20,000 deliberate defaulters

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Sarenco

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On a separate note, you might consider whether it is wise to continue arguing that circa 20,000 borrowers are strategic/deliberate defaulters. I don't see how you could ever stand up this figure and I would suggest that it is something of a distraction from the core issues.
 
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Hi Sarenco

It's absolutely a Key issue.

There are about 16,000 borrowers over one year in arrears and a further 30,000 over two years in arrears.

I am very clear. If someone is in difficulty with their mortgage, but is paying what they can and that amount is, in any way reasonable, then I want to help that person stay in their home, assuming that the home is appropriate for their needs. If they would qualify for social housing, then it makes a lot more sense for the state to help them pay the interest on their mortgage, than to mess around with buy to let.

I estimate that around 3% of the 600,000 mortgages are deliberate defaulters. They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money. They are doing this because they can get away with it. I am very clear that I want these people to resume paying and if they don't I want them out of their homes. I am not prepared to pay more taxes to help them.

When I say this in writing, on the radio or on TV, I get savaged for it. But I will continue saying it because until we face up to the cause of arrears, we will not be able to solve the problem. Instead we will busy ourselves with pointless action such as raging against the veto or reducing the bankruptcy period to one year.

Brendan
 
Am with Brendan on this.
There is a a core of non-payers who up to now have either played us or the banks as fools.

I am most definitely not a bank fan but the leg -lifters on mortgages need to be weeded out and let us get to those who are genuine.
These leg -lifters give rise to the notion that non-payers take holidays/drink/gamble etc

At 20,000 cases they are not a Core issue but what they do do is give credence that a lot of mortgage defaulters are chancers.
Means time/resources are wasted sorting genuine defaulters who I would help from these 20,000.
 
I agree with Brendan, it doesn't seem an unreasonable percentage guesstimate to me and he always clearly identifies how he has arrived at that figure. I'd even go so far as to hazard a guess that it is too low. It is something that needs to be factored in and needs to be considered separately from those that are defaulting due to distress because the possible resolution is different. It may be a small percentage but if those loans changed from non-performing to performing there would be fewer loans requiring intensive management and more repayments occurring. Fundamentally there are (and there always will be) people who will have reason to default deliberately. Depending on how you define "deliberate" I'd go so far as to say that a high proportion people defaulting are doing so "deliberately" just not necessarily cynically, willingly or voluntarily - they are worried and unhappy about it but their hands are tied by circumstances - still they know that they are doing it and they choose the loaf of bread over the mortgage, it isn't a mistake and it isn't forgetful omission, it is desperate deliberation. They need different resolutions to those who can afford to pay but do not do so. Unfortunately a cohort of mortgagees have engaged in this behaviour, primarily I suspect because the incentives to default have been larger than they are in other jurisdictions because the options open to the banks to chase were severely curtailed. The loosening of these restrictions has hopefully begun to have the effect of changing some minds but we cannot discount such deliberation going forward.
 
so-crates said:
Depending on how you define "deliberate" I'd go so far as to say that a high proportion people defaulting are doing so "deliberately" just not necessarily cynically, willingly or voluntarily - they are worried and unhappy about it but their hands are tied by circumstances
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That is a fair point. I have come across a number of cases where the mortgage is unsustainable and effectively no payments are being made. Clients have accepted this and are well aware that at some stage they will be forced to leave the property. While they could probably meet an interest only or even interest plus some element of capital payment this would still not be enough to service the mortgage at a sustainable level. They will not voluntarily surrender the property as in many cases they have no alternative accommodation. Reposession proceedings are in train but will move extremely slowly. To be fair to the defaulters there is no incentive for them to make any payments while the repossession is progression as they are all in substantial negative equity and any payment that they make will make little impact on the ultimate outcome which is the loss of the property.
While I only have a limited view of the overall picture I have yet to come across anybody who can pay but has stuck the head in the sand and refused to pay anything. many are reluctant to engage but when the Legal Proceeding letter is issued they do tend to co-operate. Perhaps because some banks are more prepared to put up with this type of non-action than others our experience of "strategic defaulters" is lower than other banks!!
 
Hi,
I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.

I took legal advice on the situation - & the legal advice was to strategically default , stay in the property for as long as possible & when eventually it would be repossessed , then I would have a nestegg built up. Was advised that I would never get another mortgage anyway as the property was so deep in negative equity.
No joke!
I didn't do this because I morally could not do this - but this was what an actual solicitor advised me to do.
Of course I didn't really want to keep making repayments on a property ravaged by negative equity , along with taking on my exes share of negative equity - but I did.
Because I have a conscience.

If I had taken this legal advice I would fall into Brendans category. I well believe that many went down this route - & I resent my salary being fleeced by taxes to pay for others who went down this route.
 
