20,000 deliberate defaulters

[Sophrosyne]

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,

I am not denying that there are defaulters, strategic or otherwise. Indeed, there are few who would.

My point is that your fixation on and your disparaging portrayal of defaulters coupled with an inability to provide credible proof, allows your views to be easily dismissed as waffle but more importantly, to cast doubt on anything else you say on the matter.

Sometimes discretion is the better part of valour.

 

[Sarenco]

Well, Noeleen Blackwell of FLAC on Primetime tonight believes there may be just the 500 out there deliberately not paying!!!

To be fair Delboy, she did say that there could just as easily be 5,000 or 500 as 20,000 and, when asked, she readily accepted that her assumption was that there was a proportion of defaulters that were strategic in nature.

 

[WizardDr]

No evidence of the figures.
No spokesman for Banks ever appear on these programmes
BB could have leverage to ask Banks to confirm figures.
Banks staying silent on these matters is to be questioned.
Absolute indifference of Central Bank should see Consumer Protection er protected by other than a fox.

 

[robert 200]

Some people appear to have an obsession about these " defaulters " the reality is the
actual number of them can never be proven.

Can we now move on and put our energy into something more positive.

 

[robert 200]

I would totally agree with Noeleen Blackwell's figure . Noeleen has been in the firing line with FLAC for 7-8 years
now. She has been dealing with people in difficulty paying their mortgage on a daily basis.
Who better to estimate the number of defaulters.

 

[Fella]

What's the benefit of defaulting? So people have money coming in to there bank account but are not paying off the mortgage ? I don't see the benefit surely they will have to pay some day when they sell it on or when they die the bank will just take it ? Seems like a lot of hassle not paying mortgage you would presumably have to keep all your cash under your mattress and it be hard to get a loan again .

 

[Brendan Burgess]

Noeleen has been in the firing line with FLAC for 7-8 years
now. She has been dealing with people in difficulty paying their mortgage on a daily basis.
Who better to estimate the number of defaulters.

Hi Robert

Actually, FLAC does not advise that many people on mortgage issues. Here are the figures from their most recent annual report.



So that is about 1,500 people with debt. Many of their callers are about unsecured debt, so in fact, they are not very active in the mortgage arrears area.

Which is why they get this wrong. From a theoretical standpoint, it can be argued that the banks should have a veto. But, in practice, it's completely irrelevant. 90,000 mortgages have been restructured after discussions between the lenders and the borrowers. The lenders have vetoed 90 proposed PIAs involving family homes. It's simply not an issue holding up resolution of the mortgage arrears problem.

Even if Noeleen were dealing with 10,000 mortgage arrears cases every year, it would still not make her a good estimator of the level of deliberate default. The people who go to FLAC probably are engaging and they will be told to make mortgage payments. There are thousands who are paying nothing. They are not talking to the banks. They are not talking to FLAC. They are not talking to New Beginning or any of the other groups. So they can say that they don't know of any deliberate defaulters.

But just go down to your local Circuit Court County Registrar hearings and see for yourself. They are paying nothing and they are not showing up in court to explain why.

Brendan

 

[Brendan Burgess]

Some people appear to have an obsession about these " defaulters " the reality is theactual number of them can never be proven.

Can we now move on and put our energy into something more positive.

Hi Robert

That is the problem. Until people accept the unpalatable fact that there are 20,000 deliberate defaulters, then we can't deal with them.

The banks are dealing with the people who are attempting to pay. They have restructured 90,000 mortgages.

If we want to fix the arrears problem, we have to recognise the cause. It's not the banks' lack of action, it's the borrowers' lack of action.

 

[IMHO]

Hi Brendan,

I applaud you for continually raising the strategic defaulter point, but it is unfortunate that it can so easily be dismissed.

Whilst it is impossible to be precise I think you can justify stating there are significant numbers of strategic defaulters with the undeniable fact that the levels of arrears in Ireland are so high compared to elsewhere.

