Borrow €400k from AIB and only pay back €250k

gaius c

cookie1977 wrote: »

Taking it at its simplistic form, and let me be clear I'm not in agreement with rightdowns at all, if the bank that's tax payer backed has a mortgage in arrears on its books valued at 400,000 and lets say the immediate sale post repossession could yield 150,000-200,000 would the bank (and thus the tax payer) not be better off with 100,000-150,000 rightdown of the 400,000 mortgage with an option to come back to the table for anther 20-50K in the future (thus valuing the new now performing mortgage at between 250-350) not be better return then a costly, lengthy repossession followed by sale of the of the same property for between 150-200K? Surely this meets the needs of those concerned about the tax payers cotinuing costs. Is it not the job of the bank to achieve the best return on its cash in what ever way they see fit?

Now of course this depends on the new mortgage deal remaining performing but assuming the banks have been able to fully analyse the state of finances of the people then its quite possible it will. And for those making throw away comments of "sure maybe I'll stop paying the mortgage" I would say that there is no hope that you would get any similar deal. The deal in these cases is being made because it offers the best return for the banks as the current situation means the people with the arrears cannot pay back the existing mortgage.

As I've explained numerous times here, it doesn't. They have a borrower with bad credit on their books and this "contaminates" the quality of their loan book and increases their overall borrowing costs. It is actually better for them to take a bigger hit early on than keep somebody with bad credit on their books for 20+ years, even if they do actually work for the bank in question.

maryishere

The bank actually done the right thing here. A lot of the other banks are doing similar deals on the quiet / signing confidentiality clauses. The banks were partially responsible for the madness that happened between 05 - 06 and they know it. It was not normal times even though they told people it was and there would be a soft landing etc.

lima

maryishere wrote: »

The bank actually done the right thing here. A lot of the other banks are doing similar deals on the quiet / signing confidentiality clauses. The banks were partially responsible for the madness that happened between 05 - 06 and they know it. It was not normal times even though they told people it was and there would be a soft landing etc.

Enough with that old excuse. The evil banks tied me up and forced a mortgage down my throat :rolleyes:

maryishere

lima wrote: »

The evil banks tied me up and forced a mortgage down my throat :rolleyes:

They would do anything then to get their commission. They give the excuse they were under pressure from shareholders to perform as well and grow their loan book like Anglo and the new kids on the block like BOSI / Halifax. So they kept their pay pay, bonuses and pensions. 'Tis amazing how the banks varied though.

Zamboni

maryishere wrote: »

The bank actually done the right thing here. A lot of the other banks are doing similar deals on the quiet / signing confidentiality clauses. The banks were partially responsible for the madness that happened between 05 - 06 and they know it. It was not normal times even though they told people it was and there would be a soft landing etc.

Just an update for you Mary...
A lot of the people issuing mortgages in AIB in 05-06 no longer work there and we, the taxpayer, own it now.
So really you want to punish my payslip.
Thanks very much.

Zamboni

Brian Hayes responded to my email this evening to be fair.
I don't think he understands the volume of aggrieved voters on this issue.
So please - if you are annoyed about the lack of transparency in these write downs and the retention of assets please let him know.
Demand a waiving of anonymity rights and voluntary surrender for any debt write down negotiation in state backed institutions!

Brian.hayes@oir.ie

Nino Brown

maryishere wrote: »

They would do anything then to get their commission. They give the excuse they were under pressure from shareholders to perform as well and grow their loan book like Anglo and the new kids on the block like BOSI / Halifax. So they kept their pay pay, bonuses and pensions. 'Tis amazing how the banks varied though.

They didn't give a mortgage to a single person that didn't want one. It's not possible. The banks acted irresponsibly, because they had an almost endless supply of idiots, who couldn't do basic maths to see what they could afford, or were so driven by greed that they didn't care that they couldn't afford it. Both these people and the banks should pay a price.

