Brendan Burgess said:


> What other assets had he at the time, if any?


He had some other assets, but would be unfair to discuss on public forum. They would however not have remotely given him the income to repay the mortgage repayments. 




Brendan Burgess said:


> Was there a guarantor for the loan? .


no



Brendan Burgess said:


> I can't find any mention of an estate agent is all this? Was there no estate agent involved? .


there was, he sold the 3 houses. His duty was to the selller, to get the highest price possible.



Brendan Burgess said:


> He was cold called by a mortgage broker? That is a bit unusual.


It happened a few times from the same mortgage brokers. They can be quite persuasive and have an answer for everything, and can prey on peoples fears of not providing for the future. They were trying to sell a pension, give investment advice. Is that really unusual?



Brendan Burgess said:


> Did he know her from before? "Surely someone apart from the young lady in the mortgage brokers " So he took his advice from a "young lady"


The lady was articulate, a few years younger than the borrower and the borrower did not meet anyone else from the mortgage brokers in relation to the mortgage, and did not meet anyone from the building society, and was not in the building society offices at any stage when taking out the mortgage.



Brendan Burgess said:


> What was the basis of his legal action against the solicitor?


as that may or may not be ongoing I can find out more / p.m. about that if necessary. Thank you.


----------



## Brendan Burgess (3 Feb 2013)

So he had a mortgage-free property and other assets. 


> He had some other assets, but would be unfair to discuss on public  forum. They would however not have remotely given him the income to  repay the mortgage repayments.



That is not the point. He could sell the assets to repay the mortgage. You keep talking about €2.5m. The mortgage was for €1.45m secured on a property and on a family home worth €800k mortgage-free. 

He had accounts showing a good income from the previous year. 

He was a business-man of sorts and yet he bought three properties without seeing inside them. 

I don't see that the Building Society has anything to answer for here. 

Unless the broker forged or amended the application form, "the young lady" has nothing to answer for either. 

This is simply someone speculating in property. They bought bad in the first place. The market collapsed. So they have lost their money. Now they are looking for a scapegoat. 

Brendan


----------



## Dermot (3 Feb 2013)

honest; Brendan asked you a question. How much was paid for the 3 cottages?.
How much was borrowed. How much was friend earning at the time. Did friend put up any other collateral as security other than the deposit. If so what was the value.
What other assets/ liabilities does your friend have?.

I still find it strange that your friend came across all of the following during the course of one transaction.

Friends that were shocked but done nothing about it. I think they could not stop him.
An estate agent and a mortgage valuer that had in or around the same outrageous crazy over the top valuation on the property.  
Is it me that finds it strange that you would be getting a mortgage on what appears to me a derelict site that would require further development. Would have thought that all sides in the deal would look at a different type of financing structure.
The solicitor. I am pretty sure he would have made a few suggestions about getting an engineer to assess future planning possibilities etc.
The mortgage lender. I would have thought that you would have had to go up the steps a bit even in those times before you would get the sort of money that we could be talking about. I do not think that the receptionist was approving that type of money even then.
Was there any projections etc. from an Accountant.
Was there an Engineer engaged at any stage.
We need answers to all of above at a minimum if this is to remain a genuine post. No insult intended.


----------



## honest (3 Feb 2013)

Brendan Burgess said:


> He could sell the assets to repay the mortgage.


He does not have the assets he once had, and used proceeds from these to repay a considerable percentage of the mortgage already, but there is a shortfall. 



Brendan Burgess said:


> You keep talking about €2.5m. The mortgage was for €1.45m secured on a property and on a family home worth €800k mortgage-free.


He discovered after taking out the mortgage that total repayments were 2.5 million out of after tax income. Excluding his other living expenses over 20 years, He would have needed maybe, what, 5 million before tax to pay for that. How did the building society expect him to pay that in monthly repayments?



Brendan Burgess said:


> He had accounts showing a good income from the previous year.


Still not a good enough income to repay even a fraction of the mortgage. 




Brendan Burgess said:


> He was a business-man of sorts and yet he bought three properties without seeing inside them.


he saw the inside of one. Yes he acknowledges he should have seen the inside of the others. Yet the valuer for the building society saw them, valued them and added on 3 utility rooms which were not there etc, and wrote a valuation which was unprecedented, bizarre and totally at variance with other valuations. 



Brendan Burgess said:


> I don't see that the Building Society has anything to answer for here.


You think building societies who lend money to someone who has no ability to repay the loan has nothing to answer for? And how do you explain their extraordinary valuation?


----------



## Dermot (3 Feb 2013)

Sorry some of the questions have been answered while I was doing my last post.
I would also make the point that it seems like a long time over 6 years to lodge a complaint with Regulator/ombudsman.
At this stage I am with Brendan on this.


----------



## losttheplot (3 Feb 2013)

Was the value based on the development potential of the site, did it have planning permission for shop units or apartments maybe? Who would rent a derelict building.


----------



## honest (3 Feb 2013)

Dermot said:


> honest; Brendan asked you a question. How much was paid for the 3 cottages?.


If you read the posts above, you will see that 1,410,000 plus other costs (stamp duty, solicitors fees etc ) was paid for the cottages.




Dermot said:


> An estate agent and a mortgage valuer that had in or around the same outrageous crazy over the top valuation on the property.


Incorrect.  The "valuer" for the building society ( who afahk had no valuation qualification or training )valued it at 1,410,000.   The mortgage was for 1.45 million.  The nearest written valuations inc any from estate agents were for a fraction of that.




Dermot said:


> Is it me that finds it strange that you would be getting a mortgage on what appears to me a derelict site that would require further development..


very strange indeed.




Dermot said:


> Would have thought that all sides in the deal would look at a different type of financing structure.


correct.   So why did the building society approve a "buy-to-let" mortgage? Its thought they had little or no experience of dealing with brokers in this market but that was not the borrowers fault.