Eg Jim Brown CEO Ulster Bank told the finance committee:

"The measure of that can be seen in England and Wales where the court system is faster. The most serious arrears have hovered between 0.2% and 0.25% of the total mortgage stock while in Ireland that equivalent number is nearly 10%, which equates to 50 times higher levels of serious arrears. The simple answer for that being the case is that no repossessions are taking place."

Ireland's mortgage arrears statistics are completely out of kilter with every other developed mortgage market in the world.

The only possible reason for the huge disparity is that it is government policy to solve the problem by encouraging the banks to do deals on the arrears rather than the mortgage holders to pay them.

This policy inevitably encourages high levels of strategic default.

 

[breakonthru]

strategic defaulters have no reason whatsoever to consult with debt campaigners or politicians

I would disagree there with that.. IT IS in the interests of strategic defaulters to improve their prospects post bankruptcy, whenever that move is made by the bank..

Having 'payment orders' brought down to one year to match proposed one year bankruptcy term - would release 1000's of properties onto the market - so that same could be bought by FTB's at a reasonable price.

Not only did solicitor give impartial advice as to my current strategy but the banks rep. himself couldn't argue with my position that paying any capital above interest would amount to 'indentured servitude'.

As the only beneficiary would be the banks themselves while - I - on the other hand would have nothing to show for it..

 

[Brendan Burgess]

Hi IMHO

I am confused by the wording of your post.

You are saying that my argument "can be easily dismissed."

Then you are saying that there are high levels of strategic default.

I don't want to put words in your mouth, but do you mean "It is unfortunate that so many people are dismissing your argument, although it is obviously correct"?

Brendan

 

[IMHO]

Hi IMHO

I am confused by the wording of your post.

You are saying that my argument "can be easily dismissed."

Then you are saying that there are high levels of strategic default.

I don't want to put words in your mouth, but do you mean "It is unfortunate that so many people are dismissing your argument, although it is obviously correct"?

Brendan

Hi Brendan, sorry should have been clearer, but yes your words in my mouth is essentially what I meant. But if for some reason it is not obvious to others I think you need to state what the estimates are based on.

I saw prime time last night, and it was frustrating that when you said your figures were just estimates that it was dismissed.

What I also meant was if you said well they are estimates based on the figures relative to other mortgage markets, anyone trying to dismiss your argument would have to offer a reason of why our figures are so high if not due to strategic default.

But I don't wish to put words in your mouth either! I think you are doing a great job and well done.

 

[Brendan Burgess]

Thanks for the suggestions IMHO

I am astonished and frustrated that so many reasonable people seem to think along the lines "We can't get a definite figure, therefore there are no deliberate defaulters".

Your approach of comparing things to other mortgage markets, is a good one. So maybe instead of just saying 3% of 600,000, I will come up with a few other ways of estimating it.

For example, in every other country, there is a direct link between unemployment and arrears. Around 6 months after unemployment starts to fall, mortgage arrears start to fall. But not in Ireland. It continued to rise.

Brendan

 

[IMHO]

Thanks for the suggestions IMHO

I am astonished and frustrated that so many reasonable people seem to think along the lines "We can't get a definite figure, therefore there are no deliberate defaulters".

Your approach of comparing things to other mortgage markets, is a good one. So maybe instead of just saying 3% of 600,000, I will come up with a few other ways of estimating it.

For example, in every other country, there is a direct link between unemployment and arrears. Around 6 months after unemployment starts to fall, mortgage arrears start to fall. But not in Ireland. It continued to rise.

Brendan

The unemployment point is valid, and another I think Jim Brown made. Also David Duffy told the Finance committee that there were 2000 account holders with more funds on deposit than the balance of their arrears!

Another area I think worth focussing on is the fact their was an uptick in accounts arrears back when the government started to announce details of PIAs etc. What I mean is that when the government first indicated that policy would be keep people in their homes, there was a coincidental spike in arrears!

