She sounds like a chancer.
She took the loan.
She asked her solicitor what the monthly repayments (interest and capital) would be but the solicitor did not know, she said to ask the bank. She asked the bank and was fobbed off, it would depend on future interest rates. She asked again and was told not to worry, they would be affordable, they got her figures, the bank were the experts, they had decades of experience, sure was property not going up in value all the time and wouldn't her wages increase during the ten years too and anyway the banker said (verbally) she could maybe extend the interest only period at the end of 10 years if she wanted to etc. She was told the most important thing was for her to get her foot on the ladder, it was a great investment etc.
She was and is a hard working nurse who took the advice of the mortgage experts who had decades of experience. If she is a chancer, what you think the banker who added over €60,000 to her salary on the loan report was? Or his relation, the valuer, who got the address of the property correct but not the number of bedrooms, type of windows etc? Or the bank, which in this instance did not comply with Consumer Credit Act 1995?
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.It didn't matter what the payments were going to be in ten years time
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.It makes literally no sense that the Bank would falsify the documents to give her a larger loan.
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.I'm saying that this defies logic for the Bank to do so.
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 was advised to get legal advice (as all borrowers are) before the mortgage and proceeded to get that 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?I cannot accept that she was not aware of what the repayments would be
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.PIA is a good option open to her in this scenario
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.I don't think there is any circumstance where she gets out of this unscathed.
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?It's unlikely that the theory of falsified documents will get her anywhere, in my opinion.
It didn't matter what the payments were going to be in ten years time, she would already have flushed €100k down the drain. Did she realise that?
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.
...she has paid the bank the best part of a few hundred thousand euro I think
As multiple people have pointed out, that is a red herring.... 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.
...and is ready to surrender the property back to the bank, yet the bank wants more.
If the borrower wanted to see it investigated further, should she contact the Garda fraud squad, and let them do so I wonder?
I wrote the "best part of a few hundred thousand euro" - that implies monthly interest payments of less than €1800."A few hundred thousand" implies monthly payments of €2-3k.
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.At the very least she must have realised it was never going to get cheaper when she had to start paying off capital.
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.Why is she looking for documentation now instead of whipping out a pencil and back of an envelope ten years ago, and figuring out what she was getting into?
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.Of course the bank wants more. It wants its money back. She hasn't paid a single cent of it yet.
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?Nobody has been prosecuted for reckless lending in this country yet.
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?I wrote the "best part of a few hundred thousand euro" - that implies monthly interest payments of less than €1800.
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.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
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....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.
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.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.
Correct. It's called "making a profit". It's what banks are in business to do.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.
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.But you are correct, nothing came off the principal, which is one reason why she is prepared to surrender the property
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.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?
She was and is a hard working nurse who took the advice of the mortgage experts who had decades of experience.
If she is a chancer, what you think the banker who added over €60,000 to her salary on the loan report was? Or his relation, the valuer, who got the address of the property correct but not the number of bedrooms, type of windows etc?
Or the bank, which in this instance did not comply with Consumer Credit Act 1995?
How the bank reached their decision to provide the loan is their business. If the bank givens a loan to someone with sufficient income and obtain collateral that is insufficient to cover the loan then that is their problem and they will suffer the consequences of being unable to recover their loss.
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?How the bank reached their decision to provide the loan is their 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.If the bank givens a loan to someone with sufficient income and obtain collateral that is insufficient to cover the loan then that is their problem
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.However, the credit approval process in most banks is pretty rigorous, involving several sign offs at different levels and the credit risk officers are very experienced. So the idea that someone could add 60K to a nurse's salary and that it would go unquestioned over several reviews, seems highly unlikely.
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.Which sections exactly? They seem to have complied with S125, since she got a copy of the valuation report...
Outside major cities and towns stranger things have happenedAnd how exactly did she know that the valuer was a relative of someone in the bank??
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?
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 happenedYes, the valuer was a relative of the banker.
Actually we all know what fraud is.Not fraud. Go learn what fraud is.
It certainly sounds like there's potential for a criminal action to have taken place, though it's not clear if it's fraud (who was defrauded?).
.. there is a division of duties when it comes to making credit decisions. The local managers have very limited input.
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.I don't believe your friend is a blameless victim here.
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