Key Post What to do if you get a letter saying your mortgage is unsustainable

Brendan Burgess

Brendan Burgess

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The first thing to do is to sit back and consider whether the mortgage is unsustainable or not.

If your mortgage is unsustainable, maybe you are better off agreeing to a voluntary sale and trying to do a deal on the shortfall.

If you really want to keep your home, you can appeal the decision to the bank's internal appeals committee. But you should have good grounds for appeal.

15,000 unsustainable mortgage letters have been issued. The lenders will have to prioritise which ones to actually seek repossession against. The primary purpose of this post is to show you how to get to the back of the queue. This may be delaying the inevitable or it may give you time to improve your income.

It is likely that the lenders will prioritise the following for taking legal action:

  • Those who have not completed a Standard Financial Statement
  • Those who are paying nothing at all
  • Those who are not returning calls
  • Those who are paying their unsecured debts in priority to their mortgage
  • Those who have cheap tracker mortgages


How to go to the back of the queue for repossession
•Try to pay the interest every month
•If you can’t pay the interest, pay something meaningful
•If your income is volatile - try to keep the payments reasonably level. It is better to pay €400 per month rather than €1,200 one month and nothing for the next two months.
•Take calls and return calls
•Prioritise your mortgage over the credit union and other creditors
•Register with MABS
•Fill in the Standard Financial Statement
•Keep a note of every call– date, time, name of person, what was said
•Write to the bank regularly confirming the details of what was said
•Write follow-up and reminder letters

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Here are some factors to consider when deciding whether to give up your home or not

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How to encourage the bank to restructure your mortgage

Banks won't restructure if you do not have enough income to pay the restructured mortgage.

Stop paying your unsecured creditors or, at least, reduce the amounts you are paying to free up more money to pay the mortgage.

If you are paying at least the interest on the mortgage, you can claim that the Central Bank considers your mortgage to be sustainable:

Central Bank Governor agrees that long interest-only is a sustainable solution
 
If the lender does begin legal action

Some people stop making any repayments when the bank begins legal action on the grounds that if they are going to lose their home, they may as well stop making repayments. This is the very opposite of what you should do.

You should make it very clear to the lender that you consider your mortgage sustainable and that you are going to continue paying as much as you can. Let them understand fully that you intend to fully defend the action.

If you are doing your best, and you are paying a reasonable amount, the judge is going to make it as difficult as possible for the bank to repossess your home.

If you are paying the interest in full every month, and you can show that the bank is being unreasonable, the judge will probably not grant repossession.

Check if the lender has adhered to the letter and spirit of the Code of Conduct on Mortgage Arrears. If they have not done so, point it out to them, and they will start the process all over again.

You should contact New Beginning who specialise in defending lenders' attempts to repossess homes.

They have a very useful list of [broken link removed]which might give you some ideas.

The case may or may not get to court, so be prepared. Make sure you have documented every contact. You will need to show the judge that you have been responsible, so have a file of correspondence documenting your efforts.

The court can be intimidating, so go down and watch a few cases to get an understanding of how it works. You will be relieved to see that most cases are deferred where any defence is put up.
 
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Brendan,

How about one who got a letter in 2012 about mortgage being unsustainable and then I have fully repaid the arrears and maintain the repayments in full?
Is the house still going to be repossessed due to bank initial assessment of mortgage being unsustainable?

I would appreciate your opinion.
 
nec said:
Brendan,

How about one who got a letter in 2012 about mortgage being unsustainable and then I have fully repaid the arrears and maintain the repayments in full?
Is the house still going to be repossessed due to bank initial assessment of mortgage being unsustainable.
Click to expand...

Highly unlikely. I presume that they have not begun legal proceedings?
 
If you choose the voluntary sale route the bank would give you a bit of breathing space once it's on the market I'd imagine. There is nothing stopping you putting a slightly above average asking price and it is quite possible to make it a long drawn out process. You are after all going to liable for the shortfall so you need to consider the sale and/or offers carefully. Ultimately, if the bank refuse a reasonable offer on your property you may find yourself back in MARP.
 
Has anyone successfully appealed one of these letters? It would be a great help if you would post your story here to help others.
 
Brendan Burgess said:
Has anyone successfully appealed one of these letters? It would be a great help if you would post your story here to help others.
Click to expand...


what those letters really means once person have sorted the arrears and kept the repayments?

My letter was dated late 2012 or early 2013 and I between then and now I have managed to repay all of the arrears and continued to make the full repayments.
 
Update July 2015

Séamus Coffey, Karl Deeter and I have been attending some of the Circuit Court hearings for possessions cases and wrote an article for the Irish Times:

"Why borrowers should not fear repossession courts"

In June, I attended the Circuit Court in Letterkenny and of 198 cases, not one order was granted. Only 3 borrowers showed up in court and in total, only around 20 were represented. On borrower had paid nothing for some years and had actually handed back the keys, but the Registrar still refused the bank's application.

So I would update the above advice. If you are paying anything meaningful towards your mortgage, even if the lender does try to get an order, they are very unlikely to succeed.

  • Pay something meaningful
  • Respond to all correspondence
  • Show up in court and tell the Registrar your story
Brendan
 
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