Case study 2 kids; ex not contributing to mortgage

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Arches1

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Personal and income details
Income self: public servant 40,000
Income history: 10 years public service - full time
Income partner/spouse: ex spouse - not sure of amount cant/wont pay
Income history:
number of children: 2 (one in creche full time)
Amount of Mortgage Interest Supplement received: 160 per month but near the end - bought first house in 2006
Home loan
Lender: ICS
Amount outstanding: 258,000
Value of home: Bank says 180,000
Interest rate: fixed 4.05 up in Feb 2013
Monthly repayment: should be 1306.00 1000 for 3 months from April 30th to June 30th. They have since agreed to keep it at 1000 for a further 6 months.
Amount in arrears: 3 months paid 1000 instead of 1301 so not much

Summary of discussions and agreements with the bank. In MARP since April - well contacted the bank at that time. They have agreed reduced mortgage of 1000 based on my earnings only. They have met with ex also to see if he could move in, rent out rooms and take over the mortgage and they said no - they said we could sell and pay back 80,000 neg equity which I couldnt afford with 2 children - ie: would have to rent a home with rent prices higher than what I am currently paying and also pay back negative equity.

Other loans and creditors - delete those which don't apply to you
Credit Union e.g. Loan of €8000 against shares of €3100

Other savings and investments
0

Any other relevant information

What is your preferred realistic outcome?
I have had a good few replies already but Brendan's template reads much easier when its down on paper. I want to move on as does my ex. If we are to do that one of us has to come off the mortgage which we cant, which I understand but I cannot pay the full amount on my salary (as agreed by ICS). So any advice is appreciated. Thanks.
 
Amount of Mortgage Interest Supplement received: 160 per month but near the end - bought first house in 2006
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I presume that you mean Tax Relief on the Mortgage Interest, rather than Mortgage Interest Supplement which is Social Welfare payment made to unemployed people?

Is your husband making any contribution towards the maintenance of your children?
It may be that you have to formally get a separation agreement to get your ex to pay towards the cost of the children which would include the cost of the house.

This is the bigger picture which you have to resolve.

Of course, getting an agreement and getting it paid are two different things.

Option 1 - Give your husband the house
The bank cannot stop you moving out and your ex moving in if that is what you want to do.
But they can agree not to take your name off the mortgage.
If your husband can't pay the mortgage, then the bank will come after you.
As this won't solve your problem and as you will have to find another place to live, I don't see this as an option.

Option 2- Sell the house
You will still have €80k of negative equity which you will be jointly and severally liable for. This means that if you husband does not pay his share, the bank will come after you. As you will have to rent a place as well, I don't see this being an option either.


Option 3 - Retain the house yourself
Mortgage| €258,000
Interest rate|4%
Annual interest|€10,320
Monthly interest|€900
€900 is proably the amount you would have to pay if you rented a house. So this seems to be the best option

If the bank agreed to allow your husband off the mortgage, your husband should pay you for the negative equity

In theory, with €80k of negative equity, your ex should pay you €40k to get out of this mortgage. But if he is not paying you any maintenance, presumably, he can't pay the €40k either.

Protecting your interest if you retain the house
Tell the bank that all you can pay is the interest on the mortgage. In fact, you should formally apply for the Deferred Interest Scheme and pay only 66% of the interest. They may then agree to interest only. But either way, you should not pay any more than the interest on the mortgage.

You and your husband need to do a side agreement where he renounces his interest in the home.

If he does not do this, he would retain the right to move back in at any time, as this woman has discovered after 4 years.

If he does not do this, and you pay any capital off the mortgage, he would benefit from it as his negative equity would be reducing. If the house goes up in value and the negative equity evaporates, he could force you to sell it, so that he would get his share of the equity.

If you had no children and were now independent of your ex, I would say that he should accept responsibility for repaying €40k of the mortgage. You would still be liable for the full mortgage, but you and he could agree a separate agreement whereby he agrees to discharge the €40k over time. If he agrees, you could ask the bank to split the mortgage into two accounts. This would be just an accounting exercise and of no legal effect. You would both be still jointly and severally liable for the mortgage.

Is there anything in the Insolvency Bill for you?
The Insolvency Bill won't help you at all. You and your husband could apply for a Personal Insolvency Arrangement but the bank would be likely to veto it. They wouldn't have any incentive to agree to it as long as you can afford to pay the interest.

I don't want to frighten you , but your husband could go to the UK and file for bankruptcy. The Official Receiver would offer you the right to buy your share of the property for €1. He would have no further responsiblity and you would be fully liable for the mortgage as you are at present.

Can you sell the house and go bankrupt in the UK yourself?
I don't see that you would achieve much by doing this. You would free yourself of the negative equity, but you would lose your secure job (unless you could avail of a career break?)
 
Brendan,

I was on leave and have only returned to a pc in the last day or 2!
Thanks for the detailed information, just to clarify - we were never married. Also I meant tax relief at source and not MIS, sorry.

