Mortgage Question - MARP & Mortgage to Rent

sam27

Hi,

My sister is a Lone Parent with one child. She has had a mortgage for over 7 years and was laid off work in 2010. She had one year payment insurance paying her mortgage till March 2011.

She has been in MARP with IBRC since this time. Last week, they contacted her and discussed her Financial Statement.

She is currently paying €320 per month. This equates to 2/3 of interest on her mortgage. They are demanding her to pay €440 per month to cover full interest on her mortgage. However, She is struggling to pay the €320 as it is. So refused to pay this new amount but offered to continue paying the €320 per month till she gets a job/improvement in financial circumstances.
(She has paid over €55,000 to date on this mortgage of €130,000. The amount outstanding is still €130,000+.)

Yesterday she received in the post a letter to say the mortgage is unsustainable. They want voluntary surrender of the property or sell it. She is appealing this decision in relation to refusing her offer to continue paying the €320 as opposed to €440 per month that they want.

She is considering availing of the Mortgage to Rent Scheme introduced by the Government last September. However, IBRC do not run this scheme at present.

Can anyone advise me in relation to the above. Any advice greatly appreciated.

Cushie Butterfield

It's very hard to negotiate with a bank if you can't meet at least the full interest content of the mortgage repayment. With regard to the Mortgage to Rent scheme, AFAIK not a lot of people have been recommended to it by their banks anyway. Is the property in negative equity? A property has to be in negative equity to qualify for this scheme, so even if the bank were running the scheme it may not have been an option anyway.

You don't say what social welfare payment you sister is claiming. Has she approached her local HSE Community Welfare Officer to see if she may be entitled to claim Mortgage Interest Supplement ? In a straightforward case the recipient would receive the interest content of their mortgage repayment minus €30 per week, so if her's were straightforward she would receive €440.00 minus €120.00 which is €320.00 per month, so if the bank would accept €440.00 she would only have to come up with €120.00 per month.

Of course all of the above depends on her individual circumstances, & income such as maintenance payments or Family Income Supplement would be counted as means in the eligibilty criteria - it's all in the link I provided above, so it could be the case that she's not entitled to it if she's above the income threshold, but she should enquire anyway.

I presume she's been in touch with MABS, who have a dedicated hotine for people in mortgage distress. She could also explore the possibility of renting out a room in the house (if there is a spare room) even on a short term basis to help with the repayments until such a time that her situation improves.

cookie1977

Shhe should get in touch with
FLAC
http://www.flac.ie/
and/or
New Beginnings
http://www.newbeginning.ie/

And discuss the situation with them. They are very busy and are primarily focused on urgent cases but her's could be considered one. Best of luck.

sam27

Cushie Butterfield wrote: »

It's very hard to negotiate with a bank if you can't meet at least the full interest content of the mortgage repayment. With regard to the Mortgage to Rent scheme, AFAIK not a lot of people have been recommended to it by their banks anyway. Is the property in negative equity? A property has to be in negative equity to qualify for this scheme, so even if the bank were running the scheme it may not have been an option anyway.

You don't say what social welfare payment you sister is claiming. Has she approached her local HSE Community Welfare Officer to see if she may be entitled to claim Mortgage Interest Supplement ? In a straightforward case the recipient would receive the interest content of their mortgage repayment minus €30 per week, so if her's were straightforward she would receive €440.00 minus €120.00 which is €320.00 per month, so if the bank would accept €440.00 she would only have to come up with €120.00 per month.

Of course all of the above depends on her individual circumstances, & income such as maintenance payments or Family Income Supplement would be counted as means in the eligibilty criteria - it's all in the link I provided above, so it could be the case that she's not entitled to it if she's above the income threshold, but she should enquire anyway.

I presume she's been in touch with MABS, who have a dedicated hotine for people in mortgage distress. She could also explore the possibility of renting out a room in the house (if there is a spare room) even on a short term basis to help with the repayments until such a time that her situation improves.

Cushie thank you very much for your detailed response. Much appreciated. The house is in negative equity. She is on Lone Parents at the moment, having worked all her life. All she can afford is €320 per month. That is her limit.

In relation to Mortgage Interest Supplement, she applied for that but as she was €4.10 (four euro and ten cents) over the means test, she did not qualify for this payment.

In relation to the Mortgage to Rent Scheme, she fulfills all the criteria that applies in this case, however IBRC will not discuss this option with her as they do not implement the scheme at present.

Any further advice would be greatly appreciated. Thanks again.

Yes she has been in contact with MABS and they agree that €320 is the most she can afford to pay.

sam27

cookie1977 wrote: »

Shhe should get in touch with
FLAC
http://www.flac.ie/
and/or
New Beginnings
http://www.newbeginning.ie/

And discuss the situation with them. They are very busy and are primarily focused on urgent cases but her's could be considered one. Best of luck.

Thank you Cookie. I will do that.

mickm86

sam27, do you mind me asking how long was your sister in the marp for before they asked her to voluntarily surrender her home?

cookie1977

mickm86 wrote: »

sam27, do you mind me asking how long was your sister in the marp for before they asked her to voluntarily surrender her home?

In anticipation of a reply, I'll just say that if you keep to the deal under MARP and continue talking then you should have protection for the full period of the deal, up to 5 years. If the mortgagee broke the deal then the term of up to 5 years protection is not guaranteed. Under MARp you could only have to pay 66% of your interest repayments and zero capital for up to 5 years but that deal depends on individual situations. That deal is the best a mortgagee will get.

mickm86

cookie 1977, are the banks starting to ask for people to voluntarily surrender their home? What would happen, if you dont mind me asking as you seem to have a good knowledge, if the home in negative equity was sold, would the person be entiteld to council accomadation as well as continuing to pay off the remainder owed to the bank?

cookie1977

Some of the questions are above my pay grade but I'll do my best. If they asked you to surrender and you agreed to that then it could take them a long time to sell the home. There's a new personal insolvency bill coming though the Dail soon (some details here) which should help people in these situations as the current laws can be quite penal. Qualification for council accommodation would depend on income and other circumstances so I can't give you a definite answer there.

Would you contact http://www.flac.ie/ as they'll be able to give you better advice? As we're still awaiting full details of the personal insolvency bill.

mickm86

thanks cookie1977

cookie1977

The Personal insolvency bill will make it easier to deal with creditors but it's a big step to take so try get as much professional advice as possible. Good luck! This link is also good for information:

http://www.keepingyourhome.ie

sam27

Sorry for late reply. I only accessed the site today. She has been in MARP since Feb/ March 2011. Id have to double check but around that date.

Still awaiting a reply on appeal