Dermot said:


> The solicitor. I am pretty sure he would have made a few suggestions about getting an engineer to assess future planning possibilities etc..


Yes, the solicitor should have suggested that, but the borrower filled out a buy-to-let mortgage application and had it professionally verified that it met the requirements of the lending institution in being "in good shape and good security"



Dermot said:


> The mortgage lender. I would have thought that you would have had to go up the steps a bit even in those times before you would get the sort of money that we could be talking about.


Correct, so would I.  The building society will not explain this.



Dermot said:


> I do not think that the receptionist was approving that type of money even then.


I never used the word "receptionist", or described her role as such.



Dermot said:


> Was there any projections etc. from an Accountant.
> .


  No.  There should have been.  His accountant was aware he had no proper job or income or business premises when taking out the loan. The borrower has tried, more than once and without success, to get figures or calculations from the building society showing ability to repay the mortgage.  The building soc obviously lent the money without checking could it be repaid.




Dermot said:


> Was there an Engineer engaged at any stage.


 Its thought the valuer had a certificate in Engineering as his qualification.


----------



## Brendan Burgess (3 Feb 2013)

> You think building societies who lend money to someone who has no  ability to repay the loan has nothing to answer for?



1. He had a site. Not sure what it was worth.
2. He had a mortgage-free house worth €800k
3. He had unspecified other assets

Where is his house now? Why doesn't he sell that to repay the mortgage? 


> And how do you  explain their extraordinary valuation?



The primary valuation is what the buyer is prepared to pay. He determines that.  The valuation organised by the building society should not be relied upon. Having said that, if the building society loses out in this case, they may have a case against the valuer if he grossly inflated the price of the property. But it would be difficult to prove. Property prices were very high at the time. Valuation is an art and not a science.


----------



## Brendan Burgess (3 Feb 2013)

> The borrower has tried, more than once and without success, to get  figures or calculations from the building society showing ability to  repay the mortgage.  The building soc obviously lent the money without  checking could it be repaid.



Why is he asking the Building Society for this? Surely he should have been working this out himself when he bought the property. 

He had assets to secure the loan. That is the main thing.


----------



## honest (3 Feb 2013)

Dermot said:


> I would also make the point that it seems like a long time over 6 years to lodge a complaint with Regulator/ombudsman.


 Hindsight is wonderful, the borrower would have done it within 6 years if he could wind the clock back.  He did not know about the 6 year limit then.
He did try to "solve the problem" by selling the property in 2006, and paid estate agents a lot of money for marketing etc, but there were no viewings or offers even then.


----------



## honest (3 Feb 2013)

Brendan Burgess said:


> Why is he asking the Building Society for this? Surely he should have been working this out himself when he bought the property.


If he was in a sound state of mind. However should'nt a financial instution look for ability to meet monthly repayments before it lends money?
I would imagine anyone else who goes in to borrow a smaller amount of money has to present some sort of financial projections to the financial institution, or ability to repay. Do you accept the building society was negligent in failing to look for this?

And should not the asset be fairly and accurately valued? It would not lend €250,000 to someone to buy a secondhand ford fiesta for example, so why did it lend the equivalent of 17 million an acre in the west of Ireland? 

Is this sort of behaviour - imprudent lending - not at least part of the reason the banks / building societies are in the mess they are in? If you do not think it was wrong then, then you accept it will happen again and more lives will be destroyed?


----------



## honest (3 Feb 2013)

losttheplot said:


> did it have planning permission for shop units or apartments maybe?



no



losttheplot said:


> Who would rent a derelict building.


 the only use for it now is as a tourist attraction / museum of some sort...which reminds me...anyone know of the next most expensive property outside of Dublin?    The 17 million an acre in 2004 is a record by how much?


----------



## honest (3 Feb 2013)

Brendan Burgess said:


> Having said that, if the building society loses out in this case, they may have a case against the valuer if he grossly inflated the price of the property.


A representative from the building society was visibly shocked when he came from Dublin and saw the property just over a year ago. He spluttered and could not accept it cost the equivalent of 17 million an acre. He said the valuations would be investigated. This is recorded. However no result of investigations by the building society in to the valuation can be obtained, despite requests more than once. 
All comparables from the area and a valuation in late 2005 by another valuer ( who noted the same faults etc as another valuer in the nineties noted) suggest the real value of the property was a small fraction of the €1,410,000.


----------



## honest (4 Feb 2013)

Brendan Burgess said:


> Valuation is an art and not a science.


That raises another point. If someone values a property for a financial institution, in what will be a major life-changing experience for the borrower, should that borrower have a qualification relevant to valuing property, or experience working for someone or some business that values property? Could someone used to e.g. pulling pints for decades become a home based valuer without appropriate qualifications / experience?


----------



## SarahMc (4 Feb 2013)

Did the borrower not instruct his own engineer /valuer?

What were the borrowers plans, did he hope to flip the property, redevelop the site or to rent it out as it was?

I don't think it is unbelievable, but I do think key to this is what assets he had secured against the loan.

Out of interest, what is the bank doing now, have they not moved against him at all, I'm presuming he is not paying back interest or anything near it?


----------



## honest (5 Feb 2013)

SarahMc said:


> Did the borrower not instruct his own engineer /valuer?
> 
> What were the borrowers plans, did he hope to flip the property, redevelop the site or to rent it out as it was?


