Moratorium request rejected and switched to interest only without consent

I returned home recently from working abroad. I have my home rented out for the last three years and have been supplementing the rent in order to pay the mortgage. This model, however, has meant myself and my wife have barely been threading water for the last three years. I returned home a few months ago with the intention of doing a Master's degree that I believe will lead to full-time employment once again, which will allow me to fulfil my mortgage obligations. I contacted AIB at the end of June to explain that I was struggling with payment (although I have not gone into arrears yet) and to inform them of my intention to return to education. I applied for a 12 month moratorium at this point.

At the end of the next month, not having heard anything back from AIB, I logged into my internet banking to check that my mortgage payment had been deducted. I discovered that only two-thirds of the amount had been taken even though there was enough money to cover the full payment. I called AIB Mortgage Department to find out what had happened. They informed me that the Arrears Department had turned down my moratorium request. The reason given was that I had not gone into arrears and AIB believed that 'at the moment' I can afford to pay the mortgage. They seemed to completely ignore that I was applying for a mortgage in advance of a change of circumstances and to avoid going into arrears. They further informed me that only two-thirds of the mortgage was taken from my account because the Arrears Department had switched my mortgage to interest-only for the next three months. At no point did anyone from AIB contact me about this decision, nor did I ever request or give consent to any restructuring of my mortgage payments.

I was put through to the Arrears Representative who made this decision. He informed me that AIB sent a letter to me informing me of their actions earlier in the month. However, when I queried him on this, we realised he sent the letter to the wrong address. My address on all of my accounts for the last 15 years with AIB has always been my home address where i am currently living and not the mortgaged property that is currently rented, and it was clearly stated on my moratorium request that my property was rented. The agent at this point tried to blame me for this mistake and was unable to answer any of my questions. I wanted to know why they put me onto interest only if they deemed that I could afford to pay my mortgage, and also, why I was not consulted about the switch to interest only? Getting nowhere with the representative, I asked him for an address to which I could write a letter of complaint. He then told me to address any letter of complaint to the Arrears Department. I later discovered, on calling into my branch and speaking with the manager, that the Arrears Department Representative lied about the complaints procedure. The representative also agreed to take the full amount as per my mortgage agreement for that month and to undo the interest only option. However, he failed to do this.

I have now submitted a letter of complaint to my branch manager who seemed genuinely shocked that I had been switched to interest only without consultation. I informed the manager that I had withdrawn all of my money from my current and deposit account. This is because AIB have already withdrawn an unauthorised amount from my account and that I therefore cannot trust that my money is secure there. I asked the manager whether or not my mortgage agreement is a legally binding contract. She agreed that it is. I informed the manager that if the mortgage agreement is legally binding, then it is my belief that AIB have acted unlawfully by restructuring the agreement to interest only without my consent and without having missed any payments in the last 6 years. I further informed her that I believed that the originally mortgage agreement had been broken and that I refuse to make any more mortgage repayments until AIB deal with the issue. I am not sure exactly what I can or cannot do here? Does AIB's actions mean that the mortgage contract has been broken and that I can go so far as demanding a renegotiation of the mortgage? Or is that just wishful thinking?

On my letter of complaint I stated 15 different issues that I was unhappy with. I also posed a further 20 questions that I want answered relating to the way the matter was handled. I am wondering what kind of response I should expect and exactly where I stand now in terms of the legalities of my mortgage contract? Does anyone know if AIB have actually broken the contract? Have they acted unlawfully? If so, how serious a mistake is it that they have made and what can I expect to happen as a result? Have AIB done anything wrong by not negotiating with me on my request for a moratorium in advance of a change of circumstances also?

Any advice would be much appreciated so that I can prepare for the bank's response.

Am a bit puzzled by this:
"that only two-thirds of the mortgage was taken from my account because the Arrears Department had switched my mortgage to interest-only for the next three months"

This does not make sense as I don't see how the interest can be two thirds of the the full P+I.

What am I missing here?

By moratorium I presume you mean that you wanted to pay nothing for 12 months?

Are you living in the house now or is it still let and are you living elsewhere?

Is it in NE?

As to all the who did what stuff, I think you will find that there is a clause in the paperwork which make the loan repayable on demand so while you may be 'legally right" they can play hardball, so I would focus more on getting a viable repayment agreement rather than a David and Goliath scenario

Hi Ircoha,

Thank you for the response.

To clarify, my mortgage every month amounts to 877 euros. AIB only took 580 this month. They told me that this is because I have been switched to interest-only. I am not sure exactly how they calculated the new interest-only amount because they never contacted me to negotiate this restructuring. I, like you, am confused by this and have not received any clarification from the bank.

Yes, by 'moratorium' I mean that I requested a 12 month mortgage break while I returned to university.

