Refusing a split mortgage?

professore

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D3PO

professore wrote: »

I believe it was updated recently to 3 years instead of 12? I can't find any hard evidence online though, it's all encouraging you to go bankrupt in the UK, which takes 1 year due to the "onerous" Irish bankruptcy terms.

Not aware of any changes to it and Id be pretty sure that a change would have been front page news.

Sleepy

flix1, as you've seen yourself from speaking with the Personal Insolvency board, your income can't possibly meet your mortgage, credit card and whatever other debts you have. If you're earnings are beneath their reasonable living expenses guidelines then none of your creditors are going to be able to make a deal with you as you have nothing to give other than the house itself.

A bankruptcy really does appear to be the only option open to you. The bank can't just put the entire mortgage on hold on the gamble that your personal situation will improve and the non-secured debt will hound you even if they did. BTW, if your income is so low, have you looked into Family Income Support or applied for the Housing List? Both would be worth spending some time on in your current situation. As ludicrous as it sounds, you might actually be better off on welfare than working.

flix1

Thanks for your advice. Yes I think the letter re bankruptcy is probably the next step. I guess it's time to just bite the bullet and finally just go with it. Going to the UK isn't really an option with wife and baby.

djimi

D3PO wrote: »

Not aware of any changes to it and Id be pretty sure that a change would have been front page news.

The Personal Insolvency Bill (or whatever its called) aims to reduce the time from 12 years to 3 years.

professore

http://www.citizensinformation.ie/en/money_and_tax/personal_finance/debt/personal_insolvency/personal_insolvency_options.html

According to the above, seems that the 3 year bankruptcy is coming in Autumn 2013 .... I remember something recently on TV3, but could be wrong .... also some interesting info on there.

D3PO

Sleepy wrote: »

. BTW, if your income is so low, have you looked into Family Income Support or applied for the Housing List? Both would be worth spending some time on in your current situation. As ludicrous as it sounds, you might actually be better off on welfare than working.

Plus 1 for FIS although don't believe they can go on the housing list given they actually have a property regardless of the overall situation. I also understand that voluntary surrender doesn't allow you get on the housing list either.

I would have suggested the OP apply for mortgage interest supplement but pretty sure that was scrapped in this budget

so not in the OP's interest to do anything other than allow a repo / go bankrupt.

D3PO

djimi wrote: »

The Personal Insolvency Bill (or whatever its called) aims to reduce the time from 12 years to 3 years.

This bill hasn't passed yet though if Im not mistaken and I wouldn't be sure if any bankruptcies would retrospectively fall under the new act.

Truth being told I don't know.

Edit when I say bill I mean ammendments to the bill

The_Conductor

D3PO wrote: »

by the sounds of it a split mortgage is of no use to you. That said there is no other option that would be of use either.

Clearly bankruptcy sounds the best option if your income doesn't even meet the guidelines of personal expenditure in a bankruptcy hearing.

Unfortunately you're 100% accurate here- the OP's finances are such that regardless of what he does, he simply is not in a position to engage with the lender. There is no 'middle ground' that can be broached with them.

I'm actually genuinely sad reading this thread.

djimi

D3PO wrote: »

This bill hasn't passed yet though if Im not mistaken and I wouldn't be sure if any bankruptcies would retrospectively fall under the new act.

Truth being told I don't know.

Edit when I say bill I mean ammendments to the bill

You could be right; I dont know much about it, only what I just read on Citizens Information!

D3PO

The_Conductor wrote: »

I'm actually genuinely sad reading this thread.

Likewise.

OP I do appologise if I came across a little strong early on in the thread. Got the impression you were looking to swerve things rather than what has become apparent later in the thread.

professore

There are a LOT of people out there in a similar situation to the OP. Pretty much anyone who took out a mortgage in the 2000's that now has a young family and subsequently lost their jobs, or ended up part time or on minimum wage style jobs. The sooner we face up to this as a country the better. I could easily see myself in this situation, but bought my house before the boom and overpaid the mortgage - and still find it tough going now. If I still had a big mortgage I don't know what I'd do. I don't argue that there aren't people trying to wriggle out of paying, but these should be easy to weed out - just apply the CAB rationale to them and have severe penalties for being caught.

D3PO

flix1 wrote: »

Thanks for your advice. Yes I think the letter re bankruptcy is probably the next step. I guess it's time to just bite the bullet and finally just go with it. Going to the UK isn't really an option with wife and baby.

I wouldn't rush things. I don't believe the PIA 2012 ammendments regarding bankruptcy have passed yet. Id be in no rush to file until you were 100% sure your only going to be impacted for 3 years rather than 12.

professore

D3PO wrote: »

I wouldn't rush things. I don't believe the PIA 2012 ammendments regarding bankruptcy have passed yet. Id be in no rush to file until you were 100% sure your only going to be impacted for 3 years rather than 12.

