Greg Connor:"more than 35% of mortgages arrears are strategic defaults"

Hi Time

While I agree, I am concerned that some people will lose their homes, because they have not prioritised their mortgage.

If my mortgage was so unsustainable that I had no hope of retaining my home, then it would make sense to prioritise the CU.

Brendan
 
There is also the difficulty of work place credit unions where repayments operate by way of salary deduction. People sometimes don't want to have to tell their payroll department to stop making the deduction or it can be difficult to persuade them to do so.
 
Brendan Burgess said:
David Duffy, the Chief Executive of AIB, said on today's Morning Ireland that he estimated that the level of strategic defaulters was in excess of 20%.
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I suspect Mr Duffy arrived at that figure in much the same way as the head of Capital Markets at Anglo arrived at the €7bn funding requirement figure from the Central Bank in 2008. Given that AIB lost €758m in the first six months of 2013 it will be interesting to see how quickly AIB start running to the courts to repossess houses and crystallise losses where there's negative equity.
 
There is also an element of people trying to clear high interest unsecured loans before tackling their mortgage. Just because debt is unsecured doesn't mean there aren't any consequences for missing payments because every penny is going into your mortgage because the bank is threatening to take your house. Are AIB freezing interest in their customers who have unsecured debt with them so they can pay more off their mortgage? Bet they are not. So people continue to be trapped in debt until they have no option but to look at bankruptcy.
 
Can someone explain clearly the difference between non recourse mortgage and full recourse mortgage so I can put the American stats in context???? How can there be such a thing as a non recourse loan....isn't that an oxymoron????
 
A non recourse mortgage is one where the bank cannot chase any shortfall. Once they take the house the mortgagee is free and clear of the loan. Common in the US.
 
Interesting. Do european especially German banks also have this kind of mortgage product or is it peculiar to US? And if so then why has no Irish punter taken a reckless lending case to te European courts as nt only have we full recourse but we have all sums due clauses converting unsecured debt into secured debt. Maybe all te strategic defaulters should take a class action.
 
Please define (strategic defaulter).
Mr Duffy Ceo of a seriously incompetent Bank now states that 20%+ are strategic defaulters !!
Show me the defination of strategic, not his self serving headline grabbing words, he has neatly spun us all.

Show me the facts, show me the defination.

I am not insolvent (unlike AIB) , I am 30 credible years in finance.
So I state that strategic defaulters mean those who can yet won,t pay are @ 5%
I present NO facts , but why not believe me?

I would be inclined to distrust AIB, on the basis of their past shennanigans and that most of the shennanigan staff are still in situ.
 
The Ulster Bank figure regarding those in arrears paying ZERO is a big red flag. Even unemployed people make a contribution to their accommodation so paying zero is definitely strategic default (or selective prioritising of repayment) in my book.
 
Gerry Canning said:
So I state that strategic defaulters mean those who can yet won,t pay are @ 5%
.
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I agree with you.

But around 12% are in arrears over 90 days

So 5% of mortgage holders is around 40% of borrowers in arrears over 90 days.

You are estimating it at twice the level David Duffy is estimating it at.

He is too low. You are too high. It is somewhere between 20% and 40% of those in arrears over 90 days.
 
I explained that 5% badly,
What I meant is that of those in arrears only 1 in 20 are can and won,t pay variety.
I just can,t see it @ 20% .
From a pure sums view if it is @ 20% on the can,t won,t pay ,the 20 Billion AIB have got ain,t enough and = more trouble.

I see the Boss of KBC in todays Independent States no one knows the (strategic default) figure = more uncertainty .

I would be of the opinion(not knowledge) that when the insolvency legislation gets up and running the 20% figure on cant wont pay will suddenly evaporate.
I hope I am correct .
 
Karl Deeter talks to a strategic defaulter
http://www.mortgagebrokers.ie/uncategorized/talking-with-a-strategic-defaulter/
The person in question is a white collar professional and the director of a relatively well known company, she agreed to speak to us on the basis that we kept her identity private. She has a family home and six investment properties.