Your bank statement should give you a current balance and the current interest rate so if you provide those we can do the math

The current balance on the mortgage account is 158,367.93. And the interest rate is 4.4%.

Hi bystander

You are being completely and uttterly unreasonable here.

1) You have no right to a moratorium. Of course, you can request it. But why should you expect AIB to fund your career break? It sounds to me as if you cannot afford the luxury of returning to college.

2) You anticipated difficulty in making your repayments. You asked for a reduction of 100%. They implemented a 33% reduction. Yes, they should have informed you , or more correctly, formally offered you the restructure. .

This is because AIB have already withdrawn an unauthorised amount from my account

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That is simply incorrect. They were authorised to withdraw €877 and only withdrew €580 to facilitate you.

4)

Does AIB's actions mean that the mortgage contract has been broken and that I can go so far as demanding a renegotiation of the mortgage? Or is that just wishful thinking?

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Of course it does. Apply directly to the court and they will simply wipe out all you debt to AIB! You should also sue for aggravated damages, due to the upset and insult you have suffered.

3) Don't bite you nose off to spite your face. You owe this money. AIB will work with you to help you meet the terms of your mortgage. If you act the blaggard, e.g. by ceasing to make mortgage payments, they will begin repossession proceedings against you.

In short, get down off your high horse and approach this in a reasonable manner.

Hi Brendan,

I am not on a high horse at all. I am simply trying to find out where I stand in all of this.

1. I originally consulted a representative in my local branch to discuss financing a return to education. It was the AIB representative who suggested a moratorium and who helped me fill out the paper work. In my recent meeting with the bank manager, she did not think that the request for a moratorium was unreasonable. She told me that I had acted reasonably and responsibly by contacting the bank with my worries about going into arrears. She agreed that in the long term a moratorium would benefit the bank because getting back into full-time employment would ensure that the bank recovered their money. AIB do after all claim that their aim is to keep people in their homes. Also, I am not on a career break; I am unemployed. I cannot afford to live in my own home and if not for the generosity of family I would be homeless. Getting back into education is not a luxury but a necessity in order to create a secure financial future.

2. I requested a break from my mortgage. If a moratorium is so unreasonable in my situation then the bank would not have suggested it to me in the first place. I am more than happy to negotiate a temporary reduction in my repayments if the bank are unwilling to give a moratorium. However, I was not consulted about any of this and was thus not given the opportunity to negotiate. I believe the bank are obligated to negotiate with me, at least according to the guidelines set out by MARP. To tell me that I can afford the mortgage but then to switch me to interest only is strange and contradictory which naturally causes me to question the way in which my request was handled.

3. I am fully aware of my financial obligations. I have emigrated already in order to work and meet them. I have spent the last two years living thousands of miles away from my wife in order to keep my mortgage paid. I have sacrificed being able to start a family with my wife in order to pay my mortgage. There is of course a legal obligation to pay what I owe, but there is also a human aspect to all of this. I believe i have allowed my mortgage to consume too many other areas of my life. I am not acting the blaggard and I don't see how such name calling helps. I am the one who contacted the bank in the first place. All I asked was that my request be dealt with in a reasonable manner. Not notifying me of their decision and then restructuring my mortgage without consent is highly unreasonable on the banks part. I have not refused to make payments on my mortgage, I have refused to make payments until I know exactly how much the bank are charging me. Again, I don't think this is unreasonable. How am I supposed to plan for other bills and expenses if the bank can change my repayment amount without telling me. Is this really unreasonable?

Anyway, thank you for your advice.

Your contract obliges you to make a payment of €877 per month, which is what you should allow for.

If the bank takes less than this, so be it.

But you should not refuse to make any payments because of this.

You appear to have made sacrifices to keep your finances in order. Don't mess it up by an inappropriate reaction to a very minor administrative error by AIB, which was designed to help you!

bystander said:

Not notifying me of their decision and then restructuring my mortgage without consent is highly unreasonable on the banks part.

I have not refused to make payments on my mortgage, I have refused to make payments until I know exactly how much the bank are charging me.

How am I supposed to plan for other bills and expenses if the bank can change my repayment amount without telling me. Is this really unreasonable?
.

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You're forgetting that they did tell you, they just sent the letter to the wrong address. That's just the usual incompetance of the banks.

If you play hardball with them you'll end up the loser. Aren't you better off on the interest only than the full amount, does the rent now cover this amount? Were you going to use the rent to cover your living expenses while you were in college? That's probably why the bank didn't agree to a moratorium.

bystander said:

The current balance on the mortgage account is 158,367.93. And the interest rate is 4.4%.

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Okay so the 577 is right for those figures and the remaining term is about 24 years or so. I have got used to tracker int calc recently so my mistake...

There is good advice in the other posts so.... Good luck with studies