# what if i freeze my payments for set period of time



## annemarie (5 Jun 2012)

Hi all

We are really stuck. We are in a tiny house (family of five), worth about €300,000 with negative equity of €100,000. We are willing to move out of the city to larger but cheaper mortgage, pay a lump sum back to the back in so doing, but I don't think we could transfer the negative equity or get a new mortgage even for a much cheaper house. A modest extension (€30,000) would make our current house more liveable in. What would most likely happen if we wrote to the bank and said we were freezing our repayments for a period of two years to fund this, with a guarantee of returning to normal at the end of that time. If they refused, as they would, and we just forged ahead, what could happen?

Many thanks
AM


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## oldnick (5 Jun 2012)

Any regular contributor to this website will advise you that it is plain silly to just unilaterally tell the bank that you won't pay them for a couple of years.

There is a chance that ,what with all the bad loans they're dealing with, the bank may not gte around to actually dealing with you for some time. You'll get nasty letters, phone calls and sooner-or-later threats of repossession, which eventually they'll try to carry out.
It's possible by this time you'll start repaying them and possibly everything will be fine.

On the other hand, the bank may justifiably be annoyed with someone who just tells them -without  first talking and writing - that the bank will get nothing for two years. And they probably will come down hard and quickly on you. 

I suspect the bank will take the second course of action -quick hard action- and you would be most unwise to go down that road. Courts don't much love the banks but they don't like people who don't communicate properly with those banks.

I know this will take some months but you MUST talk to them and follow up your request in writing. Obviously, discuss the negative equity remortgage possibility. Banks are -under govnt and public pressure -becoming more flexible. And be prepared to write down every last details of expenditure,income etc. Have a couple of possibilities laid out.

Now - if the banks still play hard ball you have at least made sincere detailed efforts and are in a much stronger position if you delay payments.   However, I do think banks are -under pressure - becoming slightly more flexible with those who talk with them. Not talking is bonkers.


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## Brendan Burgess (5 Jun 2012)

If you don't engage with your bank, you will not be covered by the Mortgage Arrears Code, so they could seek to repossess immediately and the court will have little sympathy for you as Nick points out. I don't think you should take the risk. 

In my view, you should try to get the bank's agreement to sell the house and convert the neg equity to a loan. Then rent in the meantime. 



> We are in a tiny house (family of five), worth about €300,000



€300,000 can buy a fairly big house at the moment. The bank _might _let you transfer the negative equity to a house of the same cost but larger.

Brendan


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## demoivre (5 Jun 2012)

Brendan Burgess said:


> If you don't engage with your bank, you will not be covered by the Mortgage Arrears Code, so they could seek to repossess immediately and the court will have little sympathy for you as Nick points out. I don't think you should take the risk.
> Brendan



This is interesting. If the Op makes no contact at all with the bank regarding her plans how long before the bank tries to repossess - will they be keen to repossess a house with substantial negative equity? If the OP gets away without serious threat of repossession by the bank for, say 12 months of non payment, and then engages through MARP , does the bank have to give her a further 12 months before they move to repossess as she has now engaged with them?


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## annemarie (5 Jun 2012)

Thanks so much all for replies. I would absolutely talk to the bank first. I am just assuming that they will say no and wondering what would happen at that point. Also re selling Brendan, we wouldn't now get a 300K mortgage with new income guidelines etc. I presume there is no mechanism by which they would transfer a mortgage. We would be looking for 200K not 300K thereby giving 100K to the bank straight away. Part of the problem is that we have a 2nd home also in negative equity.


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## Brendan Burgess (5 Jun 2012)

demoivre said:


> This is interesting. If the Op makes no contact at all with the bank regarding her plans how long before the bank tries to repossess - will they be keen to repossess a house with substantial negative equity? If the OP gets away without serious threat of repossession by the bank for, say 12 months of non payment, and then engages through MARP , does the bank have to give her a further 12 months before they move to repossess as she has now engaged with them?



Very difficult to answer these questions. Contrary to the generally held view, all the cards are stacked against the bank.  Many people don't engage until the date of the court hearing for repossession and then the judge or the Master tells them to try to come to some agreement. 

Banks will repossess houses whether they are in negative equity or not if the customer is simply not paying anything. 

I would not take the risk.

