AIB write off 150k. IMHO helped.

Brendan Burgess said:
It's very important to report these types of deals as they allow others to know what to expect.
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There are many reasons for this to be in the media, based on this publicity IMHO etc will get more clients, more stressed customers will engage with their banks, it gives people hope. We are the end of the barrell time here and it's a been a long time coming. How many years have we debated debt writedowns and moral hazzard. Endlessly. Meantime people are living by the pin of their collar and how many suicides. My sister told me of another one last week. I don't know where you are all living, don't you see what is happening around you.

Here on AAM in the last two weeks and it's not for the first time I had a PM by a poster in an absolutely awful state.

This couple are no different to any poster who has come on here.

Advantages

1. Couple and kids get to stay in their home
2. Bank gets repaid more than it otherwise would
3. It makes financial sense
4. Evicting on the scale that would be required is conter productive, it affects house prices, causes despair and panic.
5. Puts an end to a couples financial misery
6. Let's people get on with their lives without being punished unncessarily (read George Hook on Irish bankruptcy)
7. The incentive in this story is a good idea, means the couple will work with and for the bank and will not give up

Disadvantages

1. Moral hazzard
2. Makes people who have done everything right and are financial straightened think they have done the wrong thing
 
daftpunk said:
Seriously, you think AIB are paying the IMHO to help write down debt?
That is a crazy situation if true. I know they initially gave a sum to help fund an office for the IMHO, but if they are now paying them to help families receive write downs it is all gone crazy. PIPs are getting 5-7k approx for each PIA, so families receiving this for free is definitely good news.
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Of course IMHO are being paid, the lump sum pays the salary of the guy who arranged the deal with AIB.

IMHO are professionals, I imagine they are accountants/legal people/negotiators. These people will not work for free. It's a lot cheaper for AIB to pay say 2K to IMHO then to spend thousands on going to court for years.

IMHO and New Beginnings are not charities, their services are not free.
 
Maybe it's because I'm single and have no dependent's but I have always found the services of these 'companies' very vague; when I have dealt with them.

I was never instilled with a sense of confidence that I would walk away with the golden chalice, have a large write down (like the family in this article), keep my home and live happily ever after. The spiel was always somewhat negative, whereby you would have very little hope in keeping your home.

To be honest I found one of the companies deplorable to deal with. Obviously cannot name them, but I paid my minimum fee, received a letter notifying me that they received it. I never heard from them again.

Like many others who have posted on this forum in recent years, all of our finances have been on the floor at some stage, but what makes this family any different than the rest of us? Why are these 'companies' taking stock over one family rather than another? Why is their prejudice against single people? Do they too not have a right to stay in their home to?
 
Simple observation.

They can somehow afford to pay capital and interest on a €200k loan but obviously couldnt even pay the interest on the €400k loan (given they are €30k in arrears).

This makes no sense, the repayments on interest only on €400k are likely to be no different to those on €200k Cap and Int so why the arrears if they can now pay it down on €200k.

Strategic.
 
I agree with Battybrennan, where is the incentive to pay in this country? I am living in a sub 90K apartment with a mortgage of twice that. I was out of work for 18 months and sacrificed everything to keep the show on the road. I don't care what their situation is, they should be told to hand back the house and then have a judgement placed on them for the remainder. This would have happened to me!! Debt forgiveness for all or NONE!!
 
BrokeGuy said:
Simple observation.

They can somehow afford to pay capital and interest on a €200k loan but obviously couldnt even pay the interest on the €400k loan (given they are €30k in arrears).

This makes no sense, the repayments on interest only on €400k are likely to be no different to those on €200k Cap and Int so why the arrears if they can now pay it down on €200k.

Strategic.
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Hi Broke Guy

I have been banging on about this for some time. That if people can pay the interest, they don't need a write down.

But no one agrees me - not the Central Bank and not even some bankers who say "we want to get our capital back" . I am planning on writing a longer piece about it.
 
I agree with Dellboy in part ; since we are funding this writedown , we therfore should retain a (fairness) stake in the house. Not to screw these people, but to cover us should their house because of lsomething, gets suddenly overvalued , they still get good value and we share in an upside bonus.

It seems that this was the best/worse solution.
1. House not near worth mortgage.So why foreclose.
2. Customers able to afford enough to pay mortgage on house near present market value.
3. Would cost AIB to repossess..
4. Hope this is a well thought out solution and not a chanchers charter.
5. If 4 applies, this is a very sensible reality based option.
 
I think that before any write offs are agreed that that the following should be looked at.
I believe that for the moment that banks should be looking at parking loans for 10 years or so before granting write offs
The ability to pay interest only at the prevailing SVR rate for 10 years into the future.
That the repayment to the Bank is at least equivalent to the rental value of the property.
That the bank retains an interest in the house until the "parked portion" is repaid.
The tax payer has to be considered in all of this. The chancers have to see that there are difficult hurdles to overcome. People in genuine difficulty know that they will have to make sacrifices but need help.
I have considered that house prices may change into the future, peoples financial circumstances may improve in various ways.
There also seems to be a huge hang up about negative equity even from people who can afford to pay the mortgage. It is a home first and foremost and in a lot of situations over time it will recover most of this.
 
Hi Dermot

Agree fully, but the Central Bank will not allow that. They say that a mortgage must be long term sustainable by which they mean that the main mortgage must be paid off by age 65 and that the warehouse can't be more than 30% of the value of the house at maturity.

I would think that
1) The mortgage be switched to interest only , reviewable every 3 years
2) If the borrower pays the interest in full , the mortgage would become non-recourse. i.e. they could sell it at any time after three years and the bank would write off the shortfall.
 
