Case study AIB won't extend tracker - partner in denial/depression

Discussion in 'Mortgage arrears & negative equity case studies' started by patrick43, Jun 18, 2013.

  1. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    Personal and income details
    Net 29,000 (after tax) Income self: public company
    Income history: employed in past 4 years
    Net income partner/spouse: NIL (self employed for past 4 years, nil income - not actively trading) no social welfare (unable to know if eligible), spouse got into depression after being made redundant. Not willing to apply for social welfare.
    Income history:
    number of children: none
    Amount of Mortgage Interest Supplement received: none

    Home loan
    Lender: AIB
    Amount outstanding: 330,000
    Value of home: ? (200,000)
    Interest rate: specify whether tracker or SVR or fixed rate: Tracker
    Monthly repayment: 1,200 (the ECB interest rates are low now) this will go up in 12 months time once TRS expires
    Amount in arrears: 8,400 (about 8 months)

    Summary of discussions and agreements with the bank:

    AIB agreed to interim solution of lower repayments, this has now ended.

    AIB didn't agree to term extension - no written reason given (verbal reason given: this will extend over the standard lending terms (35yrs)

    No other proposals from the bank

    Other loans and creditors -
    Overdraft - had overdraft 600, AIB bank wrote to me saying that I didn't contact them (bank claims they sent one letter), shortly the overdraft cancelled. I responded in writing, claimed no receipt of first letter, requested to extend overdraft. No response from the bank.
    Credit Card - n/a
    Credit Union - n/a
    Car loan - n/a
    Family - n/a
    Cash Loan - 5,000 (135 per month), renegotiated from 285 per month (term extended on the cash loan), PPI present about EUR 15 per month ( is it recommended to cancel it?)

    Other savings and investments: n/a


    How important is retaining the family home to you?
    Which of the following best describes your situation?


    I really want to keep the family home.

    Any other relevant information

    What is your preferred realistic outcome?

    Term extension, part of negative equity write-off, or another solution if becomes available

    So far I have kept monthly repayments on the cash loan.
    For the past 8 months I have contributed towards mortgage with the maximum amounts I could afford. I may be able to contribute higher amounts, this will affect the quality of life.

    Would it be recommended to default on cash loan and put 135 towards mortgage on the monthly basis?

    Spouse keeps the electricity account in her name, this also went into arrears (about 600), the electricity company threatens to disconnect the supply by end of this month. What options do I have there? I'm unable to deal with them as I'm not the account holder.

    Ongoing health issues for both of us.
    In fact spouse doesn't want to hear about mortgage, arrears, debt etc.

    What reasonable amount of monthly repayments would keep me afloat

    with the bank, I wish to be in the position that bank can agree to lower repayments or dissolve part of the negative equity (thus reducing repayments)?
     
  2. TrebleT

    TrebleT Registered User

    Posts:
    32
    Sorry Patrick but your partner is in denial, they need to get a grip and face up to the financial problems therefore taking the stress away from you and the both of you can sit down together to try and work something out.
    Your partner also needs to get a job I am very sorry if this is sounding harsh but the financial burden cannot lie solely on you if as you say elec account is in arrears.
    The reality of all of this will not be as bad as it seems, you dont owe alot of money as in no credit union, no credit card.
    Also why not contact MABS and see if they can help that is what they are there for.
     
  3. Janet

    Janet Frequent Poster

    Posts:
    641
    Don't have much to offer in the way of financial advice but if your partner is as bad as it sounds, you really need to get her proper medical care. Depression is so difficult to deal with and if you can't even persuade her to make the phone call to ESB to allow you to deal with them (it only takes a minute, my brother did this for me recently as he was badly in arrears and also being threatened with being cut off), then things are pretty far gone. Talk to your doctor about it, call John of Gods (or wherever your local place is) and ask them for advice. They might have someone who can get through to her where you can't. Has she already been to the doctor, do you have an official diagnosis? Contact social welfare yourself and find out what the situation is, insofar as you can without her being there. Explain openly that she is suffering from depression and unable to deal with it. At the very least you need to get information. Not wanting to sound too harsh but please also make sure that she isn't spending money behind your back - my sister has a huge loan, paying for several credit cards that she ran debt up on during a particularly bad phase prior to a major breakdown and her husband (she claims) knows nothing about it and nothing about her having multiple cards (some of whhich were used sometimes just to put food on the table).
     
  4. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    My partner is still in denial. I have decided to move bills to my own name.
    Could anyone advise me if default on the cash loan is appropriate? that way I would contribute a bit more towards the mortgage.
    Are cash loan repayments and mortgage repayments treated in the same way when it comes to credit rating? I'm in arrears, which may means that my credit rating is damaged already.

    There appear to be some debts which I didn't know about (mobile phone company / mobile broadband contract- bill pay, which hasn't been paid for months), I just got some letter from debt agency. - Can I cancel her agreement with mobile phone company to minimize her debts?