Good advice. Could be another reason for this split mortgage now ... they want to pressurise him into a deal before the 3 year bankruptcy kicks in?

flix1

D3PO wrote: »

Likewise.

OP I do appologise if I came across a little strong early on in the thread. Got the impression you were looking to swerve things rather than what has become apparent later in the thread.

No worries... I understand..thanks for your advice

flix1

professore wrote: »

Good advice. Could be another reason for this split mortgage now ... they want to pressurise him into a deal before the 3 year bankruptcy kicks in?

How can I find out more about this? or any ideas of where I can find out when this will come into effect.

Sleepy

A call to a local Fine Gael TD should be the most accurate way of gauging it tbh.

cluelez

D3PO wrote: »

somebody that cant pay their mortgage isn't in a position to dictate how their issue should be handled. If you want to control things the way to do it is to stick to your ogirginal agreement with the bank.
.

such a rubbish.

investors- mortgagee, who invested their monies and dedicated life to pay for this, have the right to negotiate.

you believe what u were told... such a rubbish

cluelez

flix1 wrote: »

Hi there,
I'm curious has anyone been offered a split mortgage and refused it on the grounds that the solution offered by the bank does not represent a real solution, it merely puts off a problem till you are 80. If you did...what happened? especially with KBC customers.

Id love to hear your experience
Thanks y'all

I would lodge some monies to the bank (against the mortgage), followed by the letter stating that you don't want accept their position. offer own position.

Try to rent out a room or two in the house, try to repay more..

D3PO

clueless wrote: »

such a rubbish.

investors- mortgagee, who invested their monies and dedicated life to pay for this, have the right to negotiate.

you believe what u were told... such a rubbish

Your off topic as things have moved on. Maybe read the full thread instead of replying to posts form 5 plus pages ago.

But to answer this (which is irrelvent to the OP) you don't have the right to negotiate, you signed a contract your bound by that.

Your entitled to appeal under MARP but once the proposal set out is reasonable. You have no recourse in the regard.

again its irrelevant as its been identified that the OP and the proposal put to them is not realistic.

Thomas D

cluelez wrote: »

such a rubbish.

investors- mortgagee, who invested their monies and dedicated life to pay for this, have the right to negotiate.

you believe what u were told... such a rubbish

No they don't. They negotiated when they signed a contract.

Outsidethebox

Sorry to read of your situation OP.

Remember, you're health is your wealth. I know it's easy say it but it's true.

Keep the chin up, keep positive for your wife and baby. They're what's important.

Outsidethebox

Lads, excuse my ignorance but what is a "split mortgage?"

Cheers,
OTB

D3PO

Outsidethebox wrote: »

Lads, excuse my ignorance but what is a "split mortgage?"

Cheers,
OTB

its exactly what it sounds like. Its a mortgage that gets split into two.

So lets assume 300k mortgage.

It gets split to 150k (doesn't have to be an exact 50/50 split btw) which the mortgage holder pays on now meaning their repayments are significantly reduced.

the other 150k gets "parked" until a later date 10 years 20 years time whatever. At which point that split has to be dealt with by the mortgage holder.

Now that will have accrued interest on the capital in that time but the premise is that a combination of improved circumstances / wages by the mortgage holder and capital appreciation of the asset (house) will more than cover the interest accrued on the split still outstanding.

that's the logic behind it.

Outsidethebox

Cheers D3PO.

Victor

Folks, counselling / advocating defrauding creditors is not acceptable.

Moderator

gaius c

flix1 wrote: »

Hi there,
I'm curious has anyone been offered a split mortgage and refused it on the grounds that the solution offered by the bank does not represent a real solution, it merely puts off a problem till you are 80. If you did...what happened? especially with KBC customers.

Id love to hear your experience
Thanks y'all

I'm concerned that split mortgages will become the greatest swindle ever and rob people of their homes just as they most need them. If Bank A offer a split mortgage, the portion not getting full repayments will effectively be bad debt and increase the bank's borrowing costs. It makes perfect sense that they sell that non-performing portion of the loan to a debt collection agency, crystalise the loss and move on with the portion of the loan that is performing.

My reading on what may happen is that at the end of the mortgage term, the debt collection agency will then arrive, looking for payment of the parked portion of the loan in full and when they don't get it, they repo and recover the loan that way.

Seeing as folk at the end of their mortgage term are also likely to be at the end of their working lives as well, it would have the consequence that retired or on the verge of retirement folk would get evicted after living in that home for most of their working lives.

D3PO wrote: »

I don't think anybody in the position of being in arrears and having no way of getting out of it on their own has any rights to refuse a split mortgage.

if you don't want a split mortgage pay what you owe or apply for bankruptcy.

