Unable to pay mortgage on investment property but AIB has no charge on it

J

jetstream

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Just looking for some advise. We bought a house like alot of people did off the plans in 2007 before the housing market collapse. When our new house was ready late 2008 and after trying to renegotiate with the developer on the price given that the market was in crisis we moved in at the 2007 asking price however unable to sell our house we had been living in at the time. Yes like a lot of people, 2 mortgages and up to our necks in debt. Obviously we went interest only on the old house and managed to rent it out just about covering the interest. 2013 the bank now want full capital payment on the old house, some figures, new mortgage on our current home is 2020 Euro which lucky enough I can afford, full capital payments on the old house is 1700 euro which I cannot afford. Here is the icing on the cake, bank (AIB) have discovered the is no legal charge on the old house and we have refused to sign one for it !

Question really is what are my options ?
Can they come after my family home ?

Any advise greatly appreciated
 
jetstream said:
Here is the icing on the cake, bank (AIB) have discovered the is no legal charge on the old house and we have refused to sign one for it !
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What does that mean in reality? They can establish that you owe them the money but they do not have preference over the home. So if they take you to court, the court looks at your assets and then apportions them amongst your creditors, your home being the most valuable I presume. If you had €500k in cash or classic cars worth hundreds of thousands, they'd go to pay them back.

Maybe I am wrong but I don't see the benefit to them not having legal charge.
 
The only benefit I can see is that you could sell the house quickly then shuffle the money abroad.
 
My family home was bought for 625k and is now valued at 300k with an outstanding balance on the mortgage of 540k so there is no liquidity in the family home. The previous house is valued at maybe at most 190k with an outstanding mortgage of 340k. Maybe i am wrong but i see no point in the bank pursuing the family home as it is of no value to them with such a negative equity. I have no problem handing the old home over to the bank for a voluntary sale to cover sone of the outstanding mortgage however my concern is the family home which i am not in arrears. Its not so much the point of the bank not having a legal charge on it, its the point that they are cheeky enough to ask me to sign one, again my question really is can they come after my family home.
 
What does your solicitor say? How come there is no charge? What happened when you bought your first house that there is no charge?

It seems to me that you owe AIB €340k for which they do not have security.
That does not mean that you don't owe them the money.
If you don't sign the charge, and you are in arrears, they will get a judgement against you.
They will then register the judgement as a judgment mortgage, so they will in effect have a charge anyway.

If you sell the property when they have a charge or a mortgage against it, the charge or mortgage would have to be paid first. You will still owe them the balance and they could get a judgement for that and lodge it against your family home.

They won't want all the legal messing about, so they might do a deal with you. Offer to sign a charge for them on condition that they agree to waive any shortfall if and when you sell the house. I suspect they will refuse, but you could try it.

If they have no charge on it, and you go for a Personal Insolvency Arrangement, the PIP might well regard AIB as an unsecured creditor and apply the sales proceeds of the house against your AIB loan and the shortfall on your new home. AIB would veto that.

If you can make full repayments on €540k, you could probably reduce the capital element of that repayment and make payments to AIB.

First - ask your solicitor - probably not the one who did the conveyance for you.
Second - meet with AIB and try to do a deal.
Third - if they refuse, then go to a PIP.
 
Many thanks Brendan for your reply, I will talk to AIB and let you know the outcome. Regarding the charge on the house, I really don't know how this happened but they where staff mortgages so whether this had something to do with it or not I really don't know. I really don't want to reduce capital payments on my family home as I would rather try and keep it out of any involvement with they other property as long as I can.
I would also like to stress that this is not or was never bought as an investment property, we are in this position due to sheer negligence of the government, regulator and banks in Ireland at the time like so many other individuals, what will happen when the tracker mortgages start to increase, interesting times ahead and only the tip of the iceberg i think.
 
You could try a Debt Settlement Arrangement with this "mortgage" as unsecured debt.
 
jetstream said:
. I really don't want to reduce capital payments on my family home as I would rather try and keep it out of any involvement with they other property as long as I can.
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They are both your assets and your liabilities.

You have two assets. You have two mortgages. You can't just decide you want to quarantine one from the other.
 
Ok, i spoke with AIB today and had very open and truthful conversation with them and i have to say they where very helpful, they listened to my point of view and also agreed with me on certain issues. They came up with a number of suggestions and also listened to what i had to suggest. Like Brendan had suggested i did ask for a debt write off if we sold the house and of course they didnt say yes however they said everything is on the table. They would agree to freeze payments on the property while it was up for sale and then deal with the shortfall if or when it happens. They had no interest in my family home at present as full capital payments are being made on it which they are happy about however as i live abroad they have asked if i would rent the property out. I said no that i would not rent it out and they accepted that. They where just happy they we where engaging with them and made it clear they they are dealing with each case on an individual bases as this was now to them "unchartered territory". A weight off my shoulders to be honest.
 
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