Mortgage Arrears Problem in Ireland.

Boskowski

The problem is - as you pointed out very well - we're pissing money away (that we don't have) as it stands.

I always thought it would be common knowledge that a mortgage must be paid back. How come lately some people have this expectation that - 'ah sure aren't we all together in this awful recession' - this should be suspended?

Own fault or not - this is life. Surely there should be some (temporary) support to avoid hardship but surely no one can expect to be kept in their house forever courtesy of the taxpayer.

jpb1974

yekahS wrote: »

Or how about this for a mad idea, people pay back the amount they borrowed.

And if they can't afford to pay it back - then the bank repossess the house, either can't sell it or has to sell it for a loss and the government has to cough up to provide housing for the evictee(s).

What does that solve?

BluePlanet

fliball123 wrote: »

Well let those without sin throw the first stone blah blah blah

As long as my taxes are going to unmarried mothers
As long as my taxes are going to Childrens allowences
As long as my taxes are going to pay unsustainable pensions
As long as my taxes are going to pay ps wages
As long as my taxes are going to give nearly 200 squid to an unemployed person
As long as my taxes are going to Refugees
As long as my taxes are going to banks

I dont see why they should not go to help people who are paying mortgages..

The difference is that none of those things you've listed, is the same thing as using taxpayers money to help YOU retain ownership of an asset.

jester77

I think this is a ridiculous proposal. If I was going to borrow 200k+ from a bank over 20+ years then I sure as hell would be sitting down very carefully and working out all possible permutations for what could happen during the lifetime of the mortgage. My parents tooks out a mortgage in the 70's fixed at 9.5% and variable interest rates went well above and well below that figure during the lifetime of their mortgage. I would be making sure that I could cover rates of over 10%, which is soon likely. I would also make sure that 1 person can easily cover the mortgage repayments at any one time. It is most likely that over 20+ years that one half of a couple will be out of work for an extended period, i.e. unemployment, pregnancy, health reasons, career break, etc. Possibly the 2 could be out of work, therefore you would want to have insurance or some arrangement with the bank to also cover that possibility for a short period of time. After you have worked out those sums, you should then know what you can afford to borrow.

A lot of people just went in and took out mortgages without every considering what they could afford. It shouldn't be the responsibility of other tax payers to sort out these peoples mistakes.

jpb1974

A lot of people just went in and took out mortgages without every considering what they could afford.

Actually... what a lot of people did was -

Looked at the situation they were in at the time
Had reason to feel secure in their jobs
Felt they could afford the mortgage
Had no knowledge that a Global Credit crunch was lurking in the shadows
Had no knowledge that the Irish economy was going to fall as flat and hard on it's arse as it has

And thus opted to take out a mortgage.

Not everyone had a crystal ball at their disposal. You know if everyone planned only for the worst then it's possible that very few would have homes.

danbohan

jpb1974 wrote: »

Actually... what a lot of people did was -

Looked at the situation they were in at the time
Had reason to feel secure in their jobs, ( where in the world are jobs 100%secure ?)
Felt they could afford the mortgage (did people really think that mortgage rates could not reach 9% + , remember they were at that level as recently as 1999)
Had no knowledge that a Global Credit crunch was lurking in the shadows( always prepare for the unexpected )
Had no knowledge that the Irish economy was going to fall as flat and hard on it's arse as it has ( a little look at the irish economy with 500k people employed in construction would tell anybody it was a bubble)

And thus opted to take out a mortgage.( which with interest rates at only 5% they find they cant afford and want the taxpayers to pay for their mistakes )

Not everyone had a crystal ball at their disposal. You know if everyone planned for the worst then it's possible that very few would have homes.

whats needed is not a bail out of people who cant repay their mortgages, but a change to the bankruptcy laws and the end to banks following for people the balance on repossessed homes

jpb1974

Aye... something that is both constructive and fair is what's needed.

I don't agree that the debt should be written off... but some sort of agreement/arrangement needs to be put in place to take pressure of the needy and give them a reasonable amount of time in order for the economy to recover and employment to be found. (I know that changes are happening in this regard)

I doubt many people want to be sitting in this black hole and I believe that they'd be happy to pay their mortgage... finding work is the hard part for many of them... for others significantly less take home pay is a big problem.

bmel

Hi, Would appreciate your opinion on my current situation. I am a foreign national came here about 5 years ago with my family. We bought a house 4 years back and untill now we have been paying the mortgage without fail, though I had lost my job 3 years back (can't get another one due to many reason like work permit restrictions and no job situation). It is on my wife's income(about 2600/month) we were managing since then. Our mortgage itself is about 1070 plus the life insurance 70 Euro. Another 1% interest hike will be added from this month (about 160 euro/month). WE have some personal loans of about 550 Euros (taken for car, etc).