Some lowlights:
Karl: Did you make a concious decision to default on your loans? If so why?
-Yes, because the bank were insisting I go on interest and capital repayments on the investment properties and the figures just wouldn’t add up so I chose to default

Karl: You are, by your own admission, a strategic defaulter. Do you think there are many others like you?
-Without a doubt, on investment properties it’s endemic, I don’t think it’s fair to paint normal ‘family home’ owners as strategic defaulters, there probably aren’t many of them. But on the RIP’s (residential investment properties) we are (landlords) all at it. If I tried to pay the contractual amount of capital and interest it would be impossible, so instead I’m at this stand off instead which I hope will force the banks into making a more reasonable deal. Ultimately these loans, on a full repayment basis, are unsustainable, so either write them down or get nothing from me, the choice is simple.

Karl: When you hear ‘banks are going to get tough’ on borrowers, do you think they are being honest?
-No, they won’t repossess me or anybody else, they’ll get wiped if they take all the houses back, their true plan, the one they won’t talk about publicly, is to keep everybody on contract and pray the property market recovers some day and then in fifteen years or so move in on people or at least have borrowers who can break even in a sale. They don’t want to get burned any more than I do.


She claims to have only put 12k aside since she stopped paying what's due, which I find hard to believe given it's 6 properties we're talking about here. And admits to using the rent to make up for the shortfall in her salary.
It's disgusting to think that people like this actually believe they will get a deal off the bank and the rest of us will have to pay for it
 
I would also concur that the stragic defaulters will end up being better off in the long run. Even though they are called strategic defaulters could they actually afford to make full interest and capital repayments anyway?
 
I don't really get it to be honest. There is and never was anything stopping the banks putting rent receivers into manage these properties if she is keeping the rent roll. The question is why are banks bleating on about strategic defaulters to the media if they are allowing this to happen. The above example is not the same as some family who might have to prioritise other things like medical bills, education costs etc over their mortgage and they are being labeled strategic defaulters as well.
 
The bank should simply appoint rent receivers to these properties and that would soften her cough. She is a professional so she probably has a good record of paying up to now. It will take a while to catch onto her. If it's only one bank, it might be worth their while appointing a receiver. If she has loans with 6 banks, it just might not be a priority for them.

Depending on what sort of professional she is, this could have very serious career consequences. If it's one bank which she is messing around, they should go for bankruptcy which would last three years and then get a payment order for another 5 years.

But worst of all, she is wrecking it for others who are struggling but who are trying. The existence of strategic defaulters like this makes the bank suspicious of everyone in arrears and makes them reluctant to do deals.

Brendan
 
Brendan Burgess said:
But worst of all, she is wrecking it for others who are struggling but who are trying. The existence of strategic defaulters like this makes the bank suspicious of everyone in arrears and makes them reluctant to do deals.

Brendan
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At the risk of sounding a bit paranoid, I wonder whether the banks are grateful for people like this going public because it allows them to be suspicious of everyone?
 
Delboys comment quoting Karl Deeter, that few Family Homes are Strategic Defaulters.
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On a previous comment I believed very few people are strategic defaulters.
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From reading the previous it appears that the Strategic Defaulter is on Buy to Let people.

Can we therefore differentiate in our comments as there is a notion that Family Home owners are serial Strategic Defaulters. To lump home owners with Buy to Let messers sends an incorrect message.

To Mrs Vimes; I don,t think Banks are suspicious of everyone as they kmow where the defaulters are. But it does suit them to Have arrears cases in the public domain as Strategic.
 
Gerry Canning said:
Delboys comment quoting Karl Deeter, that few Family Homes are Strategic Defaulters.
.......................................................................................
On a previous comment I believed very few people are strategic defaulters.
............................................................
From reading the previous it appears that the Strategic Defaulter is on Buy to Let people.

Can we therefore differentiate in our comments as there is a notion that Family Home owners are serial Strategic Defaulters. To lump home owners with Buy to Let messers sends an incorrect message.

To Mrs Vimes; I don,t think Banks are suspicious of everyone as they kmow where the defaulters are. But it does suit them to Have arrears cases in the public domain as Strategic.
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You can't just say that all strategic defaulters are BtL's only. We don't know of any stats on the breakdown of Strategic Defaulters so there's no need to differentiate yet!
 
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