Voluntary Sale for Loss

Q

Query1

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Hi Brendan,

I have a query regarding voluntary sale for loss agreement with lender and its potential impact on eligibility for DSA after sale..

I have a joint mortgage with an ex boyfriend thats in negative equity of approx 60%. Mortgage remaining is approx €285k. The property is not intended as a family home and no longer suitable as an investment property..its become a very stressful situation since we went our separate ways three years ago and we've been struggling to meet repayments, in particular my ex since hes been ill on and off also. We've gone on interest only for 18mths to see if that would help but my exs situation has become worse and neither one of us can buy each other out. So we've decided to look at selling at a loss and trying to seek DSA or writedown thereafter. We've been talking to the bank throughtout but as paying interest only now for some time are in arrears. The bank have asked us to put together a proposal as part of the application for consent of sale on how we propose to pay the shortfall.

Im worried that if we propose a monthly repayment plan over term of the mortgage then that we would make ourselves ineligible for DSA after the sale. They have said they would not be providing a write down even though initially said over phone to us they may look at it.

We have 4 offers from potential buyers and one that wishes to progress, can you advise us on this proposal to bank on shortfall (approx €150k).. and the impact on applying for DSA if agreeing something with the bank in order for them to consent to sale.

Thanks
Query1
 
It's not possible to provide a comprehensive answer unless you complete the following:

Standard Format for mortgage arrears Case Studies

In particular -
Which bank?
What rate are you paying?
What is your net income?
What other creditors do you both have?

Subject to completing the case study, it would seem to me that this is a clear case for bankruptcy, or at least the threat of bankruptcy.

You stop making any repayments to build up a fund to pay for the costs of bankruptcy or a PIA.
You tell the bank "sign here or take the keys".
You ask them to support a DSA with an immediate write off of the shortfall.
If they don't agree, hand back the keys and go bankrupt.

If you would like to live in the family home, then you can ask the bank to take your ex's name off the mortgage and give you a non-recourse split mortgage. They will probably refuse so back to Plan A.

Brendan
 
Income details
Net monthly*(i.e. after tax) Income self: approx €2000
nature of income e.g. private sector, no bonus, no pension
Income history: same employer for 8 yrs
Net monthly*income co owner: approx €1900
nature of income - public / charity
Income history:*same employer 5 years
Amount of child benefit received - n/a*
Amount of Mortgage Interest Supplement received - n/a
Personal circumstances so we can calculate your reasonable living expenses*- looking to sell house as split up and neither one of us can buy each other out or afford alone. Co-owner also ill and had alot of medical expense - paying interest only for 2yrs now.

The Insolvency Service has published*Guidelines for reasonable living expenses*based on the family size, whether or not you need a car for work, childcare costs and other exceptional circumstances. By filling in this information, we (or you ) can calculate what your reasonable monthly living expenses should be.*
One adult family or two adult family - n/a
Do you need a car for work or do you use public transport?* each have a car for travel to work
Number of children - none
Montly spend on special circumstances: e.g. exceptional healthcare costs co-owner approx €300 a month

Home loan Lender:* Haven Mortgages (EBS)
Amount outstanding:*€287,000
Value of home: €150,000
Interest rate: SVR
Monthly repayment: €1100 (but paying €760 mth interest only)
Amount in arrears: €6000
Summary of discussions and agreements with the bank: been on interedt only for agreed 18mth period with bank. Applied again and bank refused. Spoken to bank about situationand our desire to sell house as no longer in relationship and only one person can live in house but one alone cant afford mortgage or to sign over. Co-owner in particular having difficulty meeting full payments and i cant afford to pay more than my half. Also I paid in full for deposit and house now in negative equity of approx 60%. Bought house for €315k.
Bank had advised they need firm offer before they can discuss any write down or discussion around shortfall. Now theyve advised no write down but for us to propose how we propose to handle shortfall (approx €150k), in order for them to consider sale.
We're looking to submit this in january as buyer wants to proceed also.

Monthly rent received - n/a one room rented €300 a month which allows cover for my rent elsewhere. (Co-owner living in house)
*Credit Union*- n/a
Amount of shares - n/a
Other loans and creditors - me(none), *co-owner has other loans maybe €8000 total?
Overdraft - me €1000 outstanding, co-owner acc €1500 + €3000 on joint acc outstanding
Credit Card - me €1000 outstanding*
Credit Card - co-owner €1000 outstanding
Other savings and investments: none
Do you expect any lump sums in the medium term future?*No
Redundancy, inheritances, injuries awards: None
*How important is retaining the family home to you?* Not
Which of the following best describes your situation? Its not a family home and preventing us from moving on with our lives.
What is your preferred realistic outcome?*I want to sell the house and deal with the shortfall through a DSA which i believe is the fairest outcome as we are stuck in a situation with poor potential to cut our losses and are bith willing to take on a debt for 5-6 years even though its not through any actions of ours that the house decreased in value. Bank sanctioned and valyed at that same amount in 2008 and we are both early 30's and need some confirmation from bank at this stage re shortfall. I dont think its fair that we left with a debt for period of remaining term 30 years.
 
Thanks Brendan,

Hope the above provides a little more information. To summarise, this is not a case of bankrupcy, just a case of negative equity and failed relationship and wondering how the 'voluntary sale for loss' scheme from ebs would affect DSA... i think. Would be very interested in your advice and knowledge of this re our case?

Thanks
Query1
 
If the property were totally rented out would it pay for the mortgage?
 
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