Of course it did. If she could afford them she would pay the monthly capital and interest repayments, but they are more than her take home pay, so she cannot. She has spent most of her disposable income paying variable interest rates over the past decade.
Then why did the bank falsify her income on its internal loan report, and the valuer add 2 bedrooms and state all the windows were double glazed when only one was? Its because head office would not pass a loan report for the amount of the loan if it was with her real salary, and was for a 3 bedroomed mostly single glazed house.
Nobody is suggesting it was general bank policy. Instead the file indicates it was someone in the bank who increased the borrowers salary by over 60k, and it was the individual valuer who submitted the incorrect valuation with its facts wrong.
Who said that? She used a solicitor to do the legal work in purchasing the property if that is what you mean. She says no banker advised her to "get legal advice".
She knew what the interest only repayments would be, but nowhere in her file or the banks file does it say how much the monthly capital and interest repayments would be once the interest only period expired. Should she have been told?
Not necessarily, not when there is doubt about PIA being suitable when the loan was obtained due to suspected fraud and wrongdoing on the part of the banker and valuer.
She certainly will not, she has paid the bank the best part of a few hundred thousand euro I think, and is ready to surrender the property back to the bank, yet the bank wants more.
She has the documents, she did not falsify them, as she did not write the loan report or valuation, or even see them until many years later. She just gave the bank her payslips and P60 etc, copies of which were also in the file obtained from the bank. The bank has given no reason or explanation for the discrepancies in their own documentation, despite being asked to do so. It is known the banker in question and the valuer have resigned or left their positions, perhaps for other reasons. Interesting you think it may be just a "theory" about the internal bank documents being falsified. If the borrower wanted to see it investigated further, should she contact the Garda fraud squad, and let them do so I wonder?
As multiple people have pointed out, that is a red herring.
I wrote the "best part of a few hundred thousand euro" - that implies monthly interest payments of less than €1800.
Correct, but should she not have been told what they were likely to be, or given some figures at least? Instead of just reassuring her that she could afford it, that the bank were the mortgage experts and they looked at her figures and decided she could afford it, they had decades of experience, perhaps she could roll over for another interest only period for 10 years and inflation would take care of the capital etc. That is what she was told.
She has the documentation she wants now, thank you very much. She would urge all borrowers to pay the €6.35 and get their file, even if they are not in arrears. She did not know what current capital and interest repayments would be 10 years ago because she trusted the mortgage experts, they said that was their area of expertise but even they said they did not know what repayments would be in 10 years time but they reassured her they would be affordable or she could roll over for another interest only period while inflation are away at the capital. Hindsight is wonderful when you are advised by mortgage advisers, the experts.
She paid the guts of a few hundred grand, it did not cost the bank that to extend the credit because of its margins on variable rates. But you are correct, nothing came off the principal, which is one reason why she is prepared to surrender the property.
Perhaps time an individual banker and valuer were investigated for fraud though? No harm in showing documents to the fraud squad? It may lessen the chance of such things happening again?
You're being very coy about precise figures. Ok, so at typical prevailing rates for 2007 she bought a €400k house on what you have led us to believe is a modest salary. You've said that she spent most of her disposable income on the interest. She knew the repayments could only go up as capital + interest cannot possibly be less than interest only. So what exactly was she expecting?
Nobody, including a bank manager, has a crystal ball that tells them what rates will be in ten years time. So, no, she should not have been told what they were likely to be as that would be rank speculation. But you can go to this page, slide one slider to the value of the house, another slider to an interest rate, and it tells you what your repayments will be. Takes all of 30 seconds. A six year old child could use it.
So that's her excuse for acting bewildered now? "The bank manager told me that inflation would take care of the capital". Did she do anything over the years when it was becoming clear that inflation wasn't taking care of anything? Does she realise that inflation high enough to wipe out your mortgage only happens in tandem with crushingly high interest rates that she would never have been able to afford? My sympathy is ebbing away -- this is all starting to sound ridiculous.
So you're telling me that she genuinely believed her repayments would not go up when she had to repay the capital? Or, in fact, that she'd never have to pay the capital down at all, because "inflation would take care of it". And she took no advice from anybody except the person selling her the mortgage. Sounds like she's made her own bed. In fairness, there must have been lots of people equally clueless for our bubble to have grown to such outrageous proportions. I'm beginning to understand how it happened.
Correct. It's called "making a profit". It's what banks are in business to do.
Well that's good of her, to be prepared to relinquish a property she has paid precisely nothing for. Unfortunately, it's not worth what she owes to the bank, so she is insolvent. That's what a PIA can sort out for her. She is not going to turn it around any other way. The gardai are not going to call to the door to say they caught the culprit, oh and here's a cheque for €200k. That is fantasy land stuff.
I'd certainly love to see it happen. But it won't help your friend's case one iota. Her borrowing is her own responsibility.
But if someone gives the banker proof of income, payslips P60 etc and the banker adds over 60k to the salary in order to sell the loan, is that not fraud? And is fraud and white collar crime not the fraud squads business?
Could be the taxpayers problem too when the banks had to be bailed out. And the borrowers problem when Capital and Interest Repayments are more than net income. The banker should have known that such lending was unsustainable.
Which is why that did not happen in 99.99% of cases, and I think I should suggest to the borrower that the Gardai fraud squad should be shown the evidence in black and white of where the banker added the 60k+, and the valuers incorrect valuation where clear facts were wrong, and let them take it from there.
As said before, she only got a copy of the valuation report many years later, when she paid €6.35 for her file under the data act mentioned. So the bank did not compile with S125, for this and other reasons.
Outside major cities and towns stranger things have happened
Yes, the valuer was a relative of the banker.Outside major cities and towns stranger things have happened
Actually we all know what fraud is.
I don't either, and I agree she must shoulder responsibility for the fact that she applied for a loan. She has paid almost €200,000 to date and is willing to give back the property. However the lender wants more. Her own bank 11 years ago turned her down for a loan, and implied to her they would not lend her half the amount. That should have set alarm bells ringing in her head, but did not. Finance is not her area of expertise. She finds all this a bit complicated and would be unable to post here. When the banker said in 2007 that she could roll over the interest only period in 10 years time, she should have got that in writing.