 

He did instruct and pay for his own engineer/valuer, it was the neighbour he knew who also happened to be the same home based valuer the building society used. Hundreds of pints he drunk in his company over the years. The borrower paid approx €500 of his own money to the valuer. That valuer now has the record for valuing the most expensive known land ever in Ireland outside of Dublin. The next closest I know anyway was a lot less. Anyone come across any other land valued at 17 million an acre, or even 12 million an acre, outside of Dublin? It does not have to be 2004 or January 2005 - any time will do. Incidentally, it was not in a tax incentive area either ( although it is in a run down side street of a country town, with other derelict property ), so that cannot be used to explain the record breaking ( by far ) valuation. Even main street proper shops in the main streets, or country mansions, did not make 17 million a acre, or anything close, unless anyone from around the country knows of some case? The IAVI, CSO etc could not come up with any other valuation like that.


What did the building society think they were doing lending such a person, who was attending a consultant psychiatrist, money on property which was not properly valued? If it had been properly valued, they would not have lent the money. The borrowers own bank thought the borrower was mad and would not lend him money. Wise bank.


It was a "buy-to-let mortgage application form" the borrower filled out and he was led to believe, in the written words of his lenders, the property was "in good shape and is good security". I do not know what you mean by flip? The borrower never flipped any property in his life. It was a buy-to-let mortgage / pension he bought not a pack of burgers. He was told "property was his pension", after being told the importance, in no uncertain terms by a so called expert, of having a pension, how inflation was going to lessen the value of money as it had in the past etc. The only flipping he was doing was flipping leaflets through letterboxes for a well known multinational diy chain - he was geting approx the minimum wage for that. As he found out after he took out the loan, the repayments needed to service the loan over the term of the loan was €125,000 per year net of tax. So in round figures you would need to earn €300,000 per year before tax just to pay for the mortgage! Would YOU or any prudent lender have lent money on this property to such a borrower? Yes or no? No surprise the bank will take a haircut when someone in the building society did not do their homework. Are you surprised we bailed out the banks when they lent like that? If the building society had behaved competently then the borrower would not have got the loan and he would not have lost everything and his life (not to mention the impact on his family) would not have been destroyed. 


However it is not the end of the world. Two barristers have advised the property was never worth €17 million an acre ; not surprising when no other land or property within at least a few hours drive was worth - or sold for - anything close to that, then or even a few years after that during the height of the boom. The buyer has a number of years to try to earn money from his book and tourist attraction / museum, directly or by renting it out. In that timeframe or after that he may or may not go to England for a year or two. Happy days. The building society will eventually get the cottages but no more capital - they have already got more than the celtic tiger "realistic valuation" ( what any comparable property sold for even in the height of the boom ) of the cottages. Incidentally the cottages are thought to be 209 years old, not half that, but more research in to that is ongoing. 


As for the people in the building society who were supposed to check the mortgage application, were supposed to check if the applicant had a proper job or business when applying for the loan, and were supposed to know something about property values - do you think they will ever make such mistakes again? I think they have withdrawn from that market.

http://www.askaboutmoney.com/showthread.php?t=176584


----------



## Brendan Burgess (5 Feb 2013)

> The buyer has a number of years to try to earn money from his book and  tourist attraction / museum, directly or by renting it out. In that  timeframe or after that he may or may not go to England for a year or  two. Happy days



I suspect that the public would be much more interested in your story of bankruptcy than in your story of how you paid too much for 3 houses. 

I think your story of the money you will end up paying to the two barristers/valuers will be interesting well.

So I suggest going bankrupt first and then writing the book.


----------



## Bronte (5 Feb 2013)

This is a very complicated story. Please confirm it as follows. Purchaser borrowed 1.4 Million for a derilict property that cost 1,410, 000. This property is now worth 3% of 1.4 million?  The amount lent was 90 times purchaser's salary.  So  it looks like the purchasers income was irrelevant because he was such a man of means?

The person who did the banks valuation is a drinking buddy of the purchaser. Nevertheless the bank accepted this valuation.  How did the bank think the borrower was going to service a 1.4 Million mortgage on a property that seemingly was making no income?

Did the purchaser get a surveryer's or engineer's report on the property. 

How did the purchaser think he was going to repay the mortgage? How did the bank think he was going to repay it.

It seems the morgage was sometimes paid with other assets of the purchaser. 

Someone who is mental health issues is now proposing to go into business to make money, do you really think this is a good idea. How is this renovation to be funded.

At some stage the property was for sale with an estate agent and 'thousands' were paid to them. Why were they paid?

Also barristers have been consulted, and who is paying them?

This whole idea was meant to be a 'pension 'pot' can you explain how?

And the thought that anyone would borrow 1.4 million without seeing a property, well that's outrageous.  And no excuse is acceptable.


----------



## honest (5 Feb 2013)

Bronte said:


> Purchaser borrowed 1.4 Million for a derilict property that cost 1,410, 000.



Incorrect.  He borrowed, via the buy-to-let mortgage application, 1.45 million for a property that cost 1.41 million.
There is a 40k difference.



Bronte said:


> This property is now worth 3% of 1.4 million?



between 3 + 4% of the gross purchase price.   It was valued almost a year ago by a well respected nationwide chain of valuers/estate agents at €75,000.  If you take out auctioneers selling and marketing fees and legal conveyancing fees if it was sold, and the fall in the market in the last year, it would obviously realise that bit less than €75,000.  
 


Bronte said:


> The amount lent was 90 times purchaser's salary.



At the time of taking out the loan / that financial year as a whole, as confirmed by his accountant.  The building society should have checked.  Would it not be normal for a bank or building society to verify someones income / ability to repay, and perhaps make a phone call or two to check if the borrower was still in employment or still had a business or whatever?
Especially for a loan that size?  The building society should have checked. The building society will not admit why that was not done. Why not?
 


Bronte said:


> So it looks like the purchasers income was irrelevant because he was such a man of means?


 
 He was not a man of means enough to repay 2.5 million over 20 years by monthly repayments, or he would not have been delivering leaflets through letterboxes etc. 



