Mortgage Prisoners - time to get loud!!

Debateable - good stats here on Central Bank site.

Disengaged borrowers seem artifically high right now but in the long term many of these borrowers will ultimately end up losing their homes one way or another - or they'll die in the meantime and their lender will by then be able to initiate proceedings against their estate for possession or force a disposal at that time. Most of these companies are playing the long game, and legally the law is on their side if the borrower does not engage, as around 13k borrowers currently don't. (Ref the Dec 2022 stats from CB)
 
@iff

You might be right, but I doubt it.

ptsb were forced to sell loans where there was a balance due at the end of the adjusted mortgage term where there was no provision to clear this balance.

If arrears are capitalised and the term and repayment adjusted to clear the mortgage , it is not non-performing.

Brendan
 

Thousands of mortgage prisoners turning to equity-release loans to escape vulture funds

Mortgage prisoners are turning to an equity-release provider to get their loans away from vulture funds.
m.independent.ie
The headline
Thousands of mortgage prisoners turning to equity-release loans to escape vulture funds
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seems a bit misleading as there's no mention in the article of "thousands" actually doing this but just...
Spry Finance said it was experiencing strong growth in the number of customers using its product as a way to switch from a mortgage held by an investment fund.
Click to expand...
and
Thousands of mortgage holders trapped with investment funds could be eligible to move on to a lower interest rate with a lifetime loan, one that would be fixed for life, Mr Brady said.
Click to expand...
 
It's interesting that this is happening.

It was one of my objections to the Central Bank forcing ptsb to sell loans with a balance due at the end.

For example, someone could reach the age of 70 and owe €20,000 so the mortgage would be classified as an NPL.

Yet the same customer could take out a life loan at age 65 and roll up the interest for the rest of their life.

Brendan
 
lff12 said:
Disengaged borrowers seem artifically high right now
Click to expand...
But this is not really an issue of disengaged borrowers. Someone who left for Australia in 2011 and has left a house vacant is indifferent to a 6% or an 8% mortgage rate

This is about borrowers with restructured mortgages who want to adhere to the terms of their mortgages and eventually pay off their mortgage in full. They are being punished for the "original sin" of having once been in default.


Brendan Burgess said:
A fair solution would be for the vulture funds to offer their customers the same deals offered by the lender who sold them.
In this way, the borrower has not lost out by being sold to a vulture.
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This is nice in theory but impossible in practice. What is the current "deal" offered to an INBS mortgage holder? There is none! Lenders enter and exit the market all the time. It is better framed as a straightforward anti-usury measure. A law like "no lender may charge a variable rate more than 300bps above the prevailing ECB MRO". This is very simple for everyone to understand and implement.
 
I’m not sure I understand the basis for their complaint. A bank or fund shouldn’t be stopped from passing-on ECB rate rises just because other banks aren’t doing so. Those other banks aren’t doing so for many reasons, including a wish not to be forced to increase deposit rates commensurately.

The other point is that these are high-risk borrowers. If they can’t switch to another provider, it means they’re impaired in some way, which means higher risk of default, which means that a higher interest rate makes sense. These are subprime borrowers, and subprime borrowers should pay much higher interest rates.
 
I make that argument before in another thread but it didn't go down well...

However, admittedly, the CB rules on what is and what is not a performing loan are inconsistent and arguably outdated. E.g.:

https://www.askaboutmoney.com/threads/mortgage-prisoners-time-to-get-loud.231101/post-1820871
 
A performing loan should be a loan where it’s taken-out on the basis of X repayments over Y months, and that’s what happens.

Anything else, any deviation or missed/restructured payment should place an asterisk beside it.

Rates and lending should be based on risk, and it’s logical that loans where there has been an issue in the past are higher-risk than the circa 99% of loans that live an incident-free life.
 
That is a very small minded statement. Sometimes life doesn’t go as planned for some people. My husband is self employed and I am a contract worker when our Mortgage was sold by PTSB to Pepper we tried to switch to other banks but couldn’t.

