Defaulting on mortgage while still employed, coordinated mass default?

Folks just wondering about your thoughts on this idea.

I want to default on my mortgage but am still currently employed - the reason being is the fact that my house is about 100,000 in neg equity and I don't want to live where I am and the banks will not work with me ( no personal debt and consistent savings ).

I have approached the bank stating that I would pay off the remainder of the loss on the house over time but they simply said that they would not release the deeds to the new owner unless the balance of the loan is settled and so therefore I cannot sell the house.

I feel that if enough people coordinated a mortgage default and a peaceful protest perhaps then the banks and the government would listen and actually come up with a viable plan. FG we don't want mortgage interest relief as this way the banks still win - we want an accelerated principal repayment scheme of some sorts!

Look what happened in Egypt which all started out as an idea on FB.

I'm simply putting out the feelers now to see what the public response would be to such an idea of coordinated mass default.

Thoughts....

Why should I subsidise you just because you "don't want to live where you are"?

Do you want to sell the house and take the negative equity with you? If so I think the bank should try to facilitate you. If in negative equity they have no proper secuirty anyway so letting you carry the negative equity with you is a good idea. Defaulting or not paying the negative equity is a different matter.

Banks should help you out imo if you are taking the negative equity with you. Why they wouldnt release the deeds to the new owners surprises me, especially if you have already stated to them that you would take on the negative equity. Could they not restructure the negative equity as a long term personal loan?

but surely if you default you will find it very difficult to get any type of credit in the future - therefore eliminating any chance you may have of owning a suitable house ?

You say you have consistent savings. Can you not use this to reduce the 100K negative equity, and at the same time show the bank you are serious about dealing with it? The bank may then facilitate your move.

They won't want to do anything until there are arrears on the account.

silverfield said:

...I want to default on my mortgage but am still currently employed - ... - we want an accelerated principal repayment scheme of some sorts!
Thoughts....

Click to expand...

My thoughts:
There is little enough public sympathy and appetite to help those who CAN’T pay mortgages that they signed up to – there will be next to none for those who can but WON’T pay.

I don’t think you will find many ‘can but won’t’ people who would be willing to wreck their credit rating. They are too easy a mark for legal proceedings forcing them to pay.

If you default, you will end up in the same situation with your mortgage but with no possible hope of goodwill from the bank PLUS extra arrears, penalties and legal fees (spent pursuing you) added onto your debt.

Your best case scenario is that your bank will, at some stage, let you sell the house and roll the negative equity into a standalone loan/roll it into a future mortgage. The bank would have to have a lot of trust in you to let you do this. Defaulting will make it unlikely that any bank will trust you for a very long time.

While it is commendable that you want to service your loan, you seem to overestimate how much power you have in the relationship with your bank. “I will not on the other hand put my life on hold or sardine my family into a 2 bed house just because the This post will be deleted if not edited to remove bad language fell out of the market” – well, you may have to...

The only way I can see out of your sardine-house that won’t involve increasing your debt/wrecking your credit rating for a long time is for you to rent it out and then rent somewhere bigger yourself. Or as a previous poster suggested, use your consistent savings to build a track record of paying down your NE. Your own personal "accelerated principal repayment scheme"...

I am fascinated, however, by how you would see this playing out – so, you default on your mortgage, stop making the monthly repayments... what happens next (short-term and long-term)? The bank caves to your demands and lets you sell and take a stand-alone loan for the 100K? Do you want a future mortgage or will you rent?

Silverfield

my house is about 100,000 in neg equity

Click to expand...

You have assets and you have liabilities.

You are in negative equity rather than the house.

Use your savings to reduce the negative equity.

The problem from the bank's point of view is that you would end up with an unsecured loan and people are less enthusiastic about servicing an unsecured loan.

The other problem is that a change in the law could allow you to get a write off of unsecured debt, but it is unlikely to apply to secured debt.

Do you have a tracker mortgage? How much savings do you have? You should try with the bank again in writing. And get their response in writing. If it does become a problem at a later stage, you will get a lot of sympathy from the judge.

The problem with handing back your house now is that they will sell it for a lot less than you will sell it for. so you will have a bigger deficit. As well as legal fees and a destroyed credit record.

Many thanks to all who replied - I guess I will go back into the bank and try and talk to them again. If that fails I'll just enter the rental market and maybe facilitate a move that way? I guess to default while earning an income does not make much sense at the end of the day!

Default

So I'm looking at options...restructure my mortgage over something like 80years! Or just default and let the bank suffer the debt.Developers get bailed out so why not we,after fall we are suffering these austerity measures for a wreckless lending envirnoment and goverment corruption.Have you heard of the term Jingle mail...I think its only a matter of time before this becomes a commonality.Irish people need to wake up and say enough is enough.Two fingers to the banks and walk away.If enough people do it they have to enforce some sort of debt forgiveness,but continuing to pay means the ball will always be in their court...They are crooks,and the goverment are crooks, we are the dumb sheep of Europe taking it up the rear.The Irish are too docile,we need to take on the banks and stop paying for their insolvency!

cormirl said:

so i'm looking at options...restructure my mortgage over something like 80years! Or just default and let the bank suffer the debt.developers get bailed out so why not we,after fall we are suffering these austerity measures for a wreckless lending envirnoment and goverment corruption.have you heard of the term jingle mail...i think its only a matter of time before this becomes a commonality.irish people need to wake up and say enough is enough.two fingers to the banks and walk away.if enough people do it they have to enforce some sort of debt forgiveness,but continuing to pay means the ball will always be in their court...they are crooks,and the goverment are crooks, we are the dumb sheep of europe taking it up the rear.the irish are too docile,we need to take on the banks and stop paying for their insolvency!