Bronte said:


> How did the bank think the borrower was going to service a 1.4 Million mortgage on a property that seemingly was making no income?


Thats the million dollar question!   The bank itself seemingly thought as well the property was " in good shape and is good security", to quote the banks own written words.
The bank has been asked many times how did they think the borrower was going to make, or be able to make, the monthly repayments but they will not reply to this question properly - should'nt they?




Bronte said:


> Did the purchaser get a surveryer's or engineer's report on the property.


Only the one from his neighbour the engineer who he paid the approx €500 to, whom I think he trusted and who was also the banks valuer.



Bronte said:


> How did the purchaser think he was going to repay the mortgage?



He should have been asked that by the bank , but the buyer had health problems at the time and was not thinking straight.   Cocktails of medication such as lithium, anti-depressants etc can cause difficulties in even relatively basic mathematical calculations, have side effects on peoples ability to drive machinery, side affects in relation to appetite, drowsiness etc.  The buyer did ask what was the rental income likely to be but the lady in the mortgage brokers left that box blank on the buy-to-let application form, and he was told that the building society would check if the figures added up and if the buy-to-let was "in good shape and is good security".  They were the experts.  He was fobbed off. 
Should'nt that box on the buy to let mortgage application form have been filled in?  Otherwise, why did the building society have that box on the form?  The building society will still not answer this properly. Still being fobbed off!
 


Bronte said:


> How did the bank think he was going to repay it.


Thats almost the same question as 3 questions ago. It was a buy-to-let mortgage application and clearly written as such. 



Bronte said:


> It seems the morgage was sometimes paid with other assets of the purchaser.



No monthy capital repayments were ever made, but  a lot of capital has been repaid from the sale proceeds of other property.  




Bronte said:


> Someone who is mental health issues is now proposing to go into business to make money, do you really think this is a good idea.




Just because someone attented a consultant psychiatrist in 2004 / 2005 does not necessarily mean they have such issues now.  Besides, the property could be rented out as the tourist attraction / museum, even at a very nominal rent if necessary. 
 


Bronte said:


> How is this renovation to be funded.


Who mentioned "renovation"?   To show yanks what cramped conditions people lived in 209 years ago, before their ancestors sailed to America on famine ships, the property does not need much renovation.  The 5ft 6inch high doorways will be left that high to aid authenticity.  To show people the property that was valued as the most expensive ever in Ireland outside of Dublin needs little renovation. A relic of the Celtic Tiger / symbol of bank mismanagement. I think everyone is agreed the borrower should not have got the money. 
   In certain areas of the country anything to attract tourism / employment is actively welcomed.  Besides, the borrower has been working this past number of years and is more than capable of getting that project going.



Bronte said:


> At some stage the property was for sale with an estate agent and 'thousands' were paid to them. Why were they paid?


Because they asked for it in advance and because it was the done thing in that day ( 2006 ) to advertise property for sale in local and national press, which was quite expensive.  Are you suggesting he should not have paid them / that they saw him coming as well?  I think it not unreasonable those estate agents were paid in advance for their marketing expenses. Did you never sell or try to sell property?  What other alternative would you suggest?  



Bronte said:


> Also barristers have been consulted, and who is paying them?


I wrote "Two barristers have advised the property was never worth €17 million an acre".   I never said they were "consulted" or "paid" which they may or may not have been. 
In any case, even if they were, thats small money in the overall scheme of things.  No further comment on that can be made. 



Bronte said:


> This whole idea was meant to be a 'pension 'pot' can you explain how?


I do not remember the word "pot" being used.  He thought it was a pension investment. One that was " in good shape and is good security", to quote the bank. Do you think such a very old ( 209 years) buy-to-let property, valued at €17 million an acre,  was "in good shape and good security."???? 
When it opens, all visitors will be asked that.


----------



## dereko1969 (5 Feb 2013)

I'm calling shenanigans on all this.

What makes you think people will pay good money to see a shell of a building that someone decided was a good investment? All this talk of making it a museum is just cracked - are you the owner?


----------



## Bronte (5 Feb 2013)

honest said:


> it would obviously realise that bit less than €75,000.
> 
> 
> He was not a man of means enough to repay 2.5 million over 20 years by monthly repayments, .
> ...


 
Basically what you are saying is that because the borrower was 'ill' he should not have borrowed the money or been advanced the money. And that it's the banks fault he borrowed the money.

Let's keep this simple and go step by step.

1. How much do you think a property worth 75K can generate in income. 
2. Does the property require anything to be done to it to become a tourist destination (ie how much), car parks, advertising signage
3. Are there running costs to it being a tourist destination
4. Was there one report done on the property or two? One by the banks valuer and the second one done by the purchaser's engineer/surveyer to show up building faults etc.
5. The question on whether barristers were or not paid is quite simple and there is no reason to duck it even if you consider the amount trifling. 

To answer your question, yes I've sold property, and no I did not pay any auctioneer any monies in advance. I do understand for valuable properties that would go with the likes of Lisney's etc that would require brochures and advertising in national press that money would have to be paid up front for that. (I've some experience of that too).

Now we've had an incredible property collapse but unless you bought the biggest pig in a poke ever I fail to see how the current value can only be 3% of sale price. The purchaser who despite being suffering from ill health managed to borrow 1.4 million, with no income and no means to pay it back and managed to engage with a broker, hire a valuer, a solicitor, deal with a bank, hire and pay an auctioneer and in addition had the services of two barristers. 

If we weren't living in the world we live in now (Irealand post celtic tiger) I'd say this story couldn't be possible be true, but when I read what passes every week now for what goes on, well your story is just as credible as any, just with a few more bells and whistles than most. Still doesn't prove that the purchaser made a mistake. A big mistake. Where does personal responsibility come into this story?