    I tried to call to the bank, I was told that I can apply but I will be refused as there is second signature needed.
    I know that I won't be getting second signature..
     
  5. SarahMc

    SarahMc Frequent Poster

    Posts:
    777
    Not much advice to offer you I'm afraid. It seems you are in a very lonely position shouldering all this on your own. Have you talked to MABS at all? Also can you not use the PPI now if your wife has depression (if it's diagnosed)?
     
  6. millieforbes

    millieforbes Frequent Poster

    Posts:
    306
    Can you explain what you mean by cash loan? Is it a variable/fixed rate loan with AIB?
     
  7. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    30,732
    Let's deal with the mortgage first

    You have a home worth €200k. Presumably if this was repossessed, it would cost at least €1,200 per month to rent something equivalent, so keeping the house seems like the right thing to do. We can review this later.

    With a mortgage of €330k, the interest at 2% would be around €6600 or €500 per month. This is the real cost to you of your property. Anything in excess of €500 is going towards repaying the capital.

    The lender is extremely unlikely to agree to write down the negative equity. If they do, it will be in exchange for taking you off the tracker. So forget about this option for the moment.

    If you do not have children, it seems reasonable to me, that AIB would insist that your partner gets a job and contributes to the mortgage payments. I know that this seems reasonable to you as well. But your partner doesn't see it like that. If I was in AIB's shoes, I would be slow to extend a reduced payments deal so that the customer could swan around and not look for a job.

    It's not just in AIB's interest, it's in your interest as well, as any payments she makes would reduce the capital outstanding.

    So, as the others have pointed out, your problem is with your partner rather than with AIB. You need to address this first. We don't allow medical advice on Askaboutmoney other than the advice given already to see a doctor or a psychiatric service.

    Now back to AIB.

    I presume you are in the MARP (Mortgage Arrears Resolution Process)?

    Check the details. They are supposed to write to explain the options to you.

    You also have a right to appeal to their internal appeals unit. While you can do that, I suspect that they will agree with the AIB decision and, as I say, it's a reasonable decision.

    Make sure that you pay at least the interest every month
    Some people feel that if they cannot make the full repayment due, they will pay nothing.

    So pay the interest in full every month. This should be easily affordable.

    If you can pay a bit more, pay that as well.

    Forget about your credit rating - it's shot already or will be soon
    You won't want to be borrowing for a long time to come anyway.

    Establishing your priorities
    This is difficult and I would suggest ordering them in terms of consequences of falling behind and the cost of the loan.

    1) Make sure to pay the esb bill, food bill, etc.
    2) Make sure to pay the interest on the mortgage every month.
    3) If you have already rescheduled the "cash loan", then continue paying the €135 per month.
    4) Cancel the PPI - unless you can claim for your parnter's illness

    The cash loan
    What interest rate are you being charged?
    The Central Bank are introducing a new scheme for a coordinated approach to mortgages and unsecured debt.
    If your cash loan lender is participating, you might be able to do a deal e.g. the mortgage switches to interest only, the cash loan reduces the interest rate, and you pay it off as quickly as possible so that you can focus on the mortgage.

    But the big problem is your partner - all the other solutions depend on you resolving this.
     
  8. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    I agree to that

    It's extremely hard for me to expect cooperation from person in this condition

    Yes, that is correct, I'm with MARP. They wrote one letter explaining that I'm in MARP. Then I was given brochure with options, I applied for term extension - refused. Verbally told that it's unsustainable.

    I have appealed, it was refused. I was told I can got to the ombudsman (I decided to give one or two more chances to try to make the agreement with the bank without going through ombudsman)

    I'm re-applying for the term extension again.

    Yes, the interest repayments seems to be reasonable for the moment.

    Started to deal with arrears on some of the bills.

    1) Yes
    2) Yes, I will do that
    3) Yes
    4) Cancel the PPI - unless you can claim for your parnter's illness

    re: 4) yes I plan to cancel PPI, as the loan was in my sole name it may not allow to claim PPI at present (I'm not sure on that one)

    Cash loan is at 14% or so.

    I agree that it's much easier when two adults are in good shape.
     
  9. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    30,732
    Hi again Patrick

    Have you sought independent help on how to get your wife to face up to reality? You are not the first person to go through this. A psychiatrist, or social worker or mental health support group might be able to help and advise you. It's not possible to resolve financial issues if one partner doesn't want to address them.

    This is a tough one. You can't go to the Ombudsman on the substantive issue. You can only go to say that they did not go through the procedures correctly.

    Unfortunately, the Cental Bank has set the lenders targets for "sustainable solutions". A sustainable solution includes repossession. It does not include extended interest only. So even if they want to give you interest only for a while, they probably are being forced by the bank to try to repossess.