The bank have agreed to interest only for 6 months based on my salary only. If he was to move in and me move out they would not take my name off the mortgage - they have asked him to come back to them in 6 months with more savings. My ex has decided to pay reduced maintenance only and save for the 6 months and go back to the bank to buy it - I know they will not allow this.

I think my best bet is to stay put for the moment as rent in the area for a 2/3 bed house is 900-1200 and I would not be guaranteed that he would pay the full mortgage. I have a public service job and with the children settled in school I do not want to go to England and uproot them. In time, I would like to go back to the bank and ask for an offset mortgage (not sure if this is the correct name) where I pay a certain amount and offset a % for a few years.

Again thanks for all the help on this.

Arches1
 
they have asked him to come back to them in 6 months with more savings. My ex has decided to pay reduced maintenance only and save for the 6 months and go back to the bank to buy it - I know they will not allow this.
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I don't fully understand this? Are they saying that if he comes back after 6 months with a lump of money to reduce the mortgage, they may allow him to buy the house from you and transfer the mortgage to him?

If the bank allows him to do that and takes you off the mortgage, go for it. That saves you €40k in negative equity.

Brendan
 
Brendan,

Yes the bank did indeed say that. They also told me the same thing 2.5 years ago when I first went to buy the house, they kept saying come back in a few months and we'll see. They also told me I'd need to earn a lot more to buy the house myself ie: 4 x salary = mortgage and yet they told him different. To be honest I think they are palming him off the same way they did me. I would definitely go for it if it all was as easy as that. When I said I could maybe get €10,000 together to put off the capital and take over the mortgage they said more like €40,000. His gross salary is also €7000 less than mine in an unstable career. I have asked them for an update on a long term solution but have had no reply as yet so I suppose I will sit tight on my interest only for a few months.
Thanks again for the help.
Arches
 
If they made a proposal, which would be acceptable if achieved in 6 months, you or your ex should write to them confirming your understanding of their agreement. This would boost your chances considerably or force them to write back denying what they offered.

Brendan
 
UPDATE to 2 kids: ex not contributing to mortgage

Hi all,

Current value of house: Unsure, possibly €200,000
House purchased for: €295,000 (mortgage 271,000)
Remaining amount on mortgage: 255,000
I had been paying € 1000 per month which was agreed with bank, however, mortgage fell into arrears when the full mortgage repayment (1388 pm) was put back into effect while an appeal was ongoing.
I am currently paying 640 per fortnight which is the full mortgage, arrears of approx 3000 will be added back in to the full amount of the mortgage.

Just wanted to update you and seek further advice if possible. Things are not going well in the mortgage paying front, well I'm ok but ex still isn't paying, he is now refusing to sign anything from the bank (ICS) and therefore I cannot benefit from the term extension they have offered. I have someone who wants to act as a guarantor to the mortgage, however I'm not sure ex will agree to this. I think the bank are likely to agree. I have been to a solicitor who stated if I was to go down this route I should do it before house prices creep back up.
I would appreciate any advice at all as I am unsure where to go from here.
 
Correct me if I'm wrong but my understanding of your position is as follows:
House and mortgage and in the joint names of you and your husband. You refer to your ex husband, so it's no clear whether you are divorced or legally separated. It appears that he is paying nothing towards the mortgage. However the property remains in joint names. property is in negative equity for c55K.
Any loan repayments other than interest are paying down this negative equity. However, as the house is in joint names, any payments you make are reducing the joint negative equity liability. Without your (ex)husbands co-operation or a court order you will not be able to extract yourself from this joint ownership/joint liability position. Until this is done you would be badly advised to continue full loan repayments or to give the bank any 3rd party guarantee (this makes no sense whatsoever!!!). You need good legal advice on this issue and should immediately look for a competent solicitor to act on your behalf. If your current solicitor is telling you to continue paying down the mortgage and get an independent guarantor for same, this does not appear to be good advice, unless there is further information that you have not disclosed!!
 
Arches, you were advised on here a year and a half ago not to pay down your ex's negative equity. You were advised to pay interest only but you have gone back to paying the full amount. Why did you decide to do this? The risks of paying off his negative equity have been outlined above.
 
Thanks for the replies. We we never married 44brendan and I'm sorry Lucuma I was only paying interest mainly (1000 pm) through an agreement but following a long term option offered under the MARP (Extension of mortgage term totalling 1217 pm) the bank chased me ONLY for the money and when I appealed throught the FO for a deal which was for BOTH of us I was told they had every right to chase only me. If I only pay my side of the mortgage I am blacklisting my own name am I not? This is my loan also and I can't 'not' pay my share. My ex partner was co-operating with the bank up to that point, signing letters etc but no payments were made towards the mortgage. I have 2 children, if I move and rent out a house I will be paying approx 1300 for rent in the school area. Does anyone have the name of a good solicitor so?
 
Oh and the full mortgage only went into effect this month but hasn't come out of my account yet. I don't think it will as my ex hasn't signed the agreement.
 