PadKiss said:
Hi all
I feel I must make comment here and it is not to disagree with Brendan's point but to provide some balance. I have uncovered a deliberate and concerted effort by all lenders to strategically alter the terms and conditions that were agreed at the outset of mortgage loans. This was a deliberate and orchestrated effort and I am not saying that 2 wrongs are right but balance please. I can also confirm if we are talking statistics and percentages that of the many that have contacted me I have not met one strategic defaulter, (who may not need me anyway) which if Brendan's and 44 Brendan comments are to go by I should have come across at least some, but none!!!!!. But of the attempts at the strategic alteration of contracts by lenders, 100% of lenders is the figure I would use here. Just my views Padraic
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Why would a strategic defaulter contact you? This is a very simple point that people can't seem to understand.

In what way does it benefit a strategic defaulter (who is successfully staying in their "family home" for free/near free) to identify themselves to a consumer advocate?

It seems you work in this space so please outline exactly why or any benefit a strategic defaulter would get from contacting a consumer advocate/advisor and telling them they're intentionally not paying their mortgage? Please, any benefit?
 
tunnellight said:
Hi,
I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.

I took legal advice on the situation - & the legal advice was to strategically default , stay in the property for as long as possible & when eventually it would be repossessed , then I would have a nestegg built up. Was advised that I would never get another mortgage anyway as the property was so deep in negative equity.
No joke!
I didn't do this because I morally could not do this - but this was what an actual solicitor advised me to do.
Of course I didn't really want to keep making repayments on a property ravaged by negative equity , along with taking on my exes share of negative equity - but I did.
Because I have a conscience.

If I had taken this legal advice I would fall into Brendans category. I well believe that many went down this route - & I resent my salary being fleeced by taxes to pay for others who went down this route.
Click to expand...

That's scandalous.

In fairness, the likes of the New Land League and those selling Freeman trusts have convinced people to take up their products/services.
 
so-crates said:
still they know that they are doing it and they choose the loaf of bread over the mortgage, it isn't a mistake and it isn't forgetful omission, it is desperate deliberation.
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I am a bit confused by that and I hope you are not interpreting anything I say as meaning that.

Everybody, or almost everybody, agrees that the basics of life take precedence over mortgage or rent payments. I am referring to people who make no effort at all, or who pay unsecured creditors ahead of their mortgage.
 
tunnellight said:
Hi,
I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.

I took legal advice on the situation - & the legal advice was to strategically default , stay in the property for as long as possible & when eventually it would be repossessed , then I would have a nestegg built up. Was advised that I would never get another mortgage anyway as the property was so deep in negative equity.
No joke!
I didn't do this because I morally could not do this - but this was what an actual solicitor advised me to do.
Of course I didn't really want to keep making repayments on a property ravaged by negative equity , along with taking on my exes share of negative equity - but I did.
Because I have a conscience.

If I had taken this legal advice I would fall into Brendans category. I well believe that many went down this route - & I resent my salary being fleeced by taxes to pay for others who went down this route.
Click to expand...

Was it really your 'conscience' or the fact that you believed you would never be a home owner again that prompted your laudable display of altruism?
 
Brendan Burgess said:
....I am very clear. If someone is in difficulty with their mortgage, but is paying what they can and that amount is, in any way reasonable, then I want to help that person stay in their home, assuming that the home is appropriate for their needs. If they would qualify for social housing, then it makes a lot more sense for the state to help them pay the interest on their mortgage, than to mess around with buy to let.

I estimate that around 3% of the 600,000 mortgages are deliberate defaulters. They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money. They are doing this because they can get away with it. I am very clear that I want these people to resume paying and if they don't I want them out of their homes. I am not prepared to pay more taxes to help them.

When I say this in writing, on the radio or on TV, I get savaged for it. But I will continue saying it because until we face up to the cause of arrears, we will not be able to solve the problem. Instead we will busy ourselves with pointless action such as raging against the veto or reducing the bankruptcy period to one year.

Brendan
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Very well put Mr. Burgess.

Infact, I would respectfully suggest it be taken half a step further, in so far as those who can pay but simply won't should not just be put out of their homes, but in addition they should be dragged into court and appropriate action taken against them. All said and done, it's a type of fraud imho !
 
Andy836 said:
Why would a strategic defaulter contact you? This is a very simple point that people can't seem to understand.
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Another great point. A lot of the debt advocates claim that they have never met a strategic defaulter. But that is because they are meeting with people who are trying to deal with their problems.

I come across them all the time. Go into the Circuit Court hearings for possessions and you will see plenty of them. Actually, you won't see them, because they don't bother showing up. They will have paid nothing at all for up to 5 years and they don't bother coming to court.

Brendan
 
Brendan Burgess said:
I am a bit confused by that and I hope you are not interpreting anything I say as meaning that.