We approached the bank to give a holiday kind of package so that we could have some money for a vacation to our home country. They seem to turn down our suggestions. In the form they gave us to list down the expenditures, we mentioned 800 euros/month for food(for a 4 member family, including 2 children) and he was telling us that was too much.
Now the point is , I am unable to cope up with this depressive state, have started medication for blood pressure and stomach acidity, all because of the stress I am living through. I am just 36, but dunno how my life will be directed in the current situation. At one point I might go back to my country for the sake of my children, for them to have a proper life. I know I am on negative equity but what am I supposed to do. I know at one point in the near term I will crash down.
Guys, any suggestions for me?

BluePlanet

Sell your house and accept the lose of negative equity.
Right now you are tied to a sinking ship.

Get rid of the house and live in a cheap apartment or rental.
You'll still owe the bank the difference but at least your debt won't be big as it currently is. Once you accept some cutbacks in your budget (like not taking a holiday and shopping at Aldi), you may find the debt servicable.

Monty Burnz

citizenofeire wrote: »

I am not asking to be bailed out, nor am I asking to have my mortgage paid off for me.

I am asking for leglisation to be introduced to stop re-possession of the homes of those who are making an effort to pay what they can from their reduced income.

So they should be allowed, at the cost of taxpayers, to hold onto an asset that they don't own?? :eek:

Dempo1

bmel wrote: »

Hi, Would appreciate your opinion on my current situation. I am a foreign national came here about 5 years ago with my family. We bought a house 4 years back and untill now we have been paying the mortgage without fail, though I had lost my job 3 years back (can't get another one due to many reason like work permit restrictions and no job situation). It is on my wife's income(about 2600/month) we were managing since then. Our mortgage itself is about 1070 plus the life insurance 70 Euro. Another 1% interest hike will be added from this month (about 160 euro/month). WE have some personal loans of about 550 Euros (taken for car, etc).

We approached the bank to give a holiday kind of package so that we could have some money for a vacation to our home country. They seem to turn down our suggestions. In the form they gave us to list down the expenditures, we mentioned 800 euros/month for food(for a 4 member family, including 2 children) and he was telling us that was too much.
Now the point is , I am unable to cope up with this depressive state, have started medication for blood pressure and stomach acidity, all because of the stress I am living through. I am just 36, but dunno how my life will be directed in the current situation. At one point I might go back to my country for the sake of my children, for them to have a proper life. I know I am on negative equity but what am I supposed to do. I know at one point in the near term I will crash down.
Guys, any suggestions for me?

I genuinely sympathize with you and your situation is not an exception to what is going on around the country right now. What is critical is insuring you communicate your circumstances and in writing, I assume your with PTSB and they are required to meet with you to discuss your circumstances, equally they are obliged to offer you a number of options, in particular an interest only payment period, reviewed every six months. You must at all times communicate with your lender and immediately inform them in writing about your situation, the normal practice is for them to arrange a meeting at your local branch, they will go through your statement of means etc. To be honest any mention of holidays etc is not advisable, this is not the banks concern. Again, PTSB must adhere to the mortgage resolution process. Take a look at this site http://keepingyourhome.ie/

Monty Burnz

sollar wrote: »

Consider it a form of welfare. People make bad decisions in life and sometimes need help.

Fair enough, but why should they benefit from their bad decisions?

Bad decision - buy overpriced property during bubble
Consequence - keep house

Good decision - avoid buying overpriced house during bubble
Consequence - pay extra taxes to pay for the other guy's house, still don't own a house

Fair?

bmel

I wish if things worked out that way. But the banks will not agree for a short sale. I am sure the negative equity will be about 50k to 60K atleast.
Thats a huge money to be paid off! may be a life time debt! As a foreign national I am not eligible for any sort of unemployment benefit/assistance also. So I don;t have anything to hang on to!

Monty Burnz

Dob74 wrote: »

[/B]So being spiteful towards people who did will help.
The taxpayer has bailed out the lenders.
Just change the law so no one has to pay back more than the house is worth.
That would end banks driving the price of houses.

BUT WHO PAYS FOR IT??

Seriously, you'd think by this stage in the game everyone would have informed themselves of the basic economics involved, but no - every time this comes up people advocate forcing the banks to take losses, the magical money tree solution.

