Case study Family Home sold - How to deal with mortgage shortfall?

Bronte, thanks for your post and your insight pretty much sums it up what happened. We've been left with nothing....

Brendan, we were forced out of our home - perhaps not directly through court action, but we did receive a letter at the end stating that if arrears weren't paid, legal action would commence. The three options I outlined, are not really options are they -

The mortgage was clearly unsustainable, the dogs on the street could see that - Brendan, what are you suggesting, that we should have been stubborn and stayed in the home and wait to be formally repossessed? This would not be in our interest or indeed PTSB - we would have to continue in a home that was no longer ours, accrusing further arrears - and the bank would have to spend additional money in legal actions to remove us -

We agreed to sell as we needed to move out as it was affecting our health, as indeed it does to many in this situation - believe me, it broke our hearts to have to leave our family home and remove children from their familiar surroundings - what then enter another unsustainable situation - homeless with €175k of debt hanging over us -
 
Hi whatnext

I am blue in the face arguing that the country needs to face up to the fact that many mortgages are unsustainable and the borrower and lender must deal with that. You and ptsb have done that, and I respect you for it. I hope it will stand to you in your dealings with ptsb.

I find the language "PTSB who forced this family out of their house and got their pounds worth" very unhelpful. This was an unsustainable mortgage. You have lost out. ptsb has lost out. Now let's move on and see how best to deal with the shortfall.
 
44brendan said:
Not really. In reality the loss would be fully provided for in the books of the Bank. However, there are always prospects that a debtor will "come into money" further down the line. Whether that be an income change or receipt of capital. A bank would look pretty foolish if it had agreed a WO and a year later the debtor won the Lotto!!
It's not an ideal scenaro for someone looking for closure, but its considerably better than being pursued through the Courts for money tat you don't have.
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Given this approach, I can't see many other borrowers wanting to face up to their unsustainable mortgage - best stay in the home with a familiar roof over their heads than the prospect of selling the family home and not achieving closure on the shortfall.
 
whatnext said:
Given this approach, I can't see many other borrowers wanting to face up to their unsustainable mortgage - best stay in the home with a familiar roof over their heads than the prospect of selling the family home and not achieving closure on the shortfall.
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I'm curious as to why you didn't go for this option as many are doing?

I've been thinking about your case. If the bank had written off the NE would you have been able to pay the mortgage on the reduced balance? Did PTSB ever discuss that option ?

Also could you tell us how you found PTSB to deal with?
 
Bronte said:
If the bank had written off the NE would you have been able to pay the mortgage on the reduced balance? Did PTSB ever discuss that option ?
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Hi Bronte

Is any bank writing off the negative equity? I haven't come across it yet, although it may happen under the Personal Insolvency Arrangements.

Even where it is written off under a PIA, there is a clawback if the house increases in value.

Brendan
 
We don't know if banks are writing off NE. We know banks are allowing people in NE to sell. But we don't know yet what the banks are going to do about the NE. In this thread the OP is paying back the NE which is now called a shortfall. But I've been told by a professional that the banks are ignoring the shortfall in some situations, but they won't acknowledge this in writing.

My own feeling is that where the bank thinks the borrower cannot pay the mortgage they will let them sell and then the bank will just for now ignore the NE/shortfall, but I'm pretty sure they are going to wait until near the 6 year statutue of limitations and then see if the borrower is now in good employment and has acquired assets and will then go after them. They did this in the UK about 20 or so years ago.

Whatnext, my advice to you is not to pay the bank anything. You are on social welfare and we know that the courts will not order installment orders in such circumstances (I'm open to contradiction on this). By continuing the repayments, and I think people should pay back their debts and that it's good to try, I don't think people should pay when their only income is social welfare. I consider that you are only continuing the misery for yourself and extending the amount of time the bank can come after you. If you don't pay for 6 years and they don't pursue you then it's my understanding that the debt is unenforceable.
 
Bronte - thanks for your posts.

Yes, if the bank had written off the NE, then it was likely that on regaining employment again that we could have resumed payments. I made IO payments when on contract work - and the IO payment was a significant amount - it would have paid the mortgage had NE been written off - No - We were never given this option - instead were advised all options had been tried and the best solution was to sell to reduce our overall indebtedness.
 
Just to be clear, the banks are not writing off debt while the owner retains ownership of the hosue. So they are not writing off negative equity as such.

They may be writing off the mortgage shortfall after the home is sold. In most cases, they are not bothering to chase it, but retain the right to do so.

Brendan
 
whatnext said:
instead were advised all options had been tried and the best solution was to sell to reduce our overall indebtedness.
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And looking back on this, overall, are you happy with your decision? I realise it was a difficult decision and you were put through a lot of stress but do you feel you made the right choice?
 
Bronte said:
...they are going to wait until near the 6 year statutue of limitations and then see if the borrower is now in good employment and has acquired assets and will then go after them. They did this in the UK about 20 or so years ago.
.
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How do they check this? Do they check with the ICB? Or summons one back to court to produce bank statements, PRSI payment details etc?
 
I am just wondering was "Mortgage to rent" ever suggested by the banks. It may have been a better solution for your family than the sale.
 
@ Bronte - we didn't have much choice but to sell given the options presented to us

@ ClaireM - No, mortgage to rent was never suggested by the bank - our only options were the three I outlined
 
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