PPR, now rented, some neg equity, voluntary surrender?

pcocp

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A married couple bought a house in 2004, lived there until 2012, then moved into a house inherited by the husband.
The original 2004 house has been rented since, long term tenant, no issues, on HAP, all tax affairs etc in order.

Mortgage was restructured to full interest and part capital, always paid, no arrears. The rented house is in approx €20K negative equity, rent is approx 15% below market rate and is in an RPZ.

They want out of being landlords, and could do without the hassle of trying to sell a rented house with a tenant in situ. The mortgage was with PTSB but is now with Pepper.

They are prepared to voluntarily surrender the property, is there any likelihood of this being accepted by pepper?

Have they any other options such as a sale to the council or a housing association / agency?

Leaving the tenant in situ is one of the goals here, but it’s understood that might not be realistic.

TIA.
 

NoRegretsCoyote

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A married couple bought a house in 2004, lived there until 2012, then moved into a house inherited by the husband.
The original 2004 house has been rented since, long term tenant, no issues, on HAP, all tax affairs etc in order.

Mortgage was restructured to full interest and part capital, always paid, no arrears. The rented house is in approx €20K negative equity, rent is approx 15% below market rate and is in an RPZ.
If I get this right:
  1. Couple got a free house.
  2. Couple let their original house with a mortgage on it.

How did they ever need a restructuring in the first place?
 

pcocp

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If I get this right:
  1. Couple got a free house.
  2. Couple let their original house with a mortgage on it.

How did they ever need a restructuring in the first place?
Well they sought a restructure and were given one, which is still in place, despite getting a ‘free’ house in need of significant work. Their overall financial position was not good to begin with, but has improved over time since.
 

Protocol

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How could anybody be in negative equity after 15 years of mortgage repayments?

House prices have recovered, ok not to 2008 levels, ok.

Many houses would be close to 2004 values.

Given 15 years of repayments, how could there be negative equity?
 

Bronte

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They are prepared to voluntarily surrender the property, is there any likelihood of this being accepted by pepper?
And what about the 20K negative equity. Why not borrow on the inherited house to pay the 20K off? Pepper will also want more money to cover the legal costs of selling it.
 

NoRegretsCoyote

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Here is a couple with appreciable net wealth looking for free money.

Only in Ireland could this question even be asked.
 

Brendan Burgess

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Pepper has bought this mortgage at a discount.

While they are long term lenders, they might be willing to grant a discount.

The best thing to do is to ask them. They will probably refuse.

However, if your friends want to get out of the landlord business, then Pepper might well agree to a voluntary sale with a commitment to repay the €20,000.

Brendan
 

Brendan Burgess

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I don't think that hey will agree to a surrender. They would require the owner to voluntarily sell the home.

That should be the proposal to Pepper as it's more likely to be accepted than a voluntary surrender.

Brendan
 

Bronte

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Here is a couple with appreciable net wealth looking for free money.

Only in Ireland could this question even be asked.
Where did you get they had appreciable net wealth? Even if that is so, nothing wrong with asking a bank for a discount, particularly seeing as that bank itself would have bought the loan for a discount.
 

pcocp

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And what about the 20K negative equity. Why not borrow on the inherited house to pay the 20K off? Pepper will also want more money to cover the legal costs of selling it.
That would be the intention.
 

Brendan Burgess

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I assumed that you were looking for a discount and would surrender it in full and final settlement.

If you plan to cover the shortfall, then do not surrender it. Sell it yourself and you will maximise the price.

If a fund sells it, you mind find a shortfall rising to €100k.

Brendan
 

pcocp

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I assumed that you were looking for a discount and would surrender it in full and final settlement.

If you plan to cover the shortfall, then do not surrender it. Sell it yourself and you will maximise the price.

If a fund sells it, you mind find a shortfall rising to €100k.

Brendan
The plan is to cover the shortfall, as a discount is very unlikely I agree.
Thanks for that advice Brendan, re the sale.
 

NoRegretsCoyote

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Where did you get they had appreciable net wealth? Even if that is so, nothing wrong with asking a bank for a discount, particularly seeing as that bank itself would have bought the loan for a discount.
They have 20k negative equity and another house with no mortgage. On the reasonable assumption that the other house is worth >€20k, they have net wealth.

My loan is worth well more than par now given that I have never defaulted on it, and, interest rates have fallen since origination. By your logic I should be forced to re-finance by the bank at the higher value!

Nonsense. They are not looking for free money. They will cover the negative equity shortfall.
This was not mentioned in the original post.
 
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