Sue mortgage lender for unrealistic loan approval?

[Bronte]

I have argued in several threads that it was also because of heavy pressure from all sort of expert sources - bankers, mortgage advisors, the government.

At the end of the day the borrower went into a bank, they looked at a property that was too costly, they didn't do their own sums, they didn't look at a scenario of stress testing to see if they could cope with interest rate rises, they didn't think about what they would do if they lost a job. Very simple basics. In the case of the OP they actually admit that they couldn't afford the mortgage from day one, what on earth were they thinking of?

And Cruzer, I've yet to find a person who was told by Bertie or Brian to buy a home or who listened to an economist. Anyone who listened to economists will understand that for every economist saying one thing there is another saying the opposite. People believe what they want to believe.

Before everyone jumps down my throat, there is no one more angry at bankers, regulators et al then myself.

 

[RAMS]

What do the Irish Property Council care about ordinary householders considering it was their members who built and sold the overpriced junk in the first place.

If you look at their web site you will see that they represent investors as well - a lot of whom are ordinary householders with one investment property.

 

[so-crates]

There are so many that support the banks & blame the buyers on this forum it amazes me.

What amazes me is the number of people who seem to want to be treated almost as children, despite being able to afford their mortgage they want to lash out and blame others for the fact they have invested that borrowed money in a property that is not now saleable for the amount of the mortgage. The value of your investment may go down as well as up - it applies to everything you may invest in. They gambled. The banks gambled. Both are now paying the consequences.
I have every sympathy for those in straitened circumstances, for those struggling to decide between heating and eating, for those who have truly found the burden of paying intolerable. The behaviour of lenders specifically and society in general to those will be the measure of our character - I am not sure that we are measuring up the way we ought to. I have little sympathy for those béal bochts who plaintively whine that it is somebody else's fault that they gambled borrowed money on a clearly over-inflated property market. (And I am aware that there is an overlap!)

Either they didn't buy a house between 2004 and 2009 or they are students/renters/stay at homes praying for a total meltdown in property prices. Maybe they bought a house in 1991 and have it paid off.

A rather sweeping statement and more than a little ludicruous. I did buy a house between 2004 and 2009 but I bought sensibly. I saved for my deposit. I looked at my budget myself to see what I could afford and I opted for a mortgage for less than they were willing to offer. I chose the property based on criteria that suited me (one of my criteria was a deep aversion to paying over the odds). I didn't look for a mortgage that was more than three times my salary. I didn't fudge or massage any figures on my application. As a result and because I have not been so unfortunate as to suffer unemployment I can still comfortably afford my mortgage. I am probably somewhat in negative equity, but I was neither surprised nor inclined to blame anyone else for that.

Yes the borrower and bank are both complicit however the borrower carries the debt forever. Non recourse or sharing of the debt is the only answer.

The only answer to what exactly? Non-recourse loans are hardly a panacea. On what basis to you make such a broad statement? What are the economic benefits of such a radical change in loan agreements? What are the possible consequences? What exactly do you hope to solve with this approach? I'd need more than your bald assertion to be convinced of the merit of this approach.

The other way of sorting this is a one year bankruptcy, at least until we free the people of this debt burden created by Banks / Politicians & Civil Servant idiots that were asleep at the wheel.

Ah something we can agree on! Reform of bankruptcy laws in this state are long overdue. However, I notice once again that you seem to think that the borrowers bear no responsibility for their borrowing. Adults have responsibility to manage their own affairs, assuming they are compos mentis of course. Why do you wish to infantilise a whole generation of Irish people by patting them on the head and saying it is alright, it isn't your fault, they made you borrow so you run along and play now. Being responsible isn't necessarily easy but it is necessary - who wants a nanny state? And if as you say "Banks/Politicians and Civil Servant idiots" were asleep at the wheel what about the fools that repeatedly elected a government which was careening down a path clearly marked "DANGER". Bubbles aren't a new phenomenon, they are depressingly regular. What is also depressingly regular is how people react to them, they always assume this bubble will be different because....
We elect our goverment. In 2007 we elected pretty much so the same crew we had already on the basis of a stupidly generous budget, and daft promises from a craven bunch of nest-featherers. Hopefully now we will have learned the lesson that when a politician claims he has experience, what he means is that he has experience in screwing the system for as much cash as he can.

