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Refusing a split mortgage?

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    #92
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    I really cannot see how somebody could mistake a split mortgage for debt writeoff. If they do quite honestly I cant have any sympathy for them down the line if they end up as you say FUBAR'd.

    They have made one large financial blunder getting to the place they need a split mortgage for in the first place, if they compound it with a second one quite frankly they get what they deserve.

    I cant profess to having seen the documentation that is associated with a split mortgage offer from a bank but Id be pretty sure its clearly spelt out what the process is, and there is no way possible that the documentation would in anyway insinuate that parked portion would be forgiven.


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    #93
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    D3PO wrote: »
    I really cannot see how somebody could mistake a split mortgage for debt writeoff. If they do quite honestly I cant have any sympathy for them down the line if they end up as you say FUBAR'd.

    That's not what he's saying at all. They just assume that they would be allowed pay off the parked part of the mortgage in a similar fashion to the non-parked part, not that they would face a balloon payment after struggling to pay the non-parked part.
    D3PO wrote: »
    They have made one large financial blunder getting to the place they need a split mortgage for in the first place, if they compound it with a second one quite frankly they get what they deserve.

    So they work for 20 years busting their ass paying off part of a mortgage only to find they lose their house at the end of it? They DESERVE this???? Frankly it's appalling that this is perfectly legal.
    D3PO wrote: »
    I cant profess to having seen the documentation that is associated with a split mortgage offer from a bank but Id be pretty sure its clearly spelt out what the process is, and there is no way possible that the documentation would in anyway insinuate that parked portion would be forgiven.

    Clearly spelt out - hah. Like payment protection policies were, in small print legalese.


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    #94
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    professore wrote: »
    That's not what he's saying at all. They just assume that they would be allowed pay off the parked part of the mortgage in a similar fashion to the non-parked part, not that they would face a balloon payment after struggling to pay the non-parked part.

    Why would they assume this ? Its pretty bloody clear what the expectation is. What do they expect after 30 years to have the parked part be repaid over another 30 years ? That's not practical besides anything else anybody who would think that would need their head examining to be blunt.


    So they work for 20 years busting their ass paying off part of a mortgage only to find they lose their house at the end of it? They DESERVE this????

    Extreme enough ? After the pay off the first part they have options,

    sell and use the equity they have to downsize

    work out some kind of financing agreement although over a shorter term possibly 10 years to repay the second part

    pay off the parked part in full, in 20 years time the idea is that the person would be in a much stronger position financially and could do this.

    Theres no fear of anybody with a split mortgage waking up after paying the first part and ending up on the street with nothing to show for it in the end as your insinuating.

    Clearly spelt out - hah. Like payment protection policies were, in small print legalese.

    Payment protection policies didn't have the scrutiny that split mortgages do fro a regulatory perspective to even try and put them in the same category cheapens your whole argument.


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    #95
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    D3PO wrote: »
    Payment protection policies didn't have the scrutiny that split mortgages do fro a regulatory perspective to even try and put them in the same category cheapens your whole argument.

    As far as I can see there is virtually no regulatory scrutiny of our banks. It is all lip service. Is there even an example of a financial institution even being fined in this country?

    Interestingly you didn't disagree with me on the main point.


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    #96
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    sorry what was the main point so I can respond to it ? Thought Id covered pretty much everything


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    #97
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    D3PO wrote: »
    sorry what was the main point so I can respond to it ? Thought Id covered pretty much everything

    Sorry, I didn't see your bolded responses initially. I'll reply shortly.


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    #98
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    professore wrote: »
    Is there even an example of a financial institution even being fined in this country?