----------



## honest (5 Feb 2013)

dereko1969 said:


> I'm calling shenanigans on all this.
> 
> What makes you think people will pay good money to see a shell of a building that someone decided was a good investment? All this talk of making it a museum is just cracked - are you the owner?


 
  I am not the owner but anyone who has seen the property has been astounded - indeed flabbergasted - that its the most expensive piece of property (per acre) ever outside of Dublin.  For further explanation, see post no. 11:

_" the borrower sees a gap in the market for a tourist attraction / shrine to the Celtic Tiger property era. What else can he do - retail and manufacturing are very difficult, and the borrower has no qualifications to get a job, especially at his middle age. Elsewhere in the west there is a museum of country life etc, but nothing much locally. The 3 terraced cottages are close to some surface open car parks, and there is a tourist office not far away. Rail and bus links are nearby. In wet days in the summer, tourists are looking for something to do / see. 
He envisages leaving one cottage more or less as it is, to show how people lived 100 or 120 ( correction 209 years )  years ago. Maybe a few mannequins could be dressed in old clothes. Tall foreigners would think the 5ft 6 inch high internal doorways very quaint, how the little people of Ireland lived all those years ago in such tiny dark rooms! Another of the terraced cottages - say the one with the worst structural cracks - could contain the valuations on the wall - the one from the nineties, the infamous one from Jan 2005, the one from late 2005, and one or 2 others. A copy of the "buy to let mortgage application" could also be displayed. People would be standing on the most expensive land ever valued / sold in Ireland outside of Dublin.
The third cottage could contain perhaps a coffee area, and a place where people could buy copies of the book, even meet its author,the borrower.

People in Ireland and further afield seem fascinated with property prices in Ireland, and its envisaged p.r. / free publicity for the venture will not be difficult to get. Tourists would wonder how did an Irish building society value and lend so much money for so little, and they may be able to understand a little bit better why the banks and building societies in this country got in to trouble. It would be an education for the youth of today, who will be the adults of tomorrow. Having been to the very much visited Anne Franks house in Amsterdam, where visitors are taught history must not repeat itself, maybe people seeing the most expensive property in Ireland ( outside of Dublin ),and the state of it, will see first hand the craziness that happened during our tiger period, and how we must endeavour not to make the same mistakes in future generations. 

It would be a way of getting some use out of the 3 cottages. It may also be a way of trying to pay more interest to the building society? It may be worth a try?"_

At the moment the properties are empty, so any use is surely better than none?  A few bits n' pieces have already been obtained.  Tourists have heard about the extraordinary property bubble and crash in Ireland.   They are curious.  They ask about the price of property and the downturn.  Where better to show them than the inside of a property that some years ago was valued as the most expensive in Ireland ( per acre ) outside of Dublin, and see what they think?   One of the houses especially is nearly as basic as it would have been in pre-famine times.  To Americans, thats ancient!   If you have ever been to "undeveloped" parts of the world, have you not wondered what the inside of the locals houses look like / taken a peek if you could?  And tourists here can see what stately homes look like, with their high ceilings, big windows, space etc.  These cottages have to be seen to be believed, to get the atmosphere, lack of space and darkness.  Its fascinating to see the woodwork / carpentry as basic vernacular buildings ( not stately homes or big houses )  had 209 years ago.  One in particular is so awful its brilliant.  Besides, its a country town, which gets a fair few tourists in the season, and all locals will tell you this town in particular is crying out for tourism attractions.  Some other towns have plenty but not this one.  God helps those who help themselves.


----------



## honest (5 Feb 2013)

Bronte said:


> Basically what you are saying is that because the borrower was 'ill' he should not have borrowed the money or been advanced the money.


What I think everyone realises is that the building society had no business lending money to someone who had no means to pay it back or meet monthly capital repayments.  I am also saying that because this property was the most expensive in terms of millions per acre out of Dublin, that should have set alarm bells ringing before they lent the money.  Was this buy-to-let "in good shape and good security" as the bank seemingly thought?




Bronte said:


> 1. How much do you think a property worth 75K can generate in income.


As a tourist attraction, who knows yet, but an expression of interest has already been received in operating it. 



Bronte said:


> 2. Does the property require anything to be done to it to become a tourist destination (ie how much), car parks, advertising signage


There are car parks adjacent to the property - could not be better that way now.  Yes it will need advertising signage etc. 



Bronte said:


> 3. Are there running costs to it being a tourist destination


Of course.



Bronte said:


> 4. Was there one report done on the property or two? One by the banks valuer and the second one done by the purchaser's engineer/surveyer to show up building faults etc.


One report on each of the 3 cottages.   It was the same person.  The engineer/surveyor the purchaser knew, his neighbour, who he paid the approx €500 to, was the building society valuer.   



Bronte said:


> 5. The question on whether barristers were or not paid is quite simple and there is no reason to duck it even if you consider the amount trifling.


see previous answer.  I assume they were paid, thats between the parties concerned. 



Bronte said:


> To answer your question, yes I've sold property, and no I did not pay any auctioneer any monies in advance. I do understand for valuable properties that would go with the likes of Lisney's etc that would require brochures and advertising in national press that money would have to be paid up front for that. (I've some experience of that too).


This was a valuable property was it not, so why do you therefore question the borrower paying the advertising / marketing costs in advance, seeing as it was advertised in the national and local press and seeing as how he understandably thought it would lead to a sale? 



Bronte said:


> Now we've had an incredible property collapse but unless you bought the biggest pig in a poke ever I fail to see how the current value can only be 3% of sale price.


Most people are astounded like you, and full copies of numerous valuations will be framed and on display in one of the cottages. 
That will be one of the attractions.