Dempo1

BluePlanet wrote: »

Sell your house and accept the lose of negative equity.
Right now you are tied to a sinking ship.

Get rid of the house and live in a cheap apartment or rental.
You'll still owe the bank the difference but at least your debt won't be big as it currently is. Once you accept some cutbacks in your budget (like not taking a holiday and shopping at Aldi), you may find the debt servicable.

Very constructive, get rid of the House, hmmm thats going to be easy. Complete nonsense.

Monty Burnz

hinault wrote: »

The lending institution, before issuing the loan to the mortgage applicant, sends a valuer around to the property to assess it's value before approving a loan to a mortgage applicant.

So the lending institution carries some level of culpability when it valued a property in 2006 at 50% more than it's current value in 2011.

Nonsense. They were valuing what it was 'worth' in 2006 - not 2011. Are they supposed to have crystal balls? If it wasn't worth that much, why would somebody jump through all the hoops and get themselves in enormous debt to pay that much?

Padraig Mor

jpb1974 wrote: »

Actually... what a lot of people did was -

Looked at the situation they were in at the time
Had reason to feel secure in their jobs
Felt they could afford the mortgage
Had no knowledge that a Global Credit crunch was lurking in the shadows
Had no knowledge that the Irish economy was going to fall as flat and hard on it's arse as it has

And thus opted to take out a mortgage.

Not everyone had a crystal ball at their disposal. You know if everyone planned only for the worst then it's possible that very few would have homes.

Yes, but these people could also have taken steps to protect themselves in the event that their mortgage stopped being affordable. I have a mortgage but, as my job is contracts, I pay income protection insurance. This will pay me €2000 a month if I lose my job which, together with social welfare, will allow me to keep up with the mortgage, bills, etc. This insurance now costs me over €200 a month - €200 that I'd love to spend on drink, holidays, whatever, but which instead I use to help protect my family if the unexpected happens. What stopped these people taking out similar protection or, heaven help us, saving a little?

Monty Burnz

fliball123 wrote: »

Well let those without sin throw the first stone blah blah blah

As long as my taxes are going to unmarried mothers
As long as my taxes are going to Childrens allowences
As long as my taxes are going to pay unsustainable pensions
As long as my taxes are going to pay ps wages
As long as my taxes are going to give nearly 200 squid to an unemployed person
As long as my taxes are going to Refugees
As long as my taxes are going to banks

I dont see why they should not go to help people who are paying mortgages.

So, by your logic, we should also bail out the shareholders of the banks who thought they were being properly run and regulated? And those who lost money on Eircom? And those who failed to buy Microsoft shares in 1979? And those who lost down at the racecourse?

Just because some money has already been wasted, doesn't mean it's somehow right to waste evern more. Bizarre logic.

Monty Burnz

jpb1974 wrote: »

And if they can't afford to pay it back - then the bank repossess the house, either can't sell it or has to sell it for a loss and the government has to cough up to provide housing for the evictee(s).

What does that solve?

1. It means prices will fall to more realistic levels
2. It means that those who do not have property might be able to get some
3. Those who are sitting in property not paying their mortgages are ALREADY in social housing
4. Many of those who can't pay their mortgage may well be able to pay rent on a similar propery. Why should the government have to pay it for them if they can?

Monty Burnz

jpb1974 wrote: »

Not everyone had a crystal ball at their disposal. You know if everyone planned only for the worst then it's possible that very few would have homes.

No - probably a very slightly smaller number would have much more affordable homes if people weren't bidding up prices in a frenzy like we saw a few years ago.

bmel

The banks did a valuation years back for X amount. The same bank also followed risk assessments based on the income situations of the buyers before they lent. Now the valuation is changed! the income situation of the buyers also changed. Why the negative equity is soley on the shoulder on the buyers? what about the responsibility of banks? are they not responsible for their actions, valuations, risk assesment, lenting, etc?

jprender

Padraig Mor wrote: »

Yes, but these people could also have taken steps to protect themselves in the event that their mortgage stopped being affordable. I have a mortgage but, as my job is contracts, I pay income protection insurance. This will pay me €2000 a month if I lose my job which, together with social welfare, will allow me to keep up with the mortgage, bills, etc. This insurance now costs me over €200 a month - €200 that I'd love to spend on drink, holidays, whatever, but which instead I use to help protect my family if the unexpected happens. What stopped these people taking out similar protection or, heaven help us, saving a little?

