Great Result dealing with A.I.B.

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robert 200

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I had a very positive meeting with A.I.B on Monday. It was to conclude our negotiations which
have lasted 5 years. I am currently in negative equity.

A.I.B. have agreed to allow me to stay on an interest only tracker for 5 years.

A.I.B. have 8 buy-to-lets and my family home as security. Assuming capital appreciation of
3% per annum I will be back in positive equity within this period.

My 24 tenants and myself are delighted with this outcome and the fact that we have security of
tenure for the foreseeable future.

Think this calls for a celebration.
 
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robert 200 said:
Think this calls for a celebration.
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It absolutely does and congratulations well done Robert200 and thanks for sharing. (and well done AIB negotiatiors and realists, wouldn't Ireland be a much better place if we were to hear about stories like this more often. To help make some amends for the mess you guys got us into and out of which the taxpayers helped you)
 
A pragmatic solution by AIB and congrats to Robert.The location in South Dublin I would think made it work for both parties.
 
HI Robert

That is great news indeed. It's interesting that they were happy to put trackers on interest only. I would have thought that it would be in their interests to get rid of the trackers. They could have appointed receivers easily enough I assume.

I see that you asked about the IMHO a few years ago. Did they help you to negotiate this?

Brendan
 
I'm a little confused by your posts. Yourself and your wife are on €115,000 between you, you have 8 properties that (seemingly) are all rented out, in great locations in South Dublin (according to yourself) so should be covering or just below the mortgages outstanding given the rents being achieved in Dublin.
Might be useful to share how it came to pass that you found yourself in this situation.
Whilst I think it is good that Banks are taking a pragmatic approach, it depends how pragmatic that approach is and the detail provided is scant.
Are all the properties cross-secured on the family home?
What is the deficit between rent and mortgage payments?
Is it just one mortgage covering all the properties?
Are all the properties in negative equity?
What tracker rate are you on?
Did you run into arrears? When?
 
Hi Brendan ,
I didn't involve IMHO in the end , i thought the softly softly approach might be better and luckily it worked out.
 
dereko1969 said:
, it depends how pragmatic that approach is and the detail provided is scant.
Are all the properties cross-secured on the family home?
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I never really understood why this was important, you owe the money and they will come after everything, they don't need cross security.
 
robert 200 said:
Hi Brendan ,
I didn't involve IMHO in the end , i thought the softly softly approach might be better and luckily it worked out.
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I realise you don't want to divulge in case you are identified, plus I assume you signed a confidentiality agreement, but you might do one of two things. Identify kindof what you did on here, or send Burgess an email outlining the gist of it and at some stage he I'm sure will use it to help others. Do it maybe a month from now so it's not linked to you or your previous posts or bank, on here. I only ask for the benefit of others who are not so fortunate to have as yet stuck a deal and are facing another Christmas of hell. Best of luck.
 
Hi Dereko ,
There were a few reasons I ended up in this situation .
A heart attack , prostate cancer , an acrimonious divorce , BOI and AIB shares and a little thing called
an Economic Downturn that wiped approx. 65% off the value of my buy-to-lets.
 
Am I the only one here that finds this deal a bit worrying? AIB are a state owned bank after all.
The 3% annual growth in House prices bit...what happens if that doesn't come to pass.

If it does, what happens in 5 years time- do you have to sell up and pay down debt. Or do you switch to the full Mortgage amount, incl Capital, and continue on?
 
Delboy said:
Am I the only one here that finds this deal a bit worrying? AIB are a state owned bank after all.
The 3% annual growth in House prices bit...what happens if that doesn't come to pass.

If it does, what happens in 5 years time- do you have to sell up and pay down debt. Or do you switch to the full Mortgage amount, incl Capital, and continue on?
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Ba humbug! The deal gives the debtor an out, if the receiver came in and sold the lot, the bank take the capital loss onto their books immediately, the bank has probably no realistic chance of ever recovering the outstanding loan losses. This way, the bank are giving the debtor and themselves a chance, capital appreciation may happen, indeed it will most likely happen ( stats are in favour of this after a bust ) Are the State not lining up AIB for a sale ? Do they not want it's loan book to be in good order and performing ? Well done again, to both parties.
 
robert 200 said:
Hi Dereko ,
There were a few reasons I ended up in this situation .
A heart attack , prostate cancer , an acrimonious divorce , BOI and AIB shares and a little thing called
an Economic Downturn that wiped approx. 65% off the value of my buy-to-lets.
Click to expand...