But what about the people who were prudent, and smart enough to not buy a house in a bubble. Now the banks are broke, the people who took out the mortgages can't pay them, so everyone is looking to the people who didn't buy, or only took mortgages they could afford.

I stayed out of it all and saved to buy a house after the crash, I assumed a massive supply would develop due to repo's. Little did I know that the government would tax me to the hilt, so the banks could stay afloat, and the people who couldn't afford their mortgage could stay in their house. Meanwhile I have no house and less income. Is that fair?

cookie1977

gaius c wrote: »

As I've explained numerous times here, it doesn't. They have a borrower with bad credit on their books and this "contaminates" the quality of their loan book and increases their overall borrowing costs. It is actually better for them to take a bigger hit early on than keep somebody with bad credit on their books for 20+ years, even if they do actually work for the bank in question.

As opposed to a repossessing a low value bad asset from a bad creditor. We cant have it every way in this type of environment, there's a bitter pill somewhere we've just got to take the least bitter. Getting a low return on a repossessed asset to me as a tax payer is a bad idea compared to turning a non performing low value asset into a performing asset of greater value then before.

If I were an investor and I saw a bank turning low value bad assets with bad creditors to higher value performing assets it would make me more interested in them as an investment opportunity then a bank spending limited resources on repossessing bad assets from bad creditors and taking bigger hits and relying on the tax payer to make up the difference.

Nino Brown

cookie1977 wrote: »

As opposed to a repossessing a low value bad asset from a bad creditor. We cant have it every way in this type of environment, there's a bitter pill somewhere we've just got to take the least bitter. Getting a low return on a repossessed asset to me as a tax payer is a bad idea compared to turning a non performing low value asset into a performing asset of greater value then before.

If I were an investor and I saw a bank turning low value bad assets with bad creditors to higher value performing assets it would make me more interested in them as an investment opportunity then a bank spending limited resources on repossessing bad assets from bad creditors and taking bigger hits and relying on the tax payer to make up the difference.

This is true when you look at individual cases. But it introduces a moral hazard, and encourages people in future to not repay debts. Cases like this can precipitate more similar cases, costing the banks more in the long run.

cookie1977

Nino Brown wrote: »

This is true when you look at individual cases. But it introduces a moral hazard, and encourages people in future to not repay debts. Cases like this can precipitate more similar cases, costing the banks more in the long run.

Certainly it increases risk but lets be honest, if you've either a performing asset or are shown to be capable of repaying your mortgage then the banks will not do any such deals with you. These deals are only being done for the following reasons:

• to return a non performing asset to a performing one
• with people who simple cannot pay back the full mortgage and who's negative repossession would result in higher costs and lower returns then a debt right down
• the people could repay the new mortgage

I would like to see some clause included in any deals such as a debt for equity swap on part of the mortgage or a clause (such as the one AIB included in the OP example) that allowed the bank to come back for more cash if things improved dramatically. As a tax payer I see it that it's the job of the banks that I've helped bail out to get as much money back as possible and if that means right downs then so be it.

Nino Brown

cookie1977 wrote: »

Certainly it increases risk but lets be honest, if you've either a performing asset or are shown to be capable of repaying your mortgage then the banks will not do any such deals with you. These deals are only being done for the following reasons:

• to return a non performing asset to a performing one
• with people who simple cannot pay back the full mortgage and who's negative repossession would result in higher costs and lower returns then a debt right down
• the people could repay the new mortgage

I would like to see some clause included in any deals such as a debt for equity swap on part of the mortgage or a clause (such as the one AIB included in the OP example) that allowed the bank to come back for more cash if things improved dramatically. As a tax payer I see it that it's the job of the banks that I've helped bail out to get as much money back as possible and if that means right downs then so be it.