Brendan


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## demoivre (5 Jun 2012)

Brendan Burgess said:


> Banks will repossess houses whether they are in negative equity or not if the customer is simply not paying anything.



Then why the need for these cases?


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## demoivre (5 Jun 2012)

oldnick said:


> On the other hand, the bank may justifiably be annoyed with someone who just tells them -without  first talking and writing - that the bank will get nothing for two years. And they probably will come down hard and quickly on you.
> 
> I suspect the bank will take the second course of action -*quick hard action-* and you would be most unwise to go down that road. Courts don't much love the banks but they don't like people who don't communicate properly with those banks.



How quick?  

Extract form here.


*Repossession proceedings*

  The lender must not apply to the courts to commence legal action for repossession of your property until every reasonable effort has been made to agree an alternative arrangement. If you are cooperating with the lender, they must wait at least 12 months from the date your arrears were classified as a MARP case (31 days after the first missed repayment) before applying to the courts.
  When a lender is calculating the 12-month period, it must exclude any period during which you are complying with the terms of an alternative repayment arrangement, appealing to the Appeals Board or complaining to the Financial Services Ombudsman under the Code. It must also exclude the period during which you can consider making an appeal.
  For pre-arrears cases, the 12-month period must exclude the period between your first contact about the pre-arrears situation and the setting up of an alternative repayment arrangement.
  The 12-month period does not apply if you do not cooperate with the lender; or if you perpetrate a fraud on the lender; or if there is a breach of contract by you other than the existence of arrears.
  The lender must notify you in writing before it applies to the Courts to start any legal action on repossession.
  Your property may be repossessed either by voluntary agreement or by court order - see our document on repossession. Even if court proceedings are started, the lender must still try to maintain contact with you to seek an agreement on repayments, and must put legal proceedings on hold if agreement is reached.
  The lender must explain to you that, if the property is sold and the sale price does not cover the amount you owe, you are still liable for the rest of the amount you owe.
  If your property is repossessed and sold, the lender must write to you promptly with the following information:


Balance outstanding on your mortgage loan account
Details and amount of any costs arising from the disposal which have been     added to the account
Interest rate to be charged on the remaining balance


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## Brendan Burgess (5 Jun 2012)

demoivre said:


> Then why the need for these cases?



Good point. 

There doesn't seem to be any consistency about the banks' responses. 

In the cases quoted, the borrowers are trying to get the permission of the lender to sell. The lender was refusing. 

In some very few cases, the borrower simply hands back the keys, or abandons the property, if the borrower won't agree or if they can't sell the house.

Most people don't like playing hardball with the bank e.g. simply abandoning the house. 

In the OP's case, she wants to hold onto the house. She is in danger of losing it and being faced with a massive shortfall if she stops paying the mortgage.


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## annemarie (5 Jun 2012)

If we provided a sworn affadavit that we will continue payments as normal in 24 months would the bank really go to that trouble I wonder

Anne Marie


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## oldnick (5 Jun 2012)

Every agreement with a bank is effectively the same as a sworn affadavit -that is, it is a legal binding contract. Your mortgage agreement was no different -you have already given them a written promise.

I think that any bank will regard any extra promise -from people owing them €400k, without any security except the 300k-worth house, and now leaving Ireland for a job abroad - as not worth the paper it's written on.

Just an opinion.

Look -you can easily rent that place -why enter into hassle with a bank ?


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## annemarie (5 Jun 2012)

Hi Oldnick. I think you have misunderstood my query. We are not wanting to leave the country for a job abroad. We are looking to downsize to a larger but cheaper property outside of the city or add a modest extension to our tiny house, but thanks for your contribution.

Anne Marie


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## oldnick (6 Jun 2012)

annemarie -I'm a silly old man . . I had just been looking at another post where someone in negative equity was going abroad for a couple of years and in my head I'd juxtaposed yours and his posts. Apologies for my confusing post.

However, still doubt that banks care much about any sworn statement above and beyond the existing agreement. 
But I'm  convinced that the bank won't be too harsh if you present them with facts and figures for the extension idea.  And, absolutely, there's nothing they'll do if you pay interest only for that period or even a year or two longer -there's  not one case of the even the nasty banks doing anything bad against anyone who has paid interest only rather than full payment for a short while.


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## annemarie (6 Jun 2012)

Thanks Nick that's really good to know. Very helpful. Thanks everyone


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