Does anyone here have experience of how banks treat guarantor?

[zxcvbnm]

My situation is as follows.

I bought 3 investment properties over the years.

For the last property of the 3, the bank only agreed to giving the mortgage if i had a guarantor to sign for up to EUR100k for that particular mortgage. My mother signed as the guarantor.

I subsequently took out a further re-mortgage as prices rose.(not related to this property)

I got into financial difficulty due to the crash - repayments changed from interest only to capital and interest. I was unable to pay - the bank asked me to sell.

My understanding at the time was that the guarantor applied only to the final mortgage. We didn't get any legal advice when signing the guarantee at the time as it all seemed very straightforward.


However - the bank have now come back to me today and said that the guarantee included a catch-all statement whereby it would also be called in for any other debts owed to them.(Apparently thsi is in all guarantees)
Effectively - my mother unknowingly has acted as a guarantor for all loans either taken out before she signed - as well as any loans thereafter.

My debt is with AIB. I have voluntarily nearly completed sale of 2 of the properties as per AIBs request.

I purposely held off selling the one my mother signed for in the hope that property price rises would erode the debt on that mortgage - thereby reducing the exposure of my mother - as well as give me time to put savings towards that mortgage (which has happened)
However i now realise that was a futile exercise seeing as i have huge other debts to AIB which are significant (c. EUR400k of residual debt after properties sold) and the guarantee covering all these also. (up to EUR100k max for my mother)
(I am expecting some deal to be done re the residual debt)

SO - my queries are 2-fold:

FIrstly
For the final property, I could voluntary sell it on behalf of AIB like i did teh other 2 properties.
But if they are going to claim the entire EUR100k from my mother anyway then i have no incentive to bother selling it on their behalf. I may as well just let them do it.

IS it an idea for me to go to AIB and say I will sell it as long as there is some forgiveness in the guarantee amount?

Secondly
WHile we mistakenly did not get any legal advice upon signing the guarantee at the time, the complete understanding through conversations with AIB was that it would only be related to that particular mortgage.At no point was it pointed out that it could apply to loans also.

Should AIB have had a responsibility to advise what it fully entailed?
And also - when AIB continued to give out more loans to me, shoudl they not have consulted the guarantor when doing so as obviously this increased the risk to the guarantor?

Lastly
Has anyone any experience in dealing with banks (specifically AIB) when it comes to guarantees? How agressive are they with guarantors?

Thanks

 

[Brendan Burgess]

Have you read the wording of the guarantee?

Have you had a solicitor read it?

I am surprised that it applies to borrowing after the guarantee as well.

When you say you have "nearly completed the sale", have you signed the contracts? If not, then you should not do so.

You need to get a good debt advisor to advise you on all this. They may well be able to negotiate a deal with AIB on your behalf. However, if you mother is good for the €100k, then they should and will pursue her for it. If you did not take legal advice at the time, then really it's your own and your mother's fault.

 

[zxcvbnm]

I have since read the signed guarantee and it basically covers all debts past and future.
All properties are nearly sold by voluntary sale.

I guess my question now is...does anyone have any experience in dealing with banks re guarantees when entering a debt write-down?

My mother is 78 - and she probably can afford it to be fair.
However - it would certainly cause distress. But it wouldn't make her homeless or anything like that.
Is it complete wishful thinking by me for them to go easy on her ? Or should i just assume they will take every last cent of the €100k from her?

Basically is there anyone reading this that has first hand experience of how a guarantor was dealt with by a bank?
I've scoured AAM and there seems to be nothing concrete about guarantors.