I agree write downs are necessary, but I think the home should be lost in almost every case, definitely one this large. These people were clearly completely irresponsible with debt. They ran up huge credit card bills on top of their mortgage. And there were no real consequences. The entire country is watching this, it sets a terrible precedent.
The way I see it, a write down of 150K is essentially a tax payer donation. I would much rather see the house repo'd and somebody who was financially responsible benefiting from the donation, through a repo sale. The banks would lose more money initially, but I think removing the possibility of defaulters keeping their home would give a lot of strategic defaulters the kick up the arse they need.

cookie1977

Nino Brown wrote: »

I agree write downs are necessary, but I think the home should be lost in almost every case, definitely one this large. These people were clearly completely irresponsible with debt. They ran up huge credit card bills on top of their mortgage. And there were no real consequences. The entire country is watching this, it sets a terrible precedent.
The way I see it, a write down of 150K is essentially a tax payer donation. I would much rather see the house repo'd and somebody who was financially responsible benefiting from the donation, through a repo sale. The banks would lose more money initially, but I think removing the possibility of defaulters keeping their home would give a lot of strategic defaulters the kick up the arse they need.

Are you thinking with your head or your heart, and I dont mean that disrespectfully, do you want to see the arrears person punished more then you want the greater cash return for the asset?

The property in the OP is worth less then the mortgage so a repossession and sale would yield less then the deal. But now with the deal there is more cash coming to the bank (and thus to the tax payer). Is this not a good thing?

Nino Brown

cookie1977 wrote: »

Are you thinking with your head or your heart, and I dont mean that disrespectfully, do you want to see the arrears person punished more then you want the greater cash return for the asset?

The property in the OP is worth less then the mortgage so a repossession and sale would yield less then the deal. But now with the deal there is more cash coming to the bank (and thus to the tax payer). Is this not a good thing?

I want to see a greater cash return overall. If you look at each case individually you will be right every time, the bank will seek the greatest return on the asset.

But how many more cases will this precipitate? These people got a massive write down and kept the house. This encourages more defaulters. So in the big scheme of things, increasing the return from this one asset will decrease the overall return from the bank bailout to the tax payer in my opinion.

cookie1977

Nino Brown wrote: »

I want to see a greater cash return overall. If you look at each case individually you will be right every time, the bank will seek the greatest return on the asset.

But how many more cases will this precipitate? These people got a massive write down and kept the house. This encourages more defaulters. So in the big scheme of things, increasing the return from this one asset will decrease the overall return from the bank bailout to the tax payer in my opinion.

Well that's a question I cannot answer but as I said the banks wont be rolling over for anyone who is behind on their mortgage. These people in the OP would have had to open their books completely just like anyone entering the MARP process. They would not have been able to hide assets. If anyone thinks that they can now default and they'll get a deal I suspect they'll be sorely disappointed.

username123

cookie1977 wrote: »

If anyone thinks that they can now default and they'll get a deal I suspect they'll be sorely disappointed.

And the thousands of strategic defaulters who have seen this coming and havent paid the mortgage in years while hiding any cash under the mattress? Because they are there.

OldNotWIse

maryishere wrote: »

The bank actually done the right thing here. A lot of the other banks are doing similar deals on the quiet / signing confidentiality clauses. The banks were partially responsible for the madness that happened between 05 - 06 and they know it. It was not normal times even though they told people it was and there would be a soft landing etc.

Yeah, often wonder why the States punish people for shooting others when, you know, guns are so readily available and people are forced to buy them and use them just because they are there...

cookie1977

username123 wrote: »

And the thousands of strategic defaulters who have seen this coming and havent paid the mortgage in years while hiding any cash under the mattress? Because they are there.

I dont believe that will happen. You have no statistics or evidence to back up that argument at all.

OldNotWIse

cookie1977 wrote: »

I dont believe that will happen. You have no statistics or evidence to back up that argument at all.

