Court rejects PIA for woman to pay mortgage until age of 98

Mortgage: €72,500
House value: €180k - a 4 bedroom house in Limerick

Woman's age: 69

The woman appears to have little income but the proposal was that her children would help her pay €57 a month for two years and €238 a month after that until the woman was 98

The Court correctly rejected this PIA.
But the astonishing thing is that the Personal Insolvency Practitioner and his legal advisors thought that there was a good chance of getting this approved.

Why does she need a PIA at all?

Other options worth exploring

1) She could have anticipated this problem 10 years ago and tried to pay the mortgage
The children could have helped out.
She is living on her own in a 4 bed house - she could have taken in tenants.

2) Trade down
She is living on her own in a 4 bed house.

3) A lifetime mortgage
Spry Finance will lend her 24% or €43k.
The kids could come with €30k.

4) The kids could buy the house from her for €72,500
The children may be able to get a mortgage or a credit union loan for €72,500

But no. Much better to avail of our outrageous legislation and try to impose a solution on the lender and as a result, 300,000 other mortgage holders will pay for her mortgage many times over in terms of higher mortgage rates.

Brendan

If the state wants to keep a single person living on their own in a 4 bedroom house, then the state could give her a Mortgage Assistance Payment.

Pay her mortgage for her and charge her 3% interest on it.

A much simpler solution than what is proposed.

By the way, I don't think that the state should be facilitating people to live on their own in 4 bed houses during a housing crisis, but if that it what the state wants to do, then they should pay for it.

Brendan

How is the solution deemed unaffordable? She'd be paying €238 a month.

Assume she has no other income or other assets, and no PRSI record. She will get a non-contributory state pension of about €1000 a month.

She'd be paying a quarter of a low income on housing, but has tenure for life. There has to be some trade-off for her here. She wants to remain living alone in a house with four bedrooms.

The bank wasn't unreasonable here. €108k is enough to house a single adult in Limerick.

The court heard, in an attempt to resolve her debt, the bank offered Ms Fennell €15,000 to assist with relocation costs, on top of the €108,000 equity she has in the property, if she left her home.

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She could have sold it and one of her kids could have built on a granny flat with the money she had left. We do have a crazy system.

"..granny flat"

Seriously! How do you have any idea where the adult children are now living?

So called "trading down" sounds grand in theory, it pre-supposes that there is a local suitable property available.

As to why a PIA was even needed - I suspect there's more here than we are being told.

In fairness, it is her home for years. She does deserve the choice to stay there given all the memories she has of it so trdaing down is a very harsh option for the majority of people. As usual there is probably way more to this.

elcato said:

In fairness, it is her home for years. She does deserve the choice to stay there given all the memories she has of it so trdaing down is a very harsh option for the majority of people. As usual there is probably way more to this.

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There's lot of things she can do to stay in the house if that is her priority.

It's also harsh on the people paying higher interest rates to fund people to live in houses that are beyond their means, or trying to get onto the property ladder themselves. Why should someone else be obliged to rent in a house-share just because she doesn't want to take in a tenant?

odyssey06 said:

It's also harsh on the people paying higher interest rates to fund people to live in houses that are beyond their means, or trying to get onto the property ladder themselves.

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Yep. I agree, but I was referring to quite often a flippant comment of the option to trade down in general. It's easy to be someone's mirror but still not easy for the person looking at it.

Thirsty said:

As to why a PIA was even needed - I suspect there's more here than we are being told.

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No PIA was needed. She had plenty of solutions.

But clearly an expectation has grown up that if someone can't or won't pay their mortgage, then the rest of the mortgage holders should pay it for them. It seems that while many people move home on a few occasions throughout their life, many other believe that it is wrong to ask a 69 year old to vacate a 4 bedroom house which she can no longer afford.

Brendan

I certainly don't see what's harsh, flippant or objectionable to suggesting moving/trading down as one possible option in a case such as this.

Whatever about that, when I read about it this morning I wondered what on earth the PIP was thinking in coming up with this harebrained strategy.

ClubMan said:

what on earth the PIP was thinking in coming up with this harebrained strategy.

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It wasn't harebrained. The Courts have imposed some crazy decisions on banks. So if the PIP thought that the court would approve it, why not exploit the system on behalf of a client?

Brendan

Brendan Burgess said:

It wasn't harebrained. The Courts have imposed some crazy decisions on banks.

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Brendan, the words "crazy" and "harebrained" are practically synonymous so I'm not really sure why you're disagreeing with me here:

1) The court makes crazy anti-bank decisions.
2) It is right for a PIP to propose such a solution as there is a fair chance that the court will approve of it

I am saying that the courts are often crazy.
You are saying that PIP is. I am saying that the PIP is dead right.

The full judgment may be read here:


Jim Stafford

If you look at the judgement you can then find the house on google streetview (I won't link).

It is really nothing special at all. A typical 60s or 70s 3-bed semi in an estate.