Bronte said:


> The purchaser who despite being suffering from ill health managed to borrow 1.4 million, with no income and no means to pay it back and managed to engage with a broker, hire a valuer, a solicitor, deal with a bank, hire and pay an auctioneer and in addition had the services of two barristers.


lol.  Thats over different years by far. And he did not deal with the building society himself or meet anyone from it when taking out the loan : only the lady from the brokers.  And some of the above took place long after he drew down the mortgage and after he stopped his regular visits to the consultant psychiatrist.



Bronte said:


> Where does personal responsibility come into this story?


It was always in it.  He admits he made a huge mistake in trusting people and in allowing the lady to fill out the buy-to-let application form, and what it led to. The borrower has had a miserable life since 2004, made huge sacrifices, lost nearly everything and will in time probably go to England.   Do not the people who were supposed to check the mortgage have some responsibility too?   The borrower is facing up to his responsibility by trying to find a use for the property as it is, and to make some income from it, however small.


----------



## dub_nerd (5 Feb 2013)

I went to the Colosseum in Rome and reckoned I could see as much as was worth seeing from the outside, without paying in. The idea that people are going to pay money to get into a derelict cottage on a side street in a rural Irish town strikes me as stark raving lunacy. Property bubbles are not that uncommon and are not remembered for very long, and to be quite honest many people in Ireland seem to want ours back a.s.a.p.


----------



## honest (5 Feb 2013)

dub_nerd said:


> I went to the Colosseum in Rome and reckoned I could see as much as was worth seeing from the outside, without paying in. The idea that people are going to pay money to get into a derelict cottage on a side street in a rural Irish town strikes me as stark raving lunacy.


I went to Amsterdam and there was a queue around the block of about 500 people to see Anne Franks house, and there was nothing specatular to see in it after all the waiting. Worth seeing all the same. I'm not saying the attraction will have the same pulling power, but still, just goes to show what can be done. 


Who said they would necessarily pay in? There are tourists wandering around in the summer in this location, or not far away, looking for interresting things to see/ do / pass 5 or 10 minutes. I believe they would be intrigued to see the most expensive land ever outside of Dublin, and someone- perhaps in period costume - showing them around and explaining things in a real Irish accent. I believe the exact business plan still has to be decided upon, but perhaps admission may be free, with the revenue coming from coffee/tea sales, book sales, and especially for the Americans, a little piece of the most expensive land ever in a little jar. A piece of the "auld sod". It was €353 a sq ft plus stamp duty plus solicitors fees back in 2004. Or else a little piece of wood or a piece of a brick, the same as some people went crazy buying and collecting momentoes of the Berlin wall when it came down. There are a few other revenue streams to be exploited but because it is so unusual he said he does not want it discussed at this stage. Its one of these things that gains momentum, and with the existing help from someone experienced in the tourism sector I see potential. 

I can picture the Americans when they go home.
_" Hey Chuck, you'll never guess what I saw over in Ireland. Beside the open car park I came across the most expensive land ever in Ireland outside of Dublin. A buy-to-let at 17 million euro an acre...crazy I tell you. I even bought a little bit of it ha ha ha. See this little jar and certificate? Genuine original. And you know what, those goddam Irish must have been as small as leprechauns a few hundred years ago, the doors in the cottage were only 5'6" tall and so narrow I had to fit through sideways ha ha ha. And you think our banks are bad? Some fellow dressed as a leprechaun showed me documentation that those crazy Irish bankers who lent the money thought this buy-to-let, at 17 million an acre in a side street in a quaint little town was "in good shape and good security." He said "the bankers must have thought there was a pot of gold at the bottom of the garden, begorrah"! Naw, but there may be gold dust is this here little jar of Irish soil, surely the luckiest Irish soil ever to have been sold and valued for so much ha ha ha. Very interesting and entertaining. It brings to life and says a lot about that celtic tiger we heard about. " _




dub_nerd said:


> Property bubbles are not that uncommon and are not remembered for very long, and to be quite honest many people in Ireland seem to want ours back a.s.a.p.


You will admit a 96% drop in the value of a buy-to-let is spectacular? And valuing property at €17,000,000.00 per acre in a side-street in a town in the west of Ireland is absolutely ridiculous? 
If, as you say, many people in Ireland want ours back asap it just shows that Irish people are always interested in property, the price of land, a piece of the "auld sod". Think of the play " The Field".


----------



## orka (5 Feb 2013)

honest said:


> I can picture the Americans when they go home.





honest said:


> _" .....It brings to life and says a lot about that celtic tiger we heard about. " _


Except this isn’t really about the Celtic Tiger is it? Whatever small interest there might be in seeing some of the monuments to celtic tiger greed, I can’t see this being an attractive example. At best, the owner is inviting people to look at how he was the stupidest of all stupid celtic tiger investors. But if the facts are as you outline, this is actually about the sad exploitation of a mentally ill man with no-one to protect his interests. Not exactly a feel-good story for the tourists is it?

I am curious about who sold the property (not a name – just the type of person/connection to town, other interested parties), whether there was any connection to the valuer, solicitor etc. and how the price was set. If the property really was hopelessly overvalued at the time (which I think we all agree it was), who came up with the grand plan to set a price of €1.4M and think someone would pay it? I don’t get the impression from your posts that the valuer went in blind to the price and independently came up with €1.4M as the price – he did what most valuers at the time did – looked at the price and said ‘yup, that’s the value’. If he came up with the price independently, I would certainly look to see if there was any connection with the sellers or other interested parties.

And please, I think you can take it that readers have noticed your view that the price was (a) 17M per acre and (b) the most expensive piece of land outside Dublin. I presume you or someone competent has calculated (a) and I don’t know if (b) is true but there is really no need for you to repeat these ‘facts’ over and over and over – you seem so abnormally fond of repeating them several times in each of your posts, that it is hard not to think you are either the owner or a potential investor coming up with a marketing pitch for tourists.