    You could go for a PIA but AIB would probably veto it.
     
  10. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    Hi Brendan, yes we tried, it looks like it may take more time than anticipated. She was in contact with one doctor for some time, hopefully with time her condition improves.

    Regarding the home loan term extension, what is the best route to get this issue addressed?

    Interest only seems to be temporary solution.

    The home loan term extension seems to be a permanent solution.
     
  11. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    30,732
    Hi Patrick

    If they extend the term, you will be paying interest and a reduced amount of capital.

    For the moment, they seem to be happy enough with interest only. Make sure to continue paying that, no matter what happens.

    It's not really in the bank's interest to extend the term. This gives you a long-term right to reduced payments. If/when your income increases, they have no way of getting you to resume normal payments. Given that your family could have high income again, I think that they are right.

    Given that you have a tracker, it's not in their interest either to extend the term of a loss-making product.
     
  12. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    Hi Brendan,

    I think I will ask whether it's possible to write a legally binding document stating that if my income increases I am willing to return (sign back) to the original/ or shorter term. - this should give aib the promise of shortened lifespan of the mortgage if or when the situation improves.
     
  13. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    30,732
    But that is what an interest only agreement is anyway, so they won't go drafting legal documents for just one case.
     
  14. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    I plan to pay more than interest only repayments,
    for that reason I consider to temporarily stop repayments on the cash loan and put this towards the mortgage.


    If I draft/sign sort of page and get it signed by commissioner of oath, would bank treat it as benefit towards application for term extension? I'm keen to try, perhaps someone could help me to draft such undertaking.
     
  15. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    30,732
    I have no idea what a "cash loan" is. You have been asked and haven't explained it fully. Who is it from? Personal? An institution?

    I have no idea what this means either.
     
  16. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    cash loan from the bank, personal loan in my own name
     
  17. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    Would there be a step by step guide how to arrange the new agreement with the bank in my situation (where one person is willing to cooperate and one is in denial) ?
    I'm getting lost.
     
  18. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    bank refused to negotiate due to missing signature of the second applicant
     
  19. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    30,732
    Hi Patrick

    To be fair, it's not really the bank's fault. They have a loan with the two of you and can't reach an agreement without both of you being involved.

    Have you tried getting a doctor to certify your wife's incompetence? Can she be made a ward of court or can she give you power of attorney? The bank might deal with you then.
     
  20. patrick43

    patrick43 Frequent Poster

    Posts:
    21
    Hello all,

    just a small update and advise needed..

    Net 32,000 (After tax) Income self: public company
    Income history: employed in past 6 years
    Net income partner/spouse: NIL (self employed for past 6 years, nil income - not actively trading) no social welfare (unable to know if eligible), spouse got into depression after being made redundant. Not willing to apply for social welfare.
    Income history:
    number of children: none
    Amount of Mortgage Interest Supplement received: none

    Home loan
    Lender: AIB
    Amount outstanding: 300,000
    Value of home: ? (260,000)
    Interest rate: specify whether tracker or SVR or fixed rate: Tracker
    Monthly repayments: 1,180
    Amount in arrears: 0

    Summary of discussions and agreements with the bank (back to 2013):

    AIB agreed to interim solution of lower repayments, this has now ended.
    AIB didn't agree to term extension - no written reason given (verbal reason given: this will extend over the standard lending terms (35yrs))
    No other proposals from the bank, I didn't apply for any further solutions.
    Since 2013 I have repaid the arrears and the car loan.

    Other loans and creditors -
    Overdraft - n/a
    Credit Card - n/a
    Credit Union - n/a
    Car loan - n/a
    Family - n/a
    Cash Loan - n/a (paid back)

    Other savings and investments: n/a

    How important is retaining the family home to you?
    Which of the following best describes your situation?

    Depending on the options available to me.

    Any other relevant information

    .. spouse is still in a depression and in a denial.

    I'm a bit tired of all this but I keep going. Since we purchased the house I'm the only one who pays into the mortgage, spouse becomes very abusive and keeps blaming me that this is too expensive to keep and me being on a low income.

    Do i have ANY options ?

    I would like to be in a position to rent out this property in future. I feel that this marriage will break soon or is already broken.
    She does leave quiet often, sometimes for months and while I know she stays with her relatives, I'm being left to manage all this alone.
    She is saying that she is waiting for me to say it first but yet claims that it's her house.

    My questions are:

    - what happens if i get a divorce?
    - if i manage to remove her from the mortgage, am i gonna get this house repossessed as me being only one person on the mortgage?
    - can i rent out this property without penalty such as a interest rate increase?
    - can i draft a legal agreement with her and buy off her share in the property? I have some savings (not much, maybe 7k at the moment).

    Friend of mine said to get a divorce and tell nothing to the bank for the next 25 years and keep repayments as they are for the next 25 yrs. - how bad idea is this?