    Bank of Ireland - 120k October 2012
    http://www.breakingnews.ie/ireland/central-bank-fines-bank-of-ireland-120000-569335.html

    Bank of Ireland - 30k June 2013
    http://www.irishexaminer.com/business/boi-subsidiary-fined-30k-for-gender-bias-234369.html

    Ulster bank - 1.96 million November 2012
    http://www.irishexaminer.com/business/ulster-bank-fined-2m-for-breaches-214441.html

    Susquehanna - 78k July 2013
    http://www.irishtimes.com/business/susquehanna-fined-78-000-by-central-bank-1.1445487

    Goldman Sachs - 120k, September 2011
    http://www.finfacts.ie/irishfinancenews/article_1023101.shtml

    Axa - 50k, October 2013 (Under the Money Laundering and Terrorism Act!!!)
    http://www.independent.ie/business/irish/axa-fined-50k-under-money-laundering-and-terrorist-financing-act-29643671.html

    Aviva - 2.46 million December 2012
    http://www.businesspost.ie/#!story/Home/News/Central+Bank+fines+Aviva+units+%E2%82%AC2.46+mln/id/19410615-5218-50d1-aab6-c56984166186

    Merril Lynch 2.75 million
    AIB 2 million
    AIB 4.18 million
    AIB 50k
    Aviva Life and Pensions 1.25m
    Quinn Insurance 3.25m

    etc etc etc- they are issuing fines like confetti.
    Fines don't seem to matter one iota to financial companies- the only thing that would bother them, is reputational damage.

    By the way- I can list hundreds of more fines and settlements over the past 3 years- its a long and wearying list.


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    #99
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    Why would they assume this ? Its pretty bloody clear what the expectation is. What do they expect after 30 years to have the parked part be repaid over another 30 years ? That's not practical besides anything else anybody who would think that would need their head examining to be blunt.

    I think you underestimate the financial literacy of people in this situation. If you throw a drowning man a rope he might not question what's at the other end of it.
    Extreme enough ? After the pay off the first part they have options,

    sell and use the equity they have to downsize

    work out some kind of financing agreement although over a shorter term possibly 10 years to repay the second part

    Unless there is hyperinflation relatively high inflation this isn't going to happen - these people could be in their late 60's at this point, and are effectively gambling everything on the property market.
    pay off the parked part in full, in 20 years time the idea is that the person would be in a much stronger position financially and could do this.

    Maybe ... maybe not ....
    Theres no fear of anybody with a split mortgage waking up after paying the first part and ending up on the street with nothing to show for it in the end as your insinuating.

    If property prices remain stagnant for a long time - which is quite likely IMO despite the media cheerleading property rises in isolated cases - it is quite possible that the sale of the house will not cover the parked part. Then they end up perhaps clearing their debt but little or nothing to show for it except a life of working to pay off a debt for no good reason. Maybe they end up with €10 K to the good and no house - whoop de doo !!! Better off going bankrupt when they are still young enough to actually make a fresh start. A bird in the hand and all that.


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    #100
    Snakeblood
    Registered Users Posts: 4,466 ✭✭✭Snakeblood


    The_Conductor wrote: »
    Bank of Ireland - 120k October 2012
    http://www.breakingnews.ie/ireland/central-bank-fines-bank-of-ireland-120000-569335.html

    Bank of Ireland - 30k June 2013
    http://www.irishexaminer.com/business/boi-subsidiary-fined-30k-for-gender-bias-234369.html

    Ulster bank - 1.96 million November 2012
    http://www.irishexaminer.com/business/ulster-bank-fined-2m-for-breaches-214441.html

    Susquehanna - 78k July 2013
    http://www.irishtimes.com/business/susquehanna-fined-78-000-by-central-bank-1.1445487

    Goldman Sachs - 120k, September 2011
    http://www.finfacts.ie/irishfinancenews/article_1023101.shtml

    Axa - 50k, October 2013 (Under the Money Laundering and Terrorism Act!!!)
    http://www.independent.ie/business/irish/axa-fined-50k-under-money-laundering-and-terrorist-financing-act-29643671.html

    Aviva - 2.46 million December 2012
    http://www.businesspost.ie/#!story/Home/News/Central+Bank+fines+Aviva+units+%E2%82%AC2.46+mln/id/19410615-5218-50d1-aab6-c56984166186

    Merril Lynch 2.75 million
    AIB 2 million
    AIB 4.18 million
    AIB 50k
    Aviva Life and Pensions 1.25m
    Quinn Insurance 3.25m

    etc etc etc- they are issuing fines like confetti.
    Fines don't seem to matter one iota to financial companies- the only thing that would bother them, is reputational damage.