Click to expand...

Ok,so i'm just an ordinary guy who worked hard for about 18 years abroad saved money,traded up in the property market and ended up with enough to build a mortgage free home in Ireland.
1.The bank wont suffer your debt, I will.
2.For reckless lending ;read reckless borrowing
3.You may be a dumb sheep,I aint
4.You insult the whole population with this "Irish are too docile" comment.
Now i understand that there must be a certain amount of debt forgiveness
to try and get this mess to rights again,and there has been a lot of well meaning advice given on this thread and this forum,but the opening post and your post must make reasonable people think why should we bother!

cormirl you have an interesting view for sure. You freely entered into a contract and freely borrowed money to buy your house, and now you are considering that this was a bad deal and everyone but you is to blame. No one held a gun to your head and forced the mortgage on you. If the asset had appreciated in value, you presumably would be content to pocket that as you took the risk, and are entitled to the reward.

You would presumably be straight down to the courts if the bank attempted to sequester your gain, but feel no great compunction about saddling them (meaning us as taxpayers) with your losses. It has been one of the most curious developments inthis recession that if I make a mistake then someone else is to blame and must carry the can.

As a general observation I note that alot of people who advocate defaulting on their mortgages say that by doing it they will help themselves and / or that "its time that ordinary taxpayers stood up to the banks / govt".
Such people need to remember that when people default on their loans, it only adds to the burden on the tax payer, as any loss the banks suffer is passed on to the owners of the banks ie the Irish people / govt. The govt pay for it through selling additional bonds which we pay back, via our taxes.
So in reality the taxpayers suffer more, not less, through this action.
I understand that there are people out there who can't pay - I feel for them, but have NO sympathy for anyone who won't pay

I don't think anyone defaulting is planning on remaining a tax payer. They most likely will emigrate.

I agree with the ideas mentioned earlier. You should just save until you can pay off the debt.

Whilst i'm an irish taxpayer paying and have always paid every loan and fully intend to continue doing so there is one view expressed in the last few posts that confuses me.

"Not paying the banks means not paying the Irish taxpayer".

Does this mean that because we were so stupid as to take over the banks and all their debts,no matter what these debts were, then it's incumbent on everyone to keep supporting the banks ?

There are many reasons for one to pay one's debts -to me its a matter of honour or principle.
But going on how the banks are "ours", the taxpayers, and therefore we must pay them (so they can repay,for example, the unsecured loans from foreign speculators) is not the greatest reason to repay a loan.

oldnick said:

But going on how the banks are "ours", the taxpayers, and therefore we must pay them (so they can repay,for example, the unsecured loans from foreign speculators) is not the greatest reason to repay a loan.

Click to expand...

The organizations that invested in bank bonds were not speculators! These bonds were considered low risk investments and very often taken up by foreign pension funds, insurance companies and the likes, at the time there was nothing speculative about them. If we were to screw them we would be hitting some of the very people we are not expecting to borrow more money from - the European taxpayers and pensioners.

I'm not a financial expert . So I'm surprised to be told that investing in Irish banks in the last decade was considered by financial experts (pension funds,insurance companies etc) to be "low risk", when most of the lending of Irish banks was to property speculators (sorry, investors) and naive impecunious individuals who were easily given 100% loans for crazily overpriced properties.

I'm puzzled how any expert financial scrutiny of Irish bank lending 2000-2006 - or, indeed, the basis of the Irish economy in that period - would consider that here was a low-risk investment opportunity. (I assume of course that financial organisations did some due diligence when investing millions,nay billions, into Irish banks).

Perhaps the lenders to Irish banks were not speculators -just greedy and stupid.

But ,as I say, I'm not a financial expert.

oldnick said:

I'm puzzled how any expert financial scrutiny of Irish bank lending 2000-2006 - or, indeed, the basis of the Irish economy in that period - would consider that here was a low-risk investment opportunity. (I assume of course that financial organisations did some due diligence when investing millions,nay billions, into Irish banks).

Click to expand...

Hindsight is a wonderful thing! We can all see now that it was crazy to:

• Borrow 5 or 6 times one's income
• For banks to lend people 5 or 6 times their income
• For pension funds to rely on bank bonds as an investment
• For pensioners to invest all their savings in bank shares
• And so on

But human nature being what it is, everyone looses the run of the themselves in a bubble. This has been documented several times now in various books and reports - people's behaviour in bubbles is actually very predictable and is repeated on an all too regular basis!

One other thing about bubbles, is that very often more money is lost in the immediate aftermath than during the bubble itself! Those who have not already been caught, rush in to be on board for the next ride, so to speak. I still hear people claiming that now is the time to get in on the property ladder.... Even though borrowing levels are still far to high to be sustained. Sadly people never learn....