How can you provide statistics for something that will happen? Human nature will dictate that some people will look at others getting bailouts and say why the fuuck should I pay, sure I can get one too.

cookie1977

OldNotWIse wrote: »

How can you provide statistics for something that will happen? Human nature will dictate that some people will look at others getting bailouts and say why the fuuck should I pay, sure I can get one too.

As I said they can default but if they want a deal from the banks they'd have to prove that they cannot pay. The banks are not rolling over for all and sundry. Their job is to extract the best deal from the non performing asset. Do you really believe people who just dont pay but can pay will get these deals?

fliball123

Cuddlesworth wrote: »

I know of one couple with similar income and with a similar mortgage to the couple in the OP who are just managing to pay it. What exactly was the problem with this couple that they were living far beyond their means.

The issue with debt write downs isn't the actual write down, its our spiralling arrears problem as a country. There isn't a chance in hell that this or the other cases that are starting to appear are not causing further arrears in what would be considered a performing but struggling demographic.

Sure when you have people going bankrupt and their spouses going in and actually getting living expenses of 9k a month which includes private schools and golf fees and the rest you can only see how this is going to be abused...Its phucking crazy the bankruptcy laws and the way the mortgage situation is being dealt with needs to be more penal

fliball123

gaius c wrote: »

As I've explained numerous times here, it doesn't. They have a borrower with bad credit on their books and this "contaminates" the quality of their loan book and increases their overall borrowing costs. It is actually better for them to take a bigger hit early on than keep somebody with bad credit on their books for 20+ years, even if they do actually work for the bank in question.

Better for who..Its better for the bank as it looks better on their book and better come bonus time, its better for that individual as they get a writedown..but comrade tax payer gets another a$$ raping...

drumswan

cookie1977 wrote: »

As I said they can default but if they want a deal from the banks they'd have to prove that they cannot pay. The banks are not rolling over for all and sundry. Their job is to extract the best deal from the non performing asset. Do you really believe people who just dont pay but can pay will get these deals?

What difference does it make to the bank if it's can't pay or won't pay? Won't pay punters are arguably in a stronger position and as you keep telling us the bank is only interested in the best deal for 'itself'

RedPandaDan

Ye are all somewhat half-right. Its not as simple as ceasing payment and getting debts write offs, but it is possible if engineered correctly.

Paying your mortgage isn't optional for everyone now. It only becomes optional when you both find out what the criteria are to qualify for debt writeoffs and make arrangements to fit that criteria.

I don't have a mortgage myself, but the write offs in debt people are getting are many multiples of my annual salary. I reckon if I had a bubble mortgage it would be downright irresponsible of me to not try every possible means of working out what I would need to do to get that write off, regardless of whether I could afford to repay or not.

Its not easy money, but it is there for the taking; just needs some planning. We can say with the benefit of hindsight that most who paid their mortgage over the past few years have made a mistake, but for many it is not too late to befriend your local bank manager and try and make an arrangement.

fliball123

cookie1977 wrote: »

As opposed to a repossessing a low value bad asset from a bad creditor. We cant have it every way in this type of environment, there's a bitter pill somewhere we've just got to take the least bitter. Getting a low return on a repossessed asset to me as a tax payer is a bad idea compared to turning a non performing low value asset into a performing asset of greater value then before.

If I were an investor and I saw a bank turning low value bad assets with bad creditors to higher value performing assets it would make me more interested in them as an investment opportunity then a bank spending limited resources on repossessing bad assets from bad creditors and taking bigger hits and relying on the tax payer to make up the difference.

NO you get some value back for the asset and then you leave the debt with that individual..the debt does not go away ..Sorry but these people knew that the house could be repossessed and sold if the payments are not kept up. They also knew that they are on the hook for the rest of the cash regardless..Its their phucking debt not mine, not comrade tax payers its not even the banks debt..Its that individual who after a few cocktails decided yes that half mil mansion will be mine...I got no benefit from it..So why should I have to pay any of it...If the debt is left with that person..the tax payer takes no hit

fliball123

cookie1977 wrote: »

Are you thinking with your head or your heart, and I dont mean that disrespectfully, do you want to see the arrears person punished more then you want the greater cash return for the asset?