Block direct debits from your account to the bank immediately! Continue paying interest only by direct transfer (effectively rent for the property). Advise the bank that you are fully prepared to co-operate with them in respect of re-posession. You will both be liable for the equity shortfall following sale. This is where a good negotiator could get you a favourable deal in return for co-operation. Unfortunately, I cannot advise you on who to go to. I don't think you have given your broad location in order for someone to recommend a suitable negotiator (may or may not be a solicitor).
 
Thanks for that 44Brendan, I am in North Dublin but work centrally. I am so stressed out with the whole thing, I thought I would have to accept the extension after the FO ruled in the banks favour. I am worried I will never get a mortgage again if I sell?
 
Never say never! Your priority now is to resolve this issue as painlessly as possible. the last thing you need to be thinking about at this time is further borrowing. hopefully you can access a good negotiator to help you deal with the bank!
 
Thanks 44Brendan, I would appreciate any names of negotiators and/or solicitors if anyone has used them in the central Dublin area.
 
Arches1 said:
I was only paying interest mainly (1000 pm) through an agreement but following a long term option offered under the MARP (Extension of mortgage term totalling 1217 pm) the bank chased me ONLY for the money and when I appealed throught the FO for a deal which was for BOTH of us I was told they had every right to chase only me. If I only pay my side of the mortgage I am blacklisting my own name am I not? This is my loan also and I can't 'not' pay my share. QUOTE]

Arches, I think you are trying very hard to be a good law-abiding citizen and it's not serving your longterm interests. Of course you don't have to do what the Financial Ombudsman or bank tells you to do! You absolutely do not have to pay your mortgage just because the FO pointed out that you are jointly and severally liable for the mortgage. That's a well known fact, it didn't stop your ex from not paying did it?! So two can play that game. There are thousands of people in this country at the moment that should be paying their mortgages but they're not paying anything or they're paying what they can afford, to try and force things to a head.


Yes you will affect your credit rating if you let the mortgage go into arrears, but really at this stage, so what? Is your credit rating really all that important that it's worth paying down your ex's debts for?

Reading back through your thread, I think it's a pity you didn't let your ex move into the house and rent out rooms as he had proposed to do. You said the bank ''wouldn't allow' ye to do this, but as Brendan pointed out, the bank cannot prevent ye from doing this. Is there any possibility of getting that idea back on the table? Then the house and mortgage would become your ex's problem not yours. You could rent, and stop contributing to the mortgage altogether, let your ex sort it out.

Failing that I suggest you ask your ex if he's willing to agree to sell the house. You have a few things going for you - your house is in Dublin and your negative equity is not that bad (and getting smaller as house prices rise). The fact it's in Dublin and is presumably a decent family home means the bank are likely to agree to the sale. Once it's sold, the outsanding neg eq of 80k or whatever could be converted into a long-term loan over 20 or 30 years, making it quite affordable as a monthly loan. I know you said you don't want to get caught for your ex's half of this negative equity, but don't you see by signing up for this 1217pm you're paying off his half of the negative equity anyway! Whatsmore you're paying a whopping load of extra interest to the bank as well due to the restructure of the loan. And all that for him to own half your house in 20/30 years time! A house jointly owned with an ex, is a house not worth having in my opinion.

Rent in the area you want is 1300 and this restructured mortgage is 1215, that's not that much of a difference.

If you sell and your ex refuses to pay his half of the negative equity outstanding loan, can't you take him to the cleaners in court for maintenance?
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Thanks for the advice Lucuma, I know I am being foolish in paying the full amount, the advice I received from the solicitor wasn't that detailed. I wouldn't trust my ex to live in the house and rent it out as he has gone back on his word for many things over the last few years, including maintenance, my name would still be on the mortgage and associated with him. An auctioneers rang me at lunch time as I had been in touch with them previously to value the house, he stated the house would sell for 250,000 to 260,000 if that was the case and the house is now worth that I would have a chance to get him off the mortgage. I really want to stay there, I know if I had to move of course I will. I will get to a solictor/negotiator asap and update you all. Thank you all for your help.
 
Update. Im not sure if these replies are read or relevant now since the buyer climate has changed so much. Anyway, after a total nightmare of a sale, I am in my newly purchased house since February. I had arrears, forbearance but was given a new mortgage (trade down) with the same bank. My ex got half of the profit from the sale, it wasn't much and for sanity sake I let it go, however, my solicitor was absolutely awful to the point where he tried to redeem the mortgage 3 times causing me to pay a mortgage on a house I moved from. He also halved money with my ex from management fees I paid for the house as they had to be paid up to April this year. It was a long road but it can be done. I'm now arrears free, ex free, new mortgage and hopefully solicitor free! Thanks for all the help guys. :)
 
Great news Arches, wonderful for you that the house prices went back up, the neg eq was eliminated and your ex consented to a sale. So tell me is your new house a joint mortgage........ :-o
 
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