I sick of seeing trolls on this forum point the finger of blame at those who borrowed in good faith, listened to Bank Economists/Bertie/Brian and invested in their future and the economy by purchasing a home only to find the whole thing was a giant pyramid scheme.

I'm heartily sick of the blame game - it benefits no-one, I'd rather just get the country back working. I am even sicker of the attitude that it must be someone elses fault.

 

[RAMS]

They gambled. The banks gambled. Both are now paying the consequences.

Not true. Banks are not paying, only taxpayers and borrowers are paying.

Nobody but nobody is saying borrowers arent culpaple. They are. But unfinancially literate people relied on the 'financially literate' bankers who were literally throwing money at them. Most people wouldn't understand the first page of a mortgage agreement. Bully for you that is obviously not one of the masses who were not proficient in financial accounting and economics to have made an informed decision - that is an informed decision against the majority opinion at the time. We all know the famous quote from Bertie about naysayers. Only David McWilliams was saying it was a house of cards - nobody else did until the cracks started to appear. Not even one newspaper as the revenues from property advertising were too lucrative. The Financial Services Ombudsman's office is full of cases where people were sold financial products that were not suitable for their needs. Mortgages are no different.

 

[Nutso]

The system in the US is a better system. Banks are also taking a risk on the value of the loan they give, because if the borrower becomes unable to pay they can hand the keys back.

Maybe if we had a similar system here, banks would have been more careful about the values they placed on property and the loans they gave.

 

[Sunny]

The system in the US is a better system. Banks are also taking a risk on the value of the loan they give, because if the borrower becomes unable to pay they can hand the keys back.

Maybe if we had a similar system here, banks would have been more careful about the values they placed on property and the loans they gave.

Didn't really work in the States did it!

 

[so-crates]

Not true. Banks are not paying, only taxpayers and borrowers are paying.

How do you figure that? Because they aren't paying your mortgage? Let's see - half of the banks have now been "bought" by the state, their share values are at rock-bottom prices or they are no longer listed. Oh I have no sympathy for them, I would like to see some people end up in prison having been stripped of whatever assets they have tried to salt away but it is a silly argument to stamp your foot and demand someone else pay too because you lost the gamble. Where a person has a genuine case that they cannot reasonably pay that is a different matter.

Nobody but nobody is saying borrowers arent culpaple. They are. But unfinancially literate people relied on the 'financially literate' bankers who were literally throwing money at them. Most people wouldn't understand the first page of a mortgage agreement.

I am assuming you mean "financially illiterate" as the other phrase makes no sense. Assuming that then I still have to say, it is their life they are gambling with. That they themselves did not see fit to equip themselves with the facts and instead opted to lazily rely on your so-called experts who clearly had a vested interest in their taking out the loan points to their culpability in their own situation. People choose risks poorly. Usually because they are either poor at gauging the relative risk of two things or they are lazy about assessing the risk and use short-hand indicators instead. Even having assessed risks properly people are apt to end up the "victims" of herd mentality - none of that diminishes their own responsibility for their own actions. It certainly comes across to me from the béal bocht attitude that some people have adopted that they do not accept their own responsibility in this mess. It isn't defending the banks to query why people think that everyone else should be made to pay for the mess they have got themselves into. Because ultimately, let us not forget - these banks do not have any money and are borrowing from us to fund this debacle. I pay my debts - why should I pay others?

Bully for you that is obviously not one of the masses who were not proficient in financial accounting and economics to have made an informed decision - that is an informed decision against the majority opinion at the time. We all know the famous quote from Bertie about naysayers. Only David McWilliams was saying it was a house of cards - nobody else did until the cracks started to appear. Not even one newspaper as the revenues from property advertising were too lucrative.

I am no financial expert or wizard. What I am is a person that always reads what is put in front of them. I don't sign something I don't understand and I cannot fathom why anyone would think that other people should be minding them all the time. I make mistakes and have paid for those mistakes but I acknowledge them as my mistakes and I learn from them. Perhaps that is why I was more cautious when it came to taking on such an enormous debt.

The Financial Services Ombudsman's office is full of cases where people were sold financial products that were not suitable for their needs. Mortgages are no different.

Interesting idea - and mortgages are no different, they are a financial product. But I suspect the number of mortgages mis-sold is a tiny proportion - same as other financial products.