The property in the OP is worth less then the mortgage so a repossession and sale would yield less then the deal. But now with the deal there is more cash coming to the bank (and thus to the tax payer). Is this not a good thing?

No we want to see the individual live up their side of the agreement, why should the phucking tax payer be punished ? What did we do? The house should be sold or debt for equity or put the repayments over a much longer period..There were numerous options that would not have been so penal on the taxpayer ..this deal phucks them over completely and gives people who were paying a reason not to pay.. So lets sees short term this deal loses up to 50% anyway add in the amount that will look for this deal as well as those who were paying quite rightly thinking..why the hell should I continue to struggle when my taxes are paying for the joneses up the road?

If they played hard ball..and told this couple we will start with debt for equity at say 20% aswell as upping the lenght of the mortgage which brings down the payments and if after a few years this isnt working..Sell the house you will get 50% of it back for the tax payer anyway and leave them with a much reduced cost for that debt. You then get the added effect that the banks are playing hard ball and the tax payers money is not a play thing for those who decide they dont want to live up to their responsibilities anymore

fliball123

cookie1977 wrote: »

As I said they can default but if they want a deal from the banks they'd have to prove that they cannot pay. The banks are not rolling over for all and sundry. Their job is to extract the best deal from the non performing asset. Do you really believe people who just dont pay but can pay will get these deals?

Well think of it like this..at the moment me and my wife work..we could both just stop working, collect the scratch..stop paying our bills and live comfy for about a year before the banks come knocking...Let them come we say we aint working go through the process..get the debt writedown and then go back working...we get a nice 3/5 year holdiay paid for by the tax payer..we get a nice writedown on our house when we go back to work we are in a much better position...and the sucker the tax payer not only pays for some of my house but gave a few years of sitting on my hole not working...I tell you if these mortage writedowns start becoming the norm instead of the exception I will be doing that...I am sick and tired of bailing everyone else out..time for me to get my own one

cookie1977

drumswan wrote: »

What difference does it make to the bank if it's can't pay or won't pay? Won't pay punters are arguably in a stronger position and as you keep telling us the bank is only interested in the best deal for 'itself'

Because if someone has nothing then taking them to court gets you what? If those that can pay but wont pay are taken to court it's significantly easier to get something out of them.

cookie1977

fliball123 wrote: »

Well think of it like this..at the moment me and my wife work..we could both just stop working, collect the scratch..stop paying our bills and live comfy for about a year before the banks come knocking...Let them come we say we aint working go through the process..get the debt writedown and then go back working...we get a nice 3/5 year holdiay paid for by the tax payer..we get a nice writedown on our house when we go back to work we are in a much better position...and the sucker the tax payer not only pays for some of my house but gave a few years of sitting on my hole not working...I tell you if these mortage writedowns start becoming the norm instead of the exception I will be doing that...I am sick and tired of bailing everyone else out..time for me to get my own one

Then perhaps you could try it and let us know how you get on. I'd be interested for one.

jay0109

AIB agrees over 100 deals for mortgage write-offs
http://www.rte.ie/news/business/2014/0319/603254-aib-mortgage-write-offs/

The Irish Mortgage Holders Organisation also said one of the agreements has seen a Cork family get a €195,000 write-off of their debt. The family had borrowed €478,000 and will remain in their home.
The family will now have to service a mortgage of €200,000 and the balance of their borrowings will be warehoused or put to one side.
The bank has declined to comment.
The Irish Mortgage Holders Organisation said it is now dealing with 2,000 clients of AIB or its building society EBS.
It is also handling 360 clients of KBC bank.

Zamboni

Get em whilst they're hot folks.

http://www.rte.ie/news/business/2014/0319/603254-aib-mortgage-write-offs/