is "giving back the keys" equivalent to "repossessions"

D

Domhnall O'Sullivan

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the phrase "hand back the keys" used to get used alot during the last rates crisis, in the early 90's. rates went as high as 14% at one stage!

many people simply handed the keys to the banks and walked away from both the dept and the house. They lost whatever had been paid but no more...

I understood, that since 2008 the roules had changed immensely, and people can hand back the keys as much as they want, but the debt remains theirs. So then obviously the incentive to leave is no longer there.

So, when ppeople talk here about "repossessions" by the banks, do the indiviiduals involved still owe the full debt?! surely not... is it fully written off?? or something in between??

im curious, what iis the current situation??
d
 
I worked in the banks during the 90s and I don't think there was any wholesale handing back of keys, I never came across a case of it. Even if they did hand back the keys as such they were still liable for the shortfall between sale price and debt same as they are now if there was a shortfall, I don't think the drop between purchase and sale price was next nor near as big as it has become. These days the sums are much bigger and the negative equity huge in some cases leaving a much bigger shortfall which is what the whole insolvency regime should be fixing.
 
So I take it, for the current situation if I owe a remaining say 300k on a house, which is currently valued at 250k.
and i cannot meet payments at all. then the bank would re-possess, if they were allowed to etc..
and i would just owe them the remaining 50k. then the bank proceed to sell at market rate.

yes?
 
In theory yes you would owe them the difference between what they get for the house less any costs they incur and what was outstanding on the mortgage.
 
ok.... sounds reasonable
so those who are in chronic arrears, i.e. no chance of keeping up with payments, it benefits them to end their arrangement asap, rather than add to the debt. so it should be facilitated not procrastinated
 
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Domhnall O'Sullivan said:
ok.... sounds reasonable
so those who are in chronic arrears, i.e. no chance of keeping up with payments, it benefits them to end their arrangement asap, rather than add to the debt. so it should be facilitated not procrastinated
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Most if not all banks having deemed a mortgage unsustainable will propose to the lender that they sell up or face a forced sale or repossession.
There's nothing new or mysterious about this.
And while the phrase "handing back the keys" may have been mentioned at different stages I suspect that the actual instances of this happening were few and far between.
An exception might be people who just upped and left the country and left their property and associated mortgage behind.
 
hi

yes i agree theres nothing mysterious about it..
what im saying is I think it should happen more quickly, once its verified that genuine long term problems exist with repayment of course.
letting it go on and on is not doing either side any favours, especially the borrower..
government should facilitate it more
 
Domhnall O'Sullivan said:
letting it go on and on is not doing either side any favours, especially the borrower..
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Only true if there is positive equity. And, even then, it might not be true.

There are many people whose mortgages are clearly unsustainable and who have stopped paying anything meaningful and it takes the lenders year to actually repossess the property. If they have no other assets, then the lender can't get anything from them, so it probably doesn't matter if the shortfall is €20k or €80k. So they choose to stay in the house cost-free as long as possible.

Yes, they could be made responsible for the bank's legal costs, but so what? If they don't have the money, it just makes the shortfall bigger.

I have lobbied the banks, the Central Bank and politicians that the banks should have a Protocol for Unsustainable Mortgages. In simple terms, if a person co-operates in the sale of their home, the bank would write off the shortfall over a very short period of time. AIB has been moving in this direction. And now UB is agreeing not to write off the shortfall if the borrower qualifies for social housing.
 
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