Agree fully, but the Central Bank will not allow that. They say that a mortgage must be long term sustainable by which they mean that the main mortgage must be paid off by age 65 and that the warehouse can't be more than 30% of the value of the house at maturity.

I was not aware of that so Central Bank need to have a look at their rules. I have no wish to take the debate off course can a mortgage in the normal course not go beyond 65. You can delete this post if you feel it is going off the intended debate here.
 
Hi Dermot

I wrote about it here

http://www.askaboutmoney.com/showthread.php?t=180997

But it's hard to get the Central Bank to think about these issues. They have fixed ideas "a mortgage must be paid off in full by age 65 or else it's not sustainable." They know best and won't listen to anyone else.

Having said that, that is also the conventional view and the view of the vast majority of people.


Brendan
 
Bronte said:
Of course IMHO are being paid, the lump sum pays the salary of the guy who arranged the deal with AIB.

IMHO are professionals, I imagine they are accountants/legal people/negotiators. These people will not work for free. It's a lot cheaper for AIB to pay say 2K to IMHO then to spend thousands on going to court for years.

IMHO and New Beginnings are not charities, their services are not free.
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For what it's worth I know one person with a BoI mortgage who contacted IMHO and the covering letter included this:

Our services operate in two phases ...

(1) Information gathering and the initial meeting

For a borrower with a single house and the ability to pay the fee is €150. For a borrower with two or more the fee is €250. The fee is based on both your personal circumstances, your ability to pay as per your SFS and the number of properties that you own.

(2) Formal engagement and negotiation

Should you decide at the initial meeting that you wish to formally engage the IMHO we will agree to plan and (sic.) strategy for moving forward. There is a fee for the provision of these services. The standard fee for the negotiation of a family home mortgage is €800. It may be possible to pay this fee over a period of time. The fee is greater if you have residential investment properties ...
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I know another with an EBS mortgage who got a letter stating that there was no charge to those engaging with EBS/AIB/Haven.
 
Fair play to the couple concerned but it must leave a lot of people envious of their settlement and probably scratching their head as they struggle to get by. Some people are barely keeping their head above water from month to month. Many people will be in a single salary situation with more than 2 kids looking at this even more enviously. Its a difficult one to reconcile.
 
Guys

I have deleted the personalised comments.

Please stay on topic and avoid personalised attacks.

Thanks

Brendan
 
ClubMan said:
For what it's worth I know one person with a BoI mortgage who contacted IMHO and the covering letter included this:


I know another with an EBS mortgage who got a letter stating that there was no charge to those engaging with EBS/AIB/Haven.
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Thanks ClubMan for that, fees seem very reasonable. It's a pity BofI doesn't fund IMHO like AIB does. Maybe they will now they see the benefit of it. It appears this case has spurned a lot of people into action on taking their heads out of the sand and trying to cut a deal with the banks. And finally it seems banks are ready to engage meaningfully.
 
Tiberius said:
Fair play to the couple concerned but it must leave a lot of people envious of their settlement

Some people are barely keeping their head above water from month to month.

. Its a difficult one to reconcile.
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Everybody is focusing incorrectly on the write off. This is no walk in the park for the couple concerned. Yes they both have jobs, yes there is a large write off, but they will have to still service a large mortgage, no doubt their permitted spending is not generous, they have a parked mortgage that will eventually have to be dealt with and the article mentioned other debts so they presumably like many that posted on here have CC debts, loans/overdrafts and Credit union debt to pay off.

I don't understand comments that imply the couple should have lost their home, 90% of people in financial distress who fill out the money makeover on AAM, reply that the most important thing to them is 'to stay in the family home' despite the negative equity and the debt to pay down for many years.

Now we finally have a situation where a bank allows that and everybody is calling foul. Words like chancers when we know nothing about the people involved. There is a sense that this couple should be made to pay forever. Should be punished. Totally forgetting that to have got to this point the couple, massively in arrears would have been scared to open their post or take phone calls. For many years already. Now they are being given a window of opportunity to get on with their lives and that is somehow wrong.
 
From the Irish Independent.
"It is understood the husband works in the private sector and the wife is a public servant, but the couple have seen their income collapse due to pay cuts, hikes in income taxes and other levies."

I would really like to see how their income "collapsed". Everybody has had hikes in income tax and other levies, pay cuts etc.

When that couple completed their mortgage application during the boom they would have had to supply Income Certificates, supported by P60's, possibly pay slips and other documentation. They would have convinced the banks at the time that they could afford the mortgage they were taking on.
Interest rates have not increased noticeably over the past number of years so when they were convincing the bank that they could afford this mortgage did they factor in what their repayments would be if there was an interest rate increase?
Were their pay cuts etc equivalent to what would have happened anyhow if rates had increased?
I think that the write off should have been parked until such time as their salaries returned back to normal which I believe will happen over time. I also believe that there will be some easing of taxes down the road.
When their income reverts back to the equivalent of their income that they originally had when they originally applied for their loans then there would be no reason why they then could un-park that portion of their loan and resume repayments.
 
another 2 large write off cases in Dublin per the IT
http://www.irishtimes.com/news/cons...-debt-for-two-more-mortgage-holders-1.1722816
A further two distressed mortgage holders have been given debt write-offs of more than €140,000 each by Allied Irish Banks in recent weeks, The Irish Times has learned.
Mr Hall said that the two new cases were in line with the first one.
One of the couples lived alone in a property with a mortgage of just under €400,000, while the second home was owned by a couple with children and their mortgage was slightly larger.
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David Hall seems to have the Midas touch. Wish he'd share his secret with the rest of us.
 
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