    By the way- I can list hundreds of more fines and settlements over the past 3 years- its a long and wearying list.

    Those aren't for very much, relatively speaking. I mean, If I get a fine for 200 quid, I go 'ouch' and pay it, and don't speed again. AIB for example, get fined 5 million, they've got total operating income of 1.4 billion. While it's true they're making a loss, they're at the level of loss where another five million doesn't particularly bother them, it's the least of their worries considering how badly everything is going. Besides, who is going to end up paying the fine anyway?


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    #101
    Snakeblood
    Registered Users Posts: 4,466 ✭✭✭Snakeblood


    professore wrote: »
    Then they end up perhaps clearing their debt but little or nothing to show for it except a life of working to pay off a debt for no good reason.

    The good reason would be that they agreed to pay the money back, and if they managed to make a profit, they wouldn't have been beating down the door to hand the money to the bank.


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    #102
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    The_Conductor wrote: »
    Bank of Ireland - 120k October 2012
    http://www.breakingnews.ie/ireland/central-bank-fines-bank-of-ireland-120000-569335.html

    Bank of Ireland - 30k June 2013
    http://www.irishexaminer.com/business/boi-subsidiary-fined-30k-for-gender-bias-234369.html

    Ulster bank - 1.96 million November 2012
    http://www.irishexaminer.com/business/ulster-bank-fined-2m-for-breaches-214441.html

    Susquehanna - 78k July 2013
    http://www.irishtimes.com/business/susquehanna-fined-78-000-by-central-bank-1.1445487

    Goldman Sachs - 120k, September 2011
    http://www.finfacts.ie/irishfinancenews/article_1023101.shtml

    Axa - 50k, October 2013 (Under the Money Laundering and Terrorism Act!!!)
    http://www.independent.ie/business/irish/axa-fined-50k-under-money-laundering-and-terrorist-financing-act-29643671.html

    Aviva - 2.46 million December 2012
    http://www.businesspost.ie/#!story/Home/News/Central+Bank+fines+Aviva+units+%E2%82%AC2.46+mln/id/19410615-5218-50d1-aab6-c56984166186

    Merril Lynch 2.75 million
    AIB 2 million
    AIB 4.18 million
    AIB 50k
    Aviva Life and Pensions 1.25m
    Quinn Insurance 3.25m

    etc etc etc- they are issuing fines like confetti.
    Fines don't seem to matter one iota to financial companies- the only thing that would bother them, is reputational damage.

    By the way- I can list hundreds of more fines and settlements over the past 3 years- its a long and wearying list.

    That's interesting, I should have clarified fines for financial regulations breaches, HR irregularities etc wasn't what I meant. However, the amounts are indeed quite small relatively speaking.


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    #103
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    Snakeblood wrote: »
    The good reason would be that they agreed to pay the money back, and if they managed to make a profit, they wouldn't have been beating down the door to hand the money to the bank.

    Not sure I understand what you mean Snakeblood.


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    #104
    Snakeblood
    Registered Users Posts: 4,466 ✭✭✭Snakeblood


    professore wrote: »
    Not sure I understand what you mean Snakeblood.

    'Then they end up perhaps clearing their debt but little or nothing to show for it except a life of working to pay off a debt for no good reason.'

    The 'no good reason' is that they signed up for a loan to buy a house. They agreed to repay the money, so they should repay the money, because that's how contracts work.

    Assuming there had been a windfall (as opposed to what is happening right now, a disaster), there would not be a clamour to repay the bank extra, because it would be seen as the borrowers good fortune.

    If it is the borrowers ill fortune that the loan turns out to be a rotten investment, then I'm not sure why they should be let off.


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    #105
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    Snakeblood wrote: »
    'Then they end up perhaps clearing their debt but little or nothing to show for it except a life of working to pay off a debt for no good reason.'

    The 'no good reason' is that they signed up for a loan to buy a house. They agreed to repay the money, so they should repay the money, because that's how contracts work.

    Assuming there had been a windfall (as opposed to what is happening right now, a disaster), there would not be a clamour to repay the bank extra, because it would be seen as the borrowers good fortune.