Everybody, or almost everybody, agrees that the basics of life take precedence over mortgage or rent payments. I am referring to people who make no effort at all, or who pay unsecured creditors ahead of their mortgage.
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I am not interpreting you as meaning people in those circumstances, no. Strictly speaking the word "deliberate" encompasses more people than you mean. I am trying to exclude those based on the driver behind their choice. Probably, I'd prefer the term "cynical defaulters" but that is far too negative! :)
 
tunnellight said:
I was in mortgage difficulty - not due to unsustainability - I had (after lifestyle sacrifices) sufficient funds to pay - but the property was in joint names & the bank would not sign it over to me at the time for various reasons, and my issue was making repayments by myself on a property in joint names.
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Hi tunnel

This is a real problem for the borrowers and for the lenders. If you haven't sorted it out yet, I think you should do a case study in a separate thread.

Information required for mortgage arrears and negative equity questions

While what the solicitor said sounds scandalous, and while I disagree with it, some borrowers are forced into impossible positions.

Brendan
 
Brendan Burgess said:
I estimate that around 3% of the 600,000 mortgages are deliberate defaulters. They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money.

When I say this in writing, on the radio or on TV, I get savaged for it.
Brendan
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I have to agree with Sarenco. Sometimes people defeat themselves.

You cannot possibly know or prove any of this and so you are making a rod for your own back while giving your opponents the upper hand.

Less zeal, more facts!
 
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OK, we will conduct a survey of the 64,000 borrowers in arrears over three months and ask them if they are deliberately defaulting?

Denying the existence or failing to estimate the numbers is not helping to solve the problem.

We have a poor record in Ireland of paying our taxes, water charges, Local Property Tax etc. Why would it be any difficult for people with mortgages? Especially when they reckon that there is no penalty and probably actually an incentive to default?

I reckon that around 97% of people act responsibly. But that could be wrong. It might be only 95%. But, of course, it could be 100%.

What I would say to any of you who doubt their existence is to go down to your local Circuit Court and look at the large numbers who are paying nothing and not showing up. They are not even going into MABS or FLAC or New Beginning. They are just not paying and not caring.

Brendan
 
Brendan Burgess said:
I estimate that around 3% of the 600,000 mortgages are deliberate defaulters. They are paying nothing at all, or nothing significant. They could pay a lot more. They have not cut back on their holidays. They are paying the credit union ahead of the mortgage. They are drinking or gambling the money.
Click to expand...

Hi Brendan

My point is really that the 20,000 figure is just an estimate and there is absolutely no way of verifying this number. It's really nothing more than an educated guess on your part and every time you bring it up you are instantly met with a chorus of protests that you cannot verify that figure - which, in fairness, is true - so why waste precious media time debating something that is essentially unknowable?

Just to be clear, I am not doubting for a moment that there is a significant cohort of defaulting borrowers that could afford to make the scheduled repayments on their mortgage (as per its original terms or as subsequently modified) but have made a rational decision that it is not in their financial interests to continue doing so. It would be truly extraordinary if this was not the case given the prevalence of negative equity and the lack of any apparent consequences for defaulting before an extended period of time has passed. However, I don't see any point in trying to quantify the number of defaulting borrowers that fall into this category.

I've said this a number of times on here before (and I suspect we disagree on this point) but it doesn't make any difference to me whether a default is deliberate or accidental, strategic or accidental, cynical or genuine.

If a borrower can't or won't repay a loan (in accordance with its original terms or as may be renegotiated to the satisfaction of both parties), then the borrower should be entitled (and, in my opinion, encouraged) to exercise the remedies agreed under the terms of the mortgage or as provided for by statute, within a reasonable timeframe and at a reasonable cost. In my opinion, the ability to enter into bargains with each other and to have those bargains recognised and enforced by our legal system is an important freedom.

I really don't understand why anybody with an unsustainable mortgage on a property in negative equity would make any payments whatsoever to their lender. What's the point? They will ultimately lose the property anyway so making any further payments to their lender is akin to setting their money on fire.

Given the generosity of SVR mortgage holders to continue funding the accommodation needs of those who can't or simply won't repay their mortgages, a much more logical reaction for a defaulting borrower would be to stop all repayments and simply save the amount that would otherwise have been spent on housing.

Who knows, in a few years you might get one of those sweet "mortgage to rent deals", thereby overtaking those poor fools on the social housing list. When you think about it, mortgage repayments are really only for suckers under our system!;)

You are absolutely correct that strategic defaulters have no reason whatsoever to consult with debt campaigners or politicians. However, such defaulters regularly consult with solicitors for advice on the terms of their mortgages, court procedures, etc. Solicitors are paid to give honest advice on a confidential basis and not to offer moral or ethical judgments to their clients.
 
Well, Noeleen Blackwell of FLAC on Primetime tonight believes there may be just the 500 out there deliberately not paying!!!
 
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