----------



## Mrs Vimes (5 Feb 2013)

honest said:


> anyone know of the next most expensive property outside of Dublin?    The 17 million an acre in 2004 is a record by how much?




I know I shouldn't feed the troll, but.....

Tiny terraced house in Cork city sold in 2006 for 220,000. Footprint wasn't more than 400 sq ft which I make about €24m per acre.

Anyone want to work out what apartments in Bandon or somewhere would have been "per acre"?


----------



## honest (5 Feb 2013)

Thanks for your constructive criticism. I think the success of the venture will be making it in to a fun, educational experience for visitors. The visitors / tourists may not be interested in knowing if the purchaser in 2004 was attending a consultant psychiatrist or not. And if they did know that, so what? the best of people may need to visit such a person at some stage in their lives. Look at Ben Dunne - he was a different league of businessman, but he put his hands up and said he was sorry and he was unwell once, and he meant it. People forgive his behaviour then. I think the tourists are always interested in seeing things which are very unusual, bizarre, amusing, etc. Framed copies of different valuations will be very informative and help sell pieces of what was once Irelands most valuable land or whatever. The thing will be to make it unique and fun. See my previous post.

As regards the estate agent who sold the property, his job was to get the highest price so he cannot really be faulted. Irrespective of the price paid or potential link between parties involved ( its none of my business to probe in to such conspiracy theories ) the fact remains the building society valuer valued the property as he did, and the building society lent the money. Yes the borrower behaved very foolishly, but it was the building society which was supposed to act professionally and competently in lending such large amounts of money. They have many questions to answer yet. The leprechaun ( or person in period costume from 209 years ago ) will have to think up some joke about the 3 utility rooms on the building society valuation but which were not there in real life !  Its going to be fun. Besides, the town is crying out for tourist attractions during the season. And it may help to pay back the loan. Any income from the property is better than none.


----------



## orka (5 Feb 2013)

honest said:


> visitors / tourists may not be interested in knowing if the purchaser in 2004 was attending a consultant psychiatrist or not. And if they did know that, so what? the best of people may need to visit such a person at some stage in their lives.


My comments weren't meant in any way to cast aspersions on the buyer or the fact that they were having mental health issues. I just think that a large part of this story was caused by the mental health issues, not the celtic tiger per se - sure, the lenders' largesse (and valuation stupidity) was driven by the celtic tiger but this is not a classic celtic tiger tale of greed on the part of the borrower combining with greed on the part of the lender. Knowingly (my gut feeling) or unknowingly (I'll be charitable) by the other parties, the buyer was taken advantage of. The buyer had assets at the time and was probably seen as a soft touch for a cold call - by people who knew him or of him - I don't imagine many other out of work people earning 15K a year were targetted with 1.4M properties. The more I think about it, the nastier I find the whole story but it is not a classic celtic tiger tale.


----------



## Gerry Canning (5 Feb 2013)

To Dermott in particular. I like your questions ,but as this general {mortgage mess} unravels ,this story is quite believable. Our poster may have his agenda ,but experience is showing us that the plethora of players Bank/Broker/Valuer/engineer/ all fed off the Hubris.. Whilst this customer was {unwise} methinks he was led by {professionals} who negated their duty of care.


----------



## honest (5 Feb 2013)

Mrs Vimes said:


> I know I shouldn't feed the troll, but.....


I can assure you I'm not a troll.



Mrs Vimes said:


> Tiny terraced house in Cork city sold in 2006 for 220,000. Footprint wasn't more than 400 sq ft which I make about €24m per acre.


 
 The terraced properties I'm referring to, in a town a fraction the size of Cork, have a footprint of less that 400 sq ft each and yet they were valued in Jan 2005, in very poor condition in all fairness, at an average of €470,000 by the building soc. valuer.  They had back "gardens" though, albeit very overgrown.  I assume the one you mention in Cork had a back garden / space out the back?  If not, not you have a link or source, even an estate agent you can p.m me the details of so I can pass it on to be verified please?   I agree €220,000 was closer to the expected price for  terraced houses then, and the independent valuation in late 2005 was much closer to that than the €470,000.


----------



## Bronte (6 Feb 2013)

Honest, I'm going to be honest with you. Nobody is going to be interested in seeing some silly terraced houses as a monument to how much they cost.  (and as others have pointed out to you we on AAM are really bored with how much it cost - we've seen too much on AAM, and don't need you to point it out every second post, all we want to do is try and sort out the problem if possible) 

Tourists and Irish people have far better things to be doing or seeing. So the original purchasers needs to get over it. He made a mistake and this scheme is not going to right that. Most American's that come to Ireland are on bussed tours with specific destinations in mind (Bunratty, Blarney etc). I cannot even believe I'm going into this. 

Could you please tell me why the bank has not taken back the properties. Surely they are writing horrible letters to the purchaser? I really do hope the purchaser is not being persuaded once again by others that this mad cap scheme is a good idea. Seems to me it's another way to get at his remaining money. If it's you than you really need some proper professional financial and medical advice.


----------



## dub_nerd (6 Feb 2013)

honest said:


> I went to Amsterdam and there was a queue around the block of about 500 people to see Anne Franks house, and there was nothing specatular to see in it after all the waiting. Worth seeing all the same. I'm not saying the attraction will have the same pulling power, but still, just goes to show what can be done.


 
According to Wikipedia, Anne Frank is "one of the most discussed Jewish victims of the Holocaust" whose "diary has been the basis for several plays and films". When you Google her you get 71 million hits. Not meaning to pour cold water on the idea, but I'd hate to see someone who has already been financially disappointed put a lot of effort into something that sounds, on the face of it, like it could be a total flop. Best of luck if it goes ahead.