    If it is the borrowers ill fortune that the loan turns out to be a rotten investment, then I'm not sure why they should be let off.

    Ah I see. Ok so, looking at someone similar to the OP's case, he can't pay his current mortgage. So he is offered a deal which we will assume he can afford, just about, right now - remember he is being offered this deal by the bank because they know that bankruptcy will cost them more - not out of any kind heartedness on their behalf - which is fair enough.

    He has 2 choices, do the "morally right" thing and pay part of the mortgage, where he effectively gambles on the property market and his own ability to make money for 25 years, or he does the "morally wrong" thing and goes bankrupt. If he follows the banks lead, he should choose the "morally wrong" option. The bank knows it's most likely the best deal they can get and a poor deal for him. You don't get to demand morality from someone while ignoring it yourself when it suits.

    The banks have directly cost us as of September last year €64.1bln http://www.thejournal.ie/infographic-irish-banking-costs-583961-Sep2012/ - we'll assume Anglo/INBS is €30 bln of that, so that's 34.1bln the active banks owe us directly, not counting the interest etc that will accrue to the state. Are they planning to pay that back? If not, why not?

    It's a big problem.


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    #106
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    professore wrote: »
    Maybe they end up with €10 K to the good and no house - whoop de doo !!! Better off going bankrupt when they are still young enough to actually make a fresh start. A bird in the hand and all that.

    I take your points but going bankrupt isn't easy nor is the life during or after it. Go bankrupt they are unlikely without a positive change in circumstances to own a property again in their life (unless inherited)So flip it and think about what position they will be in when they are 60 having filed for bankruptcy. Not exactly likely to be pleasant either plus that pension fund they had built up yup that's gone too.Im not saying that split mortgages are the answer for everybody but I think people should think long and hard about bankruptcy before jumping in. Its no silver bullet solution.Unfortunately in the OP's case its the only realistic option


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    #107
    Scortho
    Closed Accounts Posts: 3,876 ✭✭✭Scortho


    The benefit of a split mortgage is it gives those who wish to stay in there home the opportunity to stay in the home by parking some of the debt.
    We hear up and down the country about people going I want a write down, I can't afford my mortgage etc etc. The idea of the split mortgage is to give you breathing space so that you're not under pressure for the foreseeable future, so that you can stay in your home and in 5/10 years time when youre back on your feet, you can start paying off the rest of the debt.

    While I am against this as it's interfering with the property market, it is a fair solution for someone who can't pay now but who hopefully will be able to pay In the future. You have to remember that the borrower did agree and sign up to the terms of the mortgage which includes repossession if you fall into arrears.


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    #108
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    Snakeblood wrote: »
    'Then they end up perhaps clearing their debt but little or nothing to show for it except a life of working to pay off a debt for no good reason.'

    The 'no good reason' is that they signed up for a loan to buy a house. They agreed to repay the money, so they should repay the money, because that's how contracts work.

    Assuming there had been a windfall (as opposed to what is happening right now, a disaster), there would not be a clamour to repay the bank extra, because it would be seen as the borrowers good fortune.

    If it is the borrowers ill fortune that the loan turns out to be a rotten investment, then I'm not sure why they should be let off.

    I don't agree with ALL people being unreasonably pinned to their collars to pay every cent of their loans back. If they are in a position where they should declare bankruptcy, lose both the assets and the debt, then they should do so and not be fooled by VI's telling them that split mortgages are the way to go.

    Anybody looking at the other thread will know that I'm a vehement opponent of debt write-offs while keeping the asset but there are going to be circumstances where the debtors will be better off making a clean break and taking the pain now.


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    #109
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    gaius c wrote: »
    I don't agree with ALL people being unreasonably pinned to their collars to pay every cent of their loans back. If they are in a position where they should declare bankruptcy, lose both the assets and the debt, then they should do so and not be fooled by VI's telling them that split mortgages are the way to go.

    Anybody looking at the other thread will know that I'm a vehement opponent of debt write-offs while keeping the asset but there are going to be circumstances where the debtors will be better off making a clean break and taking the pain now.

    I don't disagree at all. However there is certainly a place for split mortgages. Writing them off as something for VI's is shortsighted.


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