I think you're slightly missing the point.
There seems to be an assumption in some quarters that "split mortgage" means "debt write off" by another name when in reality, they would be better off to apply for bankruptcy now, clear the slate and move on rather than losing their home when they are elderly.

Folk need to be educated as to the likely consequences of kicking their personal debt down the road. The more they know, the better informed they will be in making the choices that affect their financial future.

professore

gaius c wrote: »

I'm concerned that split mortgages will become the greatest swindle ever and rob people of their homes just as they most need them. If Bank A offer a split mortgage, the portion not getting full repayments will effectively be bad debt and increase the bank's borrowing costs. It makes perfect sense that they sell that non-performing portion of the loan to a debt collection agency, crystalise the loss and move on with the portion of the loan that is performing.

My reading on what may happen is that at the end of the mortgage term, the debt collection agency will then arrive, looking for payment of the parked portion of the loan in full and when they don't get it, they repo and recover the loan that way.

Seeing as folk at the end of their mortgage term are also likely to be at the end of their working lives as well, it would have the consequence that retired or on the verge of retirement folk would get evicted after living in that home for most of their working lives.

I think you are spot on.

I made a very similar point earlier in this thread, only in my scenario it was the bank demanding payment when the property was no longer in negative equity.

D3PO

gaius c wrote: »

I'm concerned that split mortgages will become the greatest swindle ever and rob people of their homes just as they most need them. If Bank A offer a split mortgage, the portion not getting full repayments will effectively be bad debt and increase the bank's borrowing costs. It makes perfect sense that they sell that non-performing portion of the loan to a debt collection agency, crystalise the loss and move on with the portion of the loan that is performing.

My reading on what may happen is that at the end of the mortgage term, the debt collection agency will then arrive, looking for payment of the parked portion of the loan in full and when they don't get it, they repo and recover the loan that way.

Ok firstly a debt collection agent wouldn't be licenced by the FSA to purchase part of a banks mortgage book, nor would the FSA allow CFD's be sold which this more or less would be.

Secondly the parked part of the loan, needs to be understood from the perspective of those entering into a split mortgage, the split wouldn't be left until retirement age your talking about it being parked for 10 - 15 - 20 years not by default until the mortgage term ends.

On top of this, with the property appreciating in value over that term (and I refer to inflationary increases and not bubble increases) it wouldn't mean somebody being evited / repoed down the line.

Worst case pending their age, financial situation etc they are likey to have to sell up, then take their equity and either downsize or rent, best case they can work out financing over a term to pay the split component, or perhaps they have the cash to pay off the split in full due to improved job situation, inheritance etc.

Seeing as folk at the end of their mortgage term are also likely to be at the end of their working lives as well, it would have the consequence that retired or on the verge of retirement folk would get evicted after living in that home for most of their working lives.



I think you're slightly missing the point.
There seems to be an assumption in some quarters that "split mortgage" means "debt write off" by another name when in reality, they would be better off to apply for bankruptcy now, clear the slate and move on rather than losing their home when they are elderly.

I don't know anybody who assumes a split mortgage means debt write off at all. I think you are very much overstating the point here.

Folk need to be educated as to the likely consequences of kicking their personal debt down the road. The more they know, the better informed they will be in making the choices that affect their financial future.

Be educated yes, but that doesn't mean be cynical, its not knowing how a split mortgage is designed to work that leads to fear over its outcome.

As a mechanism for dealing with the current situation its not a one size fits all solution but it is certainly a financial instrument far superior to bankruptcy with a high probability for success for many many many struggling mortgage holders.

gaius c

Even assuming that the property has doubled in value far beyond the value of the outstanding debt will have no benefit for the people who have the split mortgage because it's cash that they'll need to clear that parked debt. If they don't have cash or they haven't quite understood that the parked debt does need actually to be paid at the end of the term, they are at risk of losing their home.

People like that might actually be better losing their homes earlier and having a chance to recover in time for retirement. If somebody at the end of a 30 year mortgage (and probably close to retirement) loses their home, they are FUBAR'd. As long as people fully understand the implications of split mortgages, I've no problem with them but public discourse on the matter has been limited and people might jump for them thinking that it's debt write-off by proxy when such a scenario is very very unlikely.

Even if they do understand that the debt needs to be paid and they spend the next 20 years slaving away to build up the war chest required to "buy out" the remainder of the loan, that's a lot of money that could have been put to better use. Bankruptcy is a normal part of a functioning capitalistic system. It clears the mistakes and let's them start again after a grace period. Banks might prefer that debtors in arrears pay back every cent they are liable for no matter how long it takes but that's not how capitalism is supposed to work and folk need to be aware that shorter term pain might actually be in their best interests.

Likewise, how will the economy function in 20 years time if a large cadre of consumers are busy saving away to eventually pay the split mortgage and not spending anything in the economy? The bigger picture is that the debt is so large that it will strangle our economy in the same way that it did to Japan.