I also heard the Claire Byrne radio show last month when David Hall rubbished your suggestion there maybe strategic defaulters. He seems to have forgotten he very publicly recommended not paying the mortgage in order to avail of a better deal!

http://www.independent.ie/business/...ithout-debt-deal-says-imho-head-30363173.html

What is your email? I cannot see a facility to PM you here.

 

[demoivre]

D Hall does himself no favours by not acknowledging strategic defaulters. Those paying nothing on their mortgages would have to contribute something in any other type of accommodation be it rented or a local authority house. However I can think of a few very good reasons for strategic default, but that is an entirely different matter.

 

[Sarenco]

am astonished and frustrated that so many reasonable people seem to think along the lines "We can't get a definite figure, therefore there are no deliberate defaulters".

Fair enough but have any reasonable people actually said this? I'm guessing you wouldn't consider Mr Hall to be reasonable in the context of this debate.

I think there is a danger that you might be misinterpreted as suggesting that anybody who doesn't agree with your 20,000 estimate is denying the existence of the phenomenon of strategic defaulters completely. I know that is not what you are saying but I do think there is a danger that people will conflate the two issues.

Ms Blackwell is a very able lawyer and you can see almost see a smile forming on her face every time you mention the 20,000 figure because she knows that all she has to do is say that you can't prove that figure (which is obviously true) and then the debate becomes about how many strategic defaulters there are rather than the most appropriate way to resolve this issue. Ultimately, Ms Blackwell's aim was to force the government into establishing a form of personal examinership, which will be a boon for personal insolvency lawyers, and it appears that she has been successful in this regard.

Let's be clear - this process will not be cheap or fast and the costs will be largely met by the banks' other borrowers.

Ultimately trying to categorise defaulting borrowers is a futile exercise. If a loan can be re-structured to the satisfaction of both borrower and lender, well that's obviously ideal. But if it can't then pretending that any solution other than the obvious will work is a waste of time and resources.

For the record, I would like to commend you for swimming against the tide on this issue. It seems extraordinary that you seem to be the sole public commentator that wants to deal with the reality of this issue and you deserve great credit for taking this stance.

 

[elcato]

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.

I don't see the problem with this. While it fits under the banner of 'strategic' default, it also highlights the problem of the banks not willing to sort it out themselves i.e. putting onus on you to do their debt collection on the joint debtor. I'm not a legal person but I have given this advice here many a time.

 

[Gerry Canning]

Well, Noeleen Blackwell of FLAC on Primetime tonight believes there may be just the 500 out there deliberately not paying!!!

Delboy.
Noeleen Blackwell , could well be correct , in that only 500 (deliberately) not paying.I think she means 500 that can well afford to pay full mortgages but just do not.
......................................................................................................................
But that does not include those who have (logically)come to the conclusion they are damned in any event and make decisions to slow payments/withhold payments etc. What they are doing is morally dubious but then they can sort-of reasonably say Banks are screwing people on Standard Variable Rate Mortgages (SVR) .
Banks have screwed people on Payment Protection Insurance (PPI)
Banks have placed savings at risk and sold improper products to pensioners.
Banks pumped up the property markets.

I think the biggest issue was that Banks in 2008/9 hadn,t a notion of what to do. So in the vacuum people muddled along and found quasi-solutions just to keep going.

I hope the phoney wars are over and those that are genuine are helped and the leg lifters are hammered.

 

[WizardDr]

It just needs to be pointed out that we never see a Bank representative ever supporting or contradicting these figures.

As an example - the alleged issue that Credit Unions were being paid ahead of Mortgage was simply anecdotal.

What the Central Bank did was hammer the loan process in Credit Unions.

Is it not the case that if the Central Bank were examining files on a regular basis that they should be highlighting the findings.

Credible data could be achieved - er if it were true.

 

[Sarenco]

What findings or data exactly are you looking for? We have the mortgage arrears data and credit union arrears data is available - what do you think you're missing?