Negative equity. Can the bank sue me for the balance?

Re: Unsubordinated?

bacchus said:
Why? Business is business, the OP simply made a bad investment
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In fairness to to OP, he similar to many others thought it was a good Investment. The manner in which the Bank were slushing money around was disgusting and perverse. And now we all, not just in Ireland but worldwide are being asked to pay for individual mistakes and greed of others. But it doesn't give anyone who borrowed the right to wriggle away from their own liabilities.
 
OP, I would sell the apartment and pay them with that, the amount due I would not ,They really do not expect to get 100% of any big size loan taking out in the last few years and if they do then they really are stupid.Stupid in the first place to give you such an amount.
If you have any other assets I would do what the big guys do and put it in somebody else's name.
Look at your age Spain looks like a good place to retire to no disrespect to your age or anything but you don't deserve to live like a pauper,contact a good tax adviser / solicitor and see what they say.
 
dodo said:
OP, I would sell the apartment and pay them with that, the amount due I would not ,They really do not expect to get 100% of any big size loan taking out in the last few years and if they do then they really are stupid.Stupid in the first place to give you such an amount.
If you have any other assets I would do what the big guys do and put it in somebody else's name.
Look at your age Spain looks like a good place to retire to no disrespect to your age or anything but you don't deserve to live like a pauper,contact a good tax adviser / solicitor and see what they say.
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Sweet Jaysus! Please ignore that advice. The loan process is very very simple to understand. You borrow the money and you pay it back. Thats it.
One good bit of advice from dodo - please talk to a solicitor, or preferably a financial advisor - please don't ignore your loan as dodo suggests.
 
euclid said:
My understanding at the time was that the apartment was (the only) collateral on the loan.

My solicitor tells me that the loan is “unsubordinated” which he says means that the bank can sue me for the 50,000. I always thought that, as the apartment was the collateral on the loan, I could simply hand the keys to the bank and walk away, but apparently not.
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Euclid could you clarify exactly why you thought the bank would not be able to come after you for the loan? Who told you this?

Did you ever rent the apartment out or did you just invest for a capital gain? Can you rent it out and would this cover the mortgage now.

You can forget negotiating the amount to be repaid if you are a man of means.
 
Euclid,

As the property was bought for investment purposes it is treated as a non consumer loan. When you borrowed from the bank you did so as a commercial customer.

Being an investor and a business in the eyes of the law you must unfortunately bear any loss associated with the transaction. It should have been clarified with you that you may be liable for any loss (not that many foresaw the abrupt about face in property values).

It is unlikely, though not impossible, that a judge would put a judgement on the family home of a retired couple that have , from what I can gather, lost a substantial amount of their retirement fund.

That said I am sure you don't wish to think that let alone have to face the possibility.

The best approach is to meet with the bank to discuss the situation, they may come up with an idea as to how to keep the loan going without it going down a legal route.
 
I was listening to Marian Finucane's show on RTE over the weekend and she had some "experts" on about this very issue. One of the people on the show said something which totally confused me as it is at odds with what was mentioned here about a bank mortgage/loan being unsubordinated and hence any shortfall in the repayment of same will be pursued relentlessly by the bank. The person on the radio said that as the mortgage was secured on the property purchased then by selling the property or handing back the keys that the mortgage holder has effectively discharged their responsibility and the bank can go whistle for any shortfall.
Maybe I picked it up wrong. Anyone enlighten me??
 
If you got an offer of 200,000, I would try to squeeze more out of this. Tell them minimum 220 for quick sale and take the hit on the smaller difference. I would definitely sell as market as a bit further south to go. Did the solicitor make commission from banks on initial deal?
Why is the system different here than the US ?? Is the law different there that it protects people? Should this be something NAMA could include?
 
mickeyg, in answer to your question, if you hand the keys back on a family home there may be a situation whereby the bank will not chase you for the money. As it is a consumer loan there are some differences in the small print.

That said why would anybody hand the keys back on their home just because the value has fallen, it is still a home and interest rates mortgage repayments are considerably lower than they were two years ago.

In addition negative equity is just as realisable as positive equity only when you need or have to sell. If you dont need to sell, then negative equity is irrelevant.

The OPs situation is different in that they have a non consumer loan and the terms of the original agreement were based over a short term.
 