 

[Bronte]

I'm heartily sick of the blame game - it benefits no-one, I'd rather just get the country back working. I am even sicker of the attitude that it must be someone elses fault.

That whole post is great socrates.

I'm sick of it, the blame game too. Seems to me some people will never own up to their own culpability in the mess.

In relation to debt forgiveness I'm all in favour of new bankruptcy rules. But it won't solve the 'problem' that a lot of people have and that is the simple fact that they can afford their mortgages, they are in massive negative equity, and that it will take them 30 years maybe to sort themselves out. Instead of focusing on the blame game, they should focus on doing something for themselves about that. Hard choices will have to be made. No government or bank is going to sort out their financial affairs. There is no pill called 'debt forgiveness' or 'mis-sold mortgage' that wipes away debt.

Cruzer I bought an investment property between 2004 and 2009. It's no doubt in massive negative equity and I've 'lost' thousands. You've now two people on this thread who have already proved that part of your theory wrong.

Rams you don't have to be financial literate to know that if you borrow x and the repayments are y that you must be able to pay y. Reading a mortgage document while desirable is not required for that math basic.

 

[tvman]

Not true. Banks are not paying, only taxpayers and borrowers are paying.

Companies, including banks, are simply vehicles to maximise the wealth of shareholders. Shareholders of the Irish banks have lost everything, literally everything in the case of Anglo, 99% in the case of AIB and BOI. In what sense can these companies be said not to have paid a price.

 

[Mpsox]

I'm sick of it, the blame game too. Seems to me some people will never own up to their own culpability in the mess.

I agree with you in principle, and up to a point, but I don't think the answer is as black and white as you make it out to be. After all, on an annual basis, the Financial Ombudsman will make rulings against the banks for selling unsuitable investment products to people, why shouldn't mortgages be any different?

One of the reposesion cases in court this week involved a 49 yr old person who had been awarded a 30 year mortgage. There is a strong arguement for saying that the bank in question should never have leant her the money on these terms and should share in the responsibility for potentially allowing a mortgage to run until someone was 79 years old.

Bank of Ireland were already held liable in 2010 for mis-selling an endowment mortgage. UK banks have been held liable for similar issues in the last decade, + for mis-selling insurance on mortgage products. Therefore there is some precedent.

Likewise, if a mortgage holder could prove, that they were advised by a broker or bank manager to pad their salary/income figures, some liability could lie there also.

The reality is that for the majority of people, they were either naive or careless and shouldn't have grounds for a case against a bank. In particuler, that applies to investment mortgages and I have no sympathy for anyone who took out 100% interest only mortgages on investment property. they simply got carried away. However, and on a case by case basis, I do believe some cases may occur in the near future where a lender and/or broker will have to share responsibility

 

[kickstart]

The Financial Services Ombudsman's office is full of cases where people were sold financial products that were not suitable for their needs. Mortgages are no different.

Back when the FSO used to publish case histories, I used to read them all. I can't say I remember many cases of mis-sold mortgages. I think there were a few endowment-style cases brought up, but his terms or reference didn't allow him to rule on them as they were too old. For regular mortgages, I don't think you could class it as mis-selling if the buyer could afford the mortgage at the time it was taken out. For those mortgage contracts where the person taking it out was clearly unable to pay it from day one, then I think it should be classed as mis-sold. Unfortunately, I don't think the high court agrees with me.

 

[yram]

I really thought hard about 3-4 years ago about buying a house. But I knew, in reality, that if anything ever happened job/economy-wise, I would be screwed. Fine, I dont "own" a property, but Ill live.

Why did I know that, and others didnt?
I certainly dont have any third level education in business for me to realise that.
So why should people who are struggling to pay mortgages be treated as "ah the poor things"...they got themselves into this mess by greed. Pure greediness. Isnt that the (old) Irish way of thinking? Get yourself into a fine old mess and blame everyone else?

 

[dahamsta]

Anyone that bought without thinking ahead 3-4 years ago deserves what they got. I think people back further are in worse shape and more entitled.

The people crying for the heads of posters saying "x is 100% wrong" or "y is 100% wrong" must be illiterate or special, because I haven't seen a single person say that.

 

[Bronte]

One of the reposesion cases in court this week involved a 49 yr old person who had been awarded a 30 year mortgage. There is a strong arguement for saying that the bank in question should never have leant her the money on these terms and should share in the responsibility for potentially allowing a mortgage to run until someone was 79 years old.

