getting a friend to assist with a written down loan

M

Mr B

Guest
Hi,

My first time posting on here, I'm not sure if this is in the correct forum, I had a good scan, sorry if it needs to be moved.

I have a hypothetical scenario - I just want to know: is this legal? I apologise if a similar proposition has been posted before.

Man A has a BTL mortgage with Bank of Seanie on a 4 bedroom house in south Dublin. He is in arrears on the mortgage.

BoS wants to do a deal with Man A whereby Man A sells the house for 100k and pays off the bank. There are no repossession, PIA or bankruptcy proceedings in place, the bank is trying to exit the market and just wants to cash out of Ireland, hence the bank is offering Man A a deal. Similar properties in the area are advertised for around 200-250k, but of course asking prices should be taken with a pinch of salt.

Man A has 100k sitting in the bank. He transfers this to Man B, whom he trusts, and Man B buys the house off Man A for 100k. Man A pays BoS their 100k. There is no relation, family or financial, between A and B.

Once the bank are paid off and close the file on Man A, Man B then immediately sells the house back to Man A. It gets done by the book, revenue get their capital gains money, solicitors, estate agents and all the usual folks get paid, Man A gets his house back, bank gets paid off.

Alternatively, Man B sells the property at market for more than 100k, once again it gets done by the book, revenue get their capital gains money, solicitors, estate agents and all the usual folks get paid. A and B split the remaining profit.

I hope you find this one original and not too hare brained!
 
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Brendan
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This sounds like it would work if the the Bos gives a legal document that the debt is satisfied and they wont register a judgment for any shortfall on the original mortgage.
 
Mr B said:
Hi,

My first time posting on here, I'm not sure if this is in the correct forum, I had a good scan, sorry if it needs to be moved.

I have a hypothetical scenario - I just want to know: is this legal? I apologise if a similar proposition has been posted before.

Man A has a BTL mortgage with Bank of Seanie on a 4 bedroom house in south Dublin. He is in arrears on the mortgage.

BoS wants to do a deal with Man A whereby Man A sells the house for 100k and pays off the bank. There are no repossession, PIA or bankruptcy proceedings in place, the bank is trying to exit the market and just wants to cash out of Ireland, hence the bank is offering Man A a deal. Similar properties in the area are advertised for around 200-250k, but of course asking prices should be taken with a pinch of salt.

Man A has 100k sitting in the bank. He transfers this to Man B, whom he trusts, and Man B buys the house off Man A for 100k. Man A pays BoS their 100k. There is no relation, family or financial, between A and B.

Once the bank are paid off and close the file on Man A, Man B then immediately sells the house back to Man A. It gets done by the book, revenue get their capital gains money, solicitors, estate agents and all the usual folks get paid, Man A gets his house back, bank gets paid off.

Alternatively, Man B sells the property at market for more than 100k, once again it gets done by the book, revenue get their capital gains money, solicitors, estate agents and all the usual folks get paid. A and B split the remaining profit.

I hope you find this one original and not too hare brained!
Click to expand...

I think it would be legal but complicated. Might be simpler if Man A offered the bank 100k for settlement of the outstanding debt. Obviously, he would not tell them he has 100k sitting in a deposit account but could say a relative would lend it to him, that's if they care. Sounds like a good deal for Man A but you don't say what the mortgage is which would interest a lot of people on here.

Slim
 
Sounds like fraud to me.

Man A has €100K sitting around but is deliberately defaulting on his mortgage???
 
Why doesn't ManA just give the bank the 100K in full and final settlement. Or is it that the bank do not know ManA has 100K and if they did they would want more than 100K?

Where's the profit to be split? The difference between 100K and the value of 250K. Better for B to sell as another transfer to A is way too complicated.

A cannot trust B with the money.

If B buys for 100K which is below market value that will trigger tax.

Poster Mr B has the bank offered to cut you a deal on your mortgage?
 
The title of your post is too vague. Please edit it in line with the Posting Guidelines.

Brendan

apologies, I have fixed it
 
Slim said:
Sounds like a good deal for Man A but you don't say what the mortgage is which would interest a lot of people on here.