I think that most income protection policies only pay you if you can not work due to illness or accident.

I do not believe they make payments if you simply lose your job.

Can you clarify if you are covered if you are simply "out of contract" ?

Monty Burnz

bmel wrote: »

The banks did a valuation years back for X amount. The same bank also followed risk assessments based on the income situations of the buyers before they lent. Now the valuation is changed! the income situation of the buyers also changed. Why the negative equity is soley on the shoulder on the buyers? what about the responsibility of banks? are they not responsible for their actions, valuations, risk assesment, lenting, etc?

I bought a car with a car loan. I paid the market value for the car, and the bank agreed.

Now, only 3 years later, my car has halved in value! Why should I shoulder responsibility for this negative equity? The bank should have been more responsible.

jpb1974

This will pay me €2000 a month if I lose my job

For how long?

1. It means prices will fall to more realistic levels
2. It means that those who do not have property might be able to get some
3. Those who are sitting in property not paying their mortgages are ALREADY in social housing
4. Many of those who can't pay their mortgage may well be able to pay rent on a similar propery. Why should the government have to pay it for them if they can?

1. They already have
2. As per #1
3. Not necessarily. Many people are struggling but are paying, but future mortgage interest rates, ECB rate hikes, tax hikes etc are going to cause more issues.
4. Don't get your point at all here. Can't pay mortgage, can pay rent.. doesn't make sense to me.

Now, only 3 years later, my car has halved in value! Why should I shoulder responsibility for this negative equity? The bank should have been more responsible.

Not a valid comparison at all. Houses don't depreciate in the same way cars do. Houses prices are typically a multiple of car prices. You can't compare like for like here.

Duke Leonal Felmet

sollar wrote: »

This is life, people make all sorts of bad decisions and the state picks up the tab in some way or another. It happens all the time. Many people drawing money from the welfare system or the health system do so because of bad decisions they have made in life.

I can't wait for the next "boom", I'm going to borrow like a mad yoke.

Be prepared to write a big cheque for me, sollar. You seem to approve of such outcomes.

Monty Burnz

jpb1974 wrote: »

1. They already have
2. As per #1
3. And?
4. Don't get your point at all here. Can't pay mortgage, can pay rent.. doesn't make sense to me.

1. If you think current prices are realistic, you've a fright in store. I agree they are more realistic - but that's a bit like saying 2 quid is more realistic for a Mars bar than 4 quid. We've a long way to go yet - I'd be surprised if prices don't halve again (barring some sort of Deux Ex Machina).

2. As per 1
3. Someone was saying that if they lose their homes, those not paying their mortgage would have to be put in social housing. They are already in social housing. That is my point.
4. My point is that there is some weird assumption that people cannot rent a house.

Duke Leonal Felmet

fliball123 wrote: »

Well let those without sin throw the first stone blah blah blah

As long as my taxes are going to unmarried mothers
As long as my taxes are going to Childrens allowences
As long as my taxes are going to pay unsustainable pensions
As long as my taxes are going to pay ps wages
As long as my taxes are going to give nearly 200 squid to an unemployed person
As long as my taxes are going to Refugees
As long as my taxes are going to banks

I dont see why they should not go to help people who are paying mortgages..

Its a demographic thing . There are well over a million people who owe money to a bank for a mortgage and who are struggling..I do not see the difference

I would also remove a number of the above list. I am all for helping people who were born into poverty, but I do not want to pay for those who make stupid decisions. It is my money, I would like to have some say in where it goes. This is what democracy is about. Deal with it.


I must repeat BluePlanet's point, none of the above list leads to you retaining ownership of an asset.

Monty Burnz

jpb1974 wrote: »

Not a valid comparison at all. Houses don't depreciate in the same way cars do.

I think you'll find that they do. They've depreciated about 40% in 3 years.

jpb1974 wrote: »

Houses prices are typically a multiple of car prices. You can't compare like for like here.

So if something is more expensive than a car, it can't depreciate?
Good news for yacht owners I guess.

Duke Leonal Felmet

BluePlanet wrote: »

The difference is that none of those things you've listed, is the same thing as using taxpayers money to help YOU retain ownership of an asset.

*high fives*

jpb1974

those not paying their mortgage would have to be put in social housing

Stay in your own house and have the Gov't pay the rent.

Or get chucked out of your own house and go live in someone else's house and have the Gov't pay the rent.

So in effect it is probably that it may balance itself out... and thus the question begs to be asked "which approach is more constructive?"