Sorry for your troubles. You keep talking about negative equity, fair enough, but you haven't answered whether your rental income was meeting your mortgage payments and how short you were in meeting these every month and whether or not any of these could have been sold. You haven't answered any of the detailed questions I asked.
I'd be with Delboy on this as it seems symptomatic of me of the kicking the can down the road that has infected civil society - I don't want you kicked out of your family home but I don't understand why they're letting you hang onto the 8 buy-to-lets that you have.
Your tenants would more than likely become someone else's tenants if they were sold.
It's this type of stuff by the Banks that means I'm paying a least 1% more on my mortgage than I should be.
 
Bronte said:
I never really understood why this was important, you owe the money and they will come after everything, they don't need cross security.
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I suppose part of what i'm trying to find out is why they haven't forced the sale of any of the 8 buy to lets.
 
Because any losses on the said loan(s) would be crystallised immediately on the banks books. Do not forget that AIB is up for sale.
 
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I agree Helping hand , this way the bank "should " get back every euro owed to them and I get to keep my home.
Sorry if my good news upsets you Derek I suppose there will always be begrudgers.
 
dereko1969 said:
I suppose part of what i'm trying to find out is why they haven't forced the sale of any of the 8 buy to lets.
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What would that achieve? It would leave the borrower with fewer assets to increase in value to plug the negative equity gap - making it longer and less likely that the problem would be sorted. If, for example, they forced the sale of 4 of the 8 properties, it would take the borrower 10 years rather than 5 to have the property values back at the same value as the mortgages (this and following comments assume the 3% forecast increase happens). And just think about that - in 5 years time, the mortgages and the properties will be valued the same - so what has the borrower gained? At that point, his buy-to-let balance sheet is at zero. It's not like he will own them outright in 5 years time courtesy of AIB/the taxpayer/you.

If the interest was at a 'bank cost of borrowing' rate, there would be no cost/loss for the bank. The cost to the bank is the tracker interest gap lost on the capital repayments that should be made between now and 5 years time. So maybe a percent or two on capital repayments for the next 5 years (and capital repayments are relatively small in early repayment years). If the gap between the bank's borrowing rate and the tracker is 2%, I reckon the cost over the 5 years might be €1.72 per €1,000 borrowed. So if there's €1M of borrowings, the cost to the bank is less than €2,000 over 5 years. I think that's a more cost-effective option for the bank than (a) the potential for a write-off increasing and (b) legal and internal staff costs chasing up for the next 5 years.

As a tax-payer, I would prefer they incur a cost of €2,000 over 5 years than spend time and money hounding someone - possibly resulting in an actual write-off. I don't like actual write-offs but if someone can cover the interest until the negative equity goes away, great. The banks should do those deals all day long.

Having a nicely ordered loan book will make the bank a lot easier to sell too.
 
I think the point here that should be noted is that AIB are up for sale. I hope the OP has a good written contract of the deal as once it's sold then they may 'change their minds'
 
Whatever about my feelings about AIB's approach to the buy to lets. The purpose of this site is to share information so that proper advice can be given.
The OP has hardly provided anything that would give enough information to others dealing with AIB to benefit from his experiences, just that it can be done, that's not hugely helpful to others.
And my views above were expressed on the scant information provided, it may very well prove to be a good medium term decision by AIB but given the information provided we can't tell. It's certainly a good deal for the OP and fair play for getting it.
 
According to C.S.O. figures I am back in positive equity after less than 2 years. Hopefully this will be a lesson to A.I.B. - to work with their customers and stop using bullying tactics.
 
robert 200 said:
Hopefully this will be a lesson to A.I.B. - to work with their customers and stop using bullying tactics.
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The banks generally reach rescheduling agreements with 90% of the borrowers who engage with them.

AIB has probably been the most flexible of all the banks. It may have been the first one to introduce the split mortgage. It is the only one to publicly say that they will write down mortgages in some cases.

Many borrowers are unreasonable and then characterise AIB as bullying because AIB insists that they pay their mortgage ahead of their Credit Union, holidays or private school.

Brendan
 
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