Slim
Click to expand...

several properties, average mortgage is around 450k, bank will settle them all for average around 100k.
 
Bronte said:
A cannot trust B with the money.


Poster Mr B has the bank offered to cut you a deal on your mortgage?
Click to expand...

I am Man B, I can be trusted with the money.

The issue is can I trust Man A?

If I can help out a friend and make a few quid I will do so but I have a squeaky clean record with the banks and under absolutely no circumstances will I get my hands dirty.

Probably going to walk away from this one. There are too many variables for my liking. Thanks for bringing up interesting points of information. Glad some people thought it was an interesting scenario.
 
Is what you are saying that ManA has several properties, that the bank want rid of the mortgages and is willing to cut a very good deal. But ManA who has cash does not want the bank to know this?

ManB, yourself has little to lose as it's ManA's properties and money. ManB can take the ownership of the property and sell it and divide up the proceeds as he would have full control as owner.

It is ManA who would be taking the risk. ManB would want to run the scenario by his own solicitor and maybe as an initial outlay for the advice ManA might fund this. You wouldn't want to be taking the advice of us mere strangers on the internet for such a fantastic scenario.

ManA if he is getting a deal from the bank would want that the writing and run it by his solicitor and would probably have to sign a confidentiality clause.

Could you tell us what percentage the bank is willing to write down debt, don't need to know the amount just the percentage.
 
Mr B said:
several properties, average mortgage is around 450k, bank will settle them all for average around 100k.
Click to expand...

wow! That's a hell of a write down! Minimum €1.35m in mortgages settled for €300k? Really?
 
Bronte said:
Could you tell us what percentage the bank is willing to write down debt, don't need to know the amount just the percentage.
Click to expand...

don't see how this really matters, but since you gave good advice earlier in the thread it's around 80%. I know 4 people doing similar deals all 70-80% writedowns on amounts ranging 875k to 4m.
it's worth pointing out that Lloyds sold 360m of commercial loans to Kennedy Wilson and Deutsche bank earlier this summer at an average 83% discount to par value so 80% writedowns aren't as ridiculous as they sound.

not sure if I can name names but lets say the banks aren't BOSsy about it and will ACCept a low offer.
 
What's in it for me ManC.

It looks like ManA is just sticking his hand in my pocket and helping himself.
 
Mr B said:
don't see how this really matters, .
Click to expand...

Thank you for replying. The reason it matters is that it helps other people in the same situation. Now we have an idea what the percentage they will go for. For myself here on AAM I can tell others that their bank may accept a write down of 80%. It's very hard to find out the true figure as I'm sure banks are doing deals but they are not talking about it, it's not in the public domain and I'm sure this is because there are confidentiality agreements.

You have been most informative, it's a very interesting thread. Glad to have been of some help.

If you don't mind I'll 'chance' another question. Where is the money coming from? Is it coming from savings that are hidden, or from other family members? From say money transferred to a spouse years ago, or say a property/assets transferred to a spouse in the good times. That kind of thing. Just a general idea is what I'm looking for.
 
Bronte said:
If you don't mind I'll 'chance' another question. Where is the money coming from? Is it coming from savings that are hidden, or from other family members? From say money transferred to a spouse years ago, or say a property/assets transferred to a spouse in the good times. That kind of thing. Just a general idea is what I'm looking for.
Click to expand...

Money in the bank from past sales of property and general savings. Not hidden or offshore or anything like that.
Could probably avoid gift tax if Man A lends it to Man B.
I am unlikely to go ahead with this unless I get a consultation from a solicitor and am ensured that nothing can go wrong. I am more concerned about reputation and not blotting my copybook than about financial risk.
 
I understood that the money was legit. But what I was wondering was why not just pay the bank the cash and in return be free of the debt, unless the money is hidden from the bank. Hence the bank wanting a sale. There must a reason a bank will write down such a high percentage.

If you as ManB do everything legit how can it blot your copybook. Banks don't have a black list of customers. When borrowing the bank will ask you where your deposit comes from and check your salary, savings history, and the credit report. None of these are affected if you do a transaction with ManA.

I fail to see where your fear is from, particularly if you go via a solicitor.
 
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