Dropping the keys at the bank

Zynks

How long until this becomes a trend?

I know several people living in satellite dormitory towns who were stretched to the limit and suffering from negative equity that made it impossible to make any changes like moving homes. The most worrying part is that in the case of many families the extra taxation pretty much exterminated their disposable income after mortgage, bills & transport.

Alternative 1: keep going and god knows how you will keep going and feeding the kids - probably defaulting a few payments and getting a bad credit record; or

Alternative 2: Drop the keys to your bank manager, get the bad credit record anyway but move to cheaper rented accommodation in an area that allows you a better quality of living

It is getting to this stage for many people out there. I think it will start happening a lot soon.

onimpulse

Dropping the keys back into the bank is an idea that seams to have come from the US where this will in fact discharge your liability as far as I understand it.

However, not here! Legislation is different. So if you drop the keys back it's completely irrelivent. You're still responsable for the full amount of the loan outstanding. It doesn't matter where you're living or where the keys are you still have to repay the loan under Irish legislation. That daft suggestion about moving out and renting is just making the situation worse. Now you've added rent to all the things you have to pay and discharged no debt or responsibility.

Talk to your bank if you're in trouble. Despite the bad press I heard Eugene Sheedy from AIB interviewed last week where he said they had not forclosed on as far as I remember any (though I'm open to correction on this) loans relating to family homes.

At the end of the day think about this from the banks point of view. Why would they want to take your keys... eventually sell your house prob a year down the line & have all the expense associated with that, as well as no interest being paid in the meantime & then chase you up in the courts & all the legal expense associated with that? Wouldn't it make more sense for them to renegotiate the loan so you can at least keep up interest payments for the moment with a view to clearing capital down the line?

Handing back the keys makes the whole situation worse for the people concerned & even suggesting it is irresponsible as many people aren't aware of the legal implications (despite the fact they should be - that was their solicitors job when they bought the house & remember they signed on the dotted line to say they understood the implications, but that's another rant on taking responsibility for your actions...). Talk to the bank - it's the only way to deal with it.

Zynks

onimpulse wrote: »

At the end of the day think about this from the banks point of view. Why would they want to take your keys... eventually sell your house prob a year down the line & have all the expense associated with that, as well as no interest being paid in the meantime & then chase you up in the courts & all the legal expense associated with that? Wouldn't it make more sense for them to renegotiate the loan so you can at least keep up interest payments for the moment with a view to clearing capital down the line?

Think from a tax payers view point. Isn't that pretty much what the taxpayer is going to do for the banks?

onimpulse wrote: »

Handing back the keys makes the whole situation worse for the people concerned & even suggesting it is irresponsible as many people aren't aware of the legal implications (despite the fact they should be - that was their solicitors job when they bought the house & remember they signed on the dotted line to say they understood the implications, but that's another rant on taking responsibility for your actions...). Talk to the bank - it's the only way to deal with it.

I am aware of the legislation, but when the problem is to put food in the table they become irrelevant to many people. Banks can chase and make a few people end being declared bankrupt, but what if these figures start growing into four or five digits?

Let's be clear of one thing: I am not suggesting anyone to do it. I am speculating on the likelihood of this starting to happen more frequently by people who are being squeezed to the limit.

nesf

Zynks wrote: »

Alternative 2: Drop the keys to your bank manager, get the bad credit record anyway but move to cheaper rented accommodation in an area that allows you a better quality of living

God no, the bank would have to sell or value the property at today's prices and you'd be left with a loan with the bank for the remaining amount which considering the present market would be rather substantial.

As above, in the US the bank can't come after you for what's still owed on the mortgage, here it is different and there really is every incentive to keep paying your mortgage until house prices increase enough to make the left over bearable. As is, you can get a year of non-payment before being evicted so why you would give the bank the keys immediately is beyond me.

You're far better off going in and renegotiating your mortgage, the banks generally are amenable to this and stretch out your present mortgage over another 5 or 10 years to reduce the monthly outgoings.

InReality

Hopefully, people would quickly find out that giving the keys to the bank is meaningless, if it starts happening.