Well let's take that case. What was the 49 year old thinking of?

 

[dahamsta]

Well let's take that case. What was the 49 year old thinking of?

What was the bank thinking of?

 

[Time]

Quite. The banks need to be brought to book about their dodgy lending practices.

 

[orka]

Well let's take that case. What was the 49 year old thinking of?

"Yay, fooled the bank into lending me the money! A 30 year mortgage will be cheaper annually leaving me spare money to live the life I deserve because I'm worth it. I don't expect to be paying this back when I'm 79; when I get to 65, my house will be worth 4 billion euros so I'll sell it, repay the mortgage and buy a smaller house with the enormous profit I will have made"

What was the bank thinking of?

"Yay - another mortgage sold! A longer mortgage prolongs interest payments for us as less capital is paid back each year. We don't expect this 49-year old to still be paying off his mortgage when he's 79; when he gets to 65, his house will be worth 4 billion euros and he will repay his mortgage then"

 

[dahamsta]

Sounds about right, nonsense on both fronts. Which is my point: people here are trying to say that other people are trying to say that one or the other are to blame. Both assertions are wrong, even the imaginary one.

 

[DTJAE]

Value YOU ascribed to the asset?????????

Ultimately this argument that borrowers were at the mercy of the banks and advisors when it came to deciding that they could afford to purchase the mortgage they opted for is pointless. They are adults and their ignorance is their own to deal with, they cannot present naivete as an argument that justifies a payout by the bank. They weren't deceived by the bank. They were frequently complicit with the bank. The number of times I heard people's ruminations on how to get a mortgage for more than the bank was willing to lend them at the time was frightening. The number of people who massaged their presentation of their financial well-being in order to obtain the desired mortgage was disturbing.
How many people now looking to blame somebody else for a mortgage they took out expended time, effort and money on presenting a flattering picture of their financial health? I'd be inclined to say all of them.
How many of them still have not admitted to the unpalatable truth that they cheated themselves when they massaged their figures? Cynically, I'd be inclined to guess an unhealthy majority.
I do not mean to imply that all those in straitened circumstances did so. There is a considerable difference between finding yourself unemployed and finding yourself sitting with a severely depreciated asset on one hand and a large liability on the other that no longer is covered by the value YOU ascribed to the asset. The first person deserves compassion, the second deserves the lesson. Both may deserve some support.
As I already said, you can always sue if you wish but a couple of cogent points to consider.
1) Is the bank/broker the only party liable? Do you have any liability at all for your behaviour at the time?
2) If you are going to sue you should only sue where there is money available to pay out for you - so suing a bankrupt bank may simply be a fools errand.

You are obviously not familiar with the mortgage lending game?? You don't put a value on your house, the bank send out an independant valuer to value you home for them....So now who's been over pricing houses as well as the auctioneers???? One other poster stated that the irish property council were implicated in this also. You do sound like someone who either works in a bank, for a bank or is in the lending game, either way i do believe that the banks and the brokers are more to blame than the borrower, like it has been said several times already, these guys are supposed to be the experts and get paid exteremly well for being so (just like our corrupt politicians and look what happend to FF) Why can't the same game be played with the bankers??

I assume your doctor is qualified to ensure the best health service for you and your neighbourhood??? And if that wasn't the case and he recklessly or unprofessionally sold you the wrong health product or medication or prescribed an expensive medication you did not require to increase his precriptions for the chemists he would be held accountalbe regardless of what you told him your symptoms were, he is required to investigate to ensure the product is suitable and will not affect you in a negative manner. THATS A PROFESSIONAL/EXPERT

 

[Greensquare]

I don't work for any bank/lender/broker etc.
In 2005 I bought an investment property which I didn't need. It was my was of "getting ahead" in 10 years time. "I'll sell it and make a good profit", was my wisdom at the time. At the time the broker told me he would get the value of the house bumped up by 15% for the paperwork, so that he could then give me 90% of the higher value, which in reality would be 100% mortgage of the cost price. He knew it was wrong, & I certainly knew it was wrong, but I went along with it.
This property has roughly halved in value by now.
Who's fault is it? Mine & mine alone. I knew when I signed that mortgage that it was a risk. It has backfired. Its on my head to deal with it.

If you treat people in society like poor victims, they will behave like that. People need to take responsiblity for their own actions.