----------



## alica (6 Feb 2013)

It is seems to me, that OP started this topic only to get an approval on this mad idea about museum...

if this is a case- please- *NO, NO, NO*!
this idea sound for me even worse, then original "buy to letderelict cottages" scheme...

even biggest and famous museums like Uffizi's in Florence won't survive without governments donations, not to mention Anna Frank museum...

if you really a good friend of a person in such a horrific financial situation, you have to talk him off this idea and start to think abound bankruptcy option ...


----------



## terrontress (6 Feb 2013)

A museum will bring all kind of issues.

He will have to get liability insurance. He'll have to get tickets and promotional material printed as well as the certificates to certify the authenticity of the soil being sold.

He'll have to pay VAT on tickets and sales from the proposed gift shop.

He'll have to employ people to wear the period costume and run the gift shop and coffee area. Pay them their wages, deduct PAYE, USC, PRSI and all the other hassles that come with employing people.

He'll have to ensure that local knackers don't start taking an interest in the place and start causing trouble, hanging round when it is shut, breaking in to the gift shop, graffittiing, starting fires, using drugs.

He'll need to make sure the coffee area meets all the health and safety requirements and that you have proper toilet facilities, disabled access, fire escapes throughout.

All I can do is wish him all the best for it. If, after having done all the above, he has enough of a trade coming through the door to make anything to pay back the building society, after having taken a manager's wage of course, then good for him.


----------



## honest (7 Feb 2013)

terrontress said:


> He'll have to pay VAT on tickets and sales from the proposed gift shop.


The person leasing it / running it will not have to register for vat until turnover reaches a certain threshold. 



alica said:


> even biggest and famous museums like Uffizi's in Florence won't survive without governments donations, not to mention Anna Frank museum.


 
I am not saying the new tourist attraction will be like the Anne Frank house. She and her attic hideaway are such an iconic story from WW2 that nobody could compete with that. However, in 2011, the Anne Frank Foundation used the €14.3 million ($18.9 million) in revenues from tickets and merchandising to pay for its staff and activities worldwide, including exhibitions from Berlin to Buenos Aires, brochures against racism and extremism and educational materials. However, its not envisaged it will be that type of museum. Its not true when you say Anne Franks house would not survive without government donations.  Links are available, easily googled.

The property in the west has to capitalise on its own unique strengths. You think nobody will buy "lucky Irish soil"/ The most valued Irish soil ever? Well, do you think anyone would buy ordinary Irish soil? Did you know in the States, Irish-Americans ( and there are 40 million of them ) sometimes throw packets of Irish soil on the graves there. http://www.nytimes.com/2007/03/17/nyregion/17dirt.html?_r=0

If others can sell millions of dollars worth of ordinary Irish soil, what do you think about soil which (the bank thought!) must have had gold dust in it? lol. Lucky magic soil, with a genuine leprechaun cottage on top, with its 5'6 inch high doorways. Soil which has the power to make 3 utility rooms (which were on the bank valuation) vanish without a trace or explanation. 

Its thought the person who may be leasing may envisage it only being open for a few hours each day during the tourist season. I gather it may have lunchtime performances as lunchtime is when some coaches deposit their tourists for lunch and shopping nearby in the town. An up and coming comedian ( he's still a third level student but he's really good and has theatre experience ) is going to have a field day ....it will not be difficult to make fun of the celtic tiger story, the buy-to-let property the bank thought was "in good shape and good security", bank mismanagent etc. Special concession rates, if not free entry, will be offered to bankers etc, as everyone loves them. . 

Who would have thought anyone 30 years ago selling Irish drinking water would succeed? Who thought Mrs Browns boys would work in the UK? Who would have thought selling lucky Irish soil to homesick Americans would never succeed? 

Rather than the borrower go to England now, " Whats another year"? as Johnny Logan would say. If there is no risk to the borrower, and he's going to England sooner or later, maybe he will give it a go. Nothing left to lose, and all that. It'll be fun if nothing else.



Bronte said:


> Surely they (the bank) are writing horrible letters to the purchaser?


For one thing, I think they are a bit embarassed they never asked themselves or him how was he going to pay all that money back, the 2.5 million inc interest out of after-tax earnings over 20 years. He has asked them that, looked for calculations and they cannot answer. Plus he has already paid them more than the property was ever worth in reality.

This is my last post in this thread, because its repeating itself, and out of respect to Mr. Burgess and the site. The borrower can make up his own mind - I do not think I've said anything that will not be going public. Thank you all.


----------



## Kev (7 Feb 2013)

alica said:


> it is seems to me, that op started this topic only to get an approval on this mad idea about museum...
> 
> If this is a case- please- *no, no, no*!
> This idea sound for me even worse, then original "buy to letderelict cottages" scheme...
> ...



+1


----------



## Bronte (7 Feb 2013)

honest said:


> Plus he has already paid them more than the property was ever worth in reality.


 
What are you saying here.  That he has paid them a sum equal to it's current value of 75K.  Or has he paid them more than that?  Would it be possible for you to not talk about the museum for a while and just concentrate on the figures?


----------



## terrontress (7 Feb 2013)

Once the museum is up and running, come back and let us know. I would be very interested to go and see it.


----------



## honest (7 Feb 2013)

Bronte said:


> What are you saying here. That he has paid them a sum equal to it's current value of 75K.


No. I said "more than the property was ever worth in reality." He paid them more than it was independently valued at in late 2005, which was a hell of a lot more than 75k. Even though he has paid a seven figure sum ( i.e. over €1m. )  inc interest the "arrears unit" has still been pressurising him to increase payments, and not willing to answer questions - even those sent by registered post - fully or properly. Shameful. I am not going to go in to specifics or clarify any more points. This is definitely my last post in this thread, thanks.


----------