I earn a quarter of what I use to earn because of personal circumstances that we didn’t expect. We never defaulted on mortgage payments but now we are struggling, our interest rate is at 7% now with another increase that arrived this morning I can’t open the letter and we don’t have the money in our account to pay it. I have to stop my direct debit and lodge what I believe to be fair to Pepper on a monthly basis until I think of something else.

I have completed the SFS and am waiting for a reply. The same happened years ago when PTSB were over charging except we could pay it as the money was in our account and we both had great jobs we loved. I didn’t choose to be a high risk borrower. I hope everything goes to plan with your life so that no one generalises about you.
 
Westirl said:
That is a very small minded statement.
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That's a judgement call.
But it's a simple fact that where the borrower doesn't adhere to the mortgage agreement, in particular as it pertains to scheduled repayment, then the borrower is in breach of the contract.
This is the case no matter how unfortunate the circumstances are that led to the situation.
 
Irish lenders assess borrowers when they take out their mortgage. They assess the risk at that stage.

They do not reassess the risk mid-loan and charge a higher rate because the customer is in arrears.

In a way, the opposite is true. Sub-prime lenders claimed that if a person kept up their payments for 5 years, they would get a lower rate.

I fully agree that people with a bad credit record should pay more when they take out a mortgage. I don't agree with charging more after a mortgage has been drawn down.

It's a bit like taking out an insurance policy for a year. But if you have a claim after one month, they put up the premium.

Brendan
 
Much higher interest rates will increase the risk of default.
 
Why don't you talk to a PIP ? You're insolvent if you can't pay your loans when they are due.
Insolvency is not a choice you make.
 
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Westirl said:
I have completed the SFS and am waiting for a reply.
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Hi Westirl

You should start a new thread.

Case study - Information required for mortgage arrears and negative equity questions

Please copy and paste this post into a new thread. If you give comprehensive information, it will maximise your chances of getting comprehensive and useful results. Income details Net monthly (i.e. after tax) Income self: nature of income e.g. self-employed/public servant...
www.askaboutmoney.com

From this recent thread, you had a great deal but I assume that they have reviewed it.

Pepper Split Mortgage - €250k capital to reduce it?

They clearly set the capital repayment against the interest-bearing part of the mortgage. It now means that most of your repayment, is clearing down the capital. After your repayment on 19/9 , your balance was €297,009 They added net interest of €262 to bring it up to €297, 271 And then you...
www.askaboutmoney.com
 
Gordon Gekko said:
Rates and lending should be based on risk, and it’s logical that loans where there has been an issue in the past are higher-risk than the circa 99% of loans that live an incident-free life.
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I think the issue is not so much the principle here but the degree. For sure higher risk loans should pay a higher rate - the question is how much.

There is a long thread here and it seems that there is legally no upper limit on what a lender can charge a borrower on a variable rate.

As is well rehearsed, there are several thousand borrowers who are in the following category:
  1. Have had loans restructured due to past arrears but are fully meeting terms of restructure;
  2. Were already paying a higher rate a year ago, c. 4.5%
  3. Cannot switch lender or take advantage of a better rate with same lender
  4. Have had rates rise 300bps or so in the last year, a lot more than for borrowers like me with the option to fix

Interest rates are rising and this is going to effect the borrowers above. It just doesn't seem very fair to me that these borrowers are being squeezed a lot more than the rest of us, especially when for many of them it will cause real financial stress up to and including the point of default.
 
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@gordon Ghekko and Clubman,
I'm sure you both have the choice to fix your mortgage to protect yourself from ECB rate rises!

Our complaint is those of us transferred to Vultures funds can not fix and have seen our mortgages rise a couple of hundred a month. Yes a month!!!

Do you still think this is right, yes contracts may have been breached at one stage but most of us got back on track before we were thrown to wolves. Should we be punished for a lifetime because of this, I don't think so.

Please think before you speak, there are real people and families struggling because of this. We expect to be treated fairly and offered fix rates like the rest of borrowers to have some certainty and protection. I don't think that's too much to ask!
 
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