Hi,

First of all I feel sad for you.
I can put myself into your shoe and imagine that I might have done the same if I was you.
It is always us nowhere to go middle class people who suffer the most in any economic downturn as Rich have the means to move away and blame everything but them and poor well they got nothing to loose and have their social benefits regardless.
It is offcourse as you mentioned as well your decision to invest and you are liable for all monies owed. It is very unfortunate to see as in your case banks were throwing money to even those who cannot afford a loss to put on roulette table. And hence the credit crunch we are in. Well they have got govt. to bale them out and Nama to make sure they didnt end up as unfortunate as you.
I will say you do need to knock lot of doors looking for some sort of leverage. Personally I think it is unbelievable that bank lend you money when you have no continuous means of income in long term but thats history.
I will say it is worth having a chat with your local TD explaining your situation if bank is unhelpful. In any case do go to bank and try to work things around. Try to hang on for a year if you can but again its a gamble but thats what it was from the beginning.

Best of luck.
 
Hi,
I have heard that if there is negative equity that you must get the permission of the lender to sell the property and this may not be forthcoming. The lender says that if the borrower sells and there is a shortfall that the deeds of the property will not be released unless the borrower can make up the shortfall.
In the case I heard of, the lender (major bank) offered the borrower a substantial loan at 9.95% interest ! to pay towards any shortfall. this happened in recent months and it seems extraordinary after all that has happened that a major lender thinks it is ok to lend someone obviously in difficulty an expensive loan in order to pay towards a shortfall. In the particular case the shortfall is likely to be higher than the amount of the expensive loan.
Has anyone come across this? I do understand that the lender would try and recoup the shortfall but I thought they at least would allow the borrower sell the home and pay the proceeds of the sale towards the mortgage and then negotiate around any shortfall.
 
Guby said:
this happened in recent months and it seems extraordinary after all that has happened that a major lender thinks it is ok to lend
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What is so extraordinary about this ?? What do you think the Bank should do -- simply write off the debt ?? It is because of the careless lending that has left the Banks in such a dangerous level. Look, it really is quite simple, if you borrow the money it has to be paid back. And the higher the risk the more one will pay for the loan.
 
mercman said:
What is so extraordinary about this ?? What do you think the Bank should do -- simply write off the debt ?? It is because of the careless lending that has left the Banks in such a dangerous level. Look, it really is quite simple, if you borrow the money it has to be paid back. And the higher the risk the more one will pay for the loan.
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Mercman, I don't understand your reply. You are being sarcastic? "it is because of the careless lending that has left the Banks in such a dangerous level". My concern here is that a family in financial difficulty and negative equity has made the decision to sell their home, put the proceeds towards their mortgage debt, and negotiate around the shortfall. But they cannot sell their home as the bank has said they will not release the deeds until the shortfall, how ever much that may be, is paid. the borrowers are concerned that prices will fall further and are trying to minimise the shortfall. Acting responsibly I would say but the bank by granting them an expensive loan at 9.95% to cover the shortfall are acting irresponsibly, compounding the borrowers difficulties. when the house is sold, their asset is gone, they will be renting so how are they to pay back the large expensive loan.
I suspect that if the lender sought to re-possess the home that if a Judge heard the account above, they would be less than impressed.
 
Guby, No sarcasm meant. My answer was in line with the original Post. Everybody's circumstances are different. In the case of this the OP bought the property as an Investment not as a family home.
 
compounding the borrowers difficulties. when the house is sold, their asset is gone, they will be renting so how are they to pay back the large expensive loan.
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This is exactly what should happen. They have a debt to pay.

The poor family have to rent and pay a loan. Big deal. They shouldn't have bought a house they couldn't afford or anticipate not affording.
 
Buddyg said:
This is exactly what should happen. They have a debt to pay.

The poor family have to rent and pay a loan. Big deal. They shouldn't have bought a house they couldn't afford or anticipate not affording.
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And what about those who were well paid but have lost their jobs since recession. House prices are still at such levels that not a lot of ppl can afford to buy it outright.
What you are suggesting is a bit harsh on ppl already suffering bcoz of current economic climate.
 
In order to keep my blood pressure down :), I've kept my distance from this thread for a while, but reading the latest posts, I have seen a lot of sensible and sympathetic replies. Thanks for those.

My original question has been answered, I suppose, although I'm not totally convinced:

When I took this gamble, and took out the mortgage to buy this property, my clear understanding was that THIS PROPERTY (AND ONLY THIS PROPERTY) WAS COLLATERAL FOR THE MORTGAGE. I had no idea that I was risking our family home as well!

My orginal question was: Shouldn't my solicitor have alerted me to the fact that the loan was "unsubordinated" and that my family home would be at risk if the property bubble burst?

Did I mention that I had an offer of 200,000 for the apartment? I managed (as someone suggested above) to get that increased to 220,000 and wrote to the bank asking them if they'd like me to sell for that price. I gave an undertaking that I would make up the difference. The bank agreed and the purchaser sent a surveyor round to check out the property.

The surveyor found a problem and the purchaser backed out. So the property is back on the market. The saga continues!
 
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