epicaricacy
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Well done Brendan on generating an interesting debate. I've been slow to reveal our own story on AAM for obvious reasons - but I believe it may help others.
My wife and I bought a property in 2006 for north of 300k on a 100 percent mortgage.
We both lost our jobs in 2010. We continued to pay our full mortgage for a further 18 months out of our redundancies until our funds were depleted. We then contacted our bank and entered the MARP process, whereby we paid about a third of our full mortgage for 12 months.
At the end of the MARP, the bank's underwriters suggested a voluntary sale as they believed that our mortgage was unsustainable.
We appealed - on the basis that we'd paid the full mortgage for 18 months, had never failed to pay restructured amount, our arrears were less than 8k, that the house was in massive neg equity and that we could see ourselves recovering in the near future as the economy improved.
We lost our appeal and bowing to the inevitable, we agreed to sell our house on the bank's behalf. We met with our bank manager and he assured us that the bank would probably write off the shortfall.
After we sold the house, the bank wrote to us with a 26 year repayment schedule, whereby we would have to pay 800 per month for the 26 years - which equated to 90k interest in addition to full shortfall.
We decided that our only option was to move to the UK and petition for bankruptcy.
Our bank was (is) one of the Irish banks.
In conclusion:
(1) A wealthy cash investor bought our house and is now renting it out. So much for the argument that repossessions will free up property for first time buyers.
(2) The bank took a hit of 180,000 - which is probably being footed by the tax payer.
(3) Solicitor's and Estate's fees were paid by bank (tax payer).
(4) We 're now paying rent to another wealthy landlord.
(5) As the economy has improved - as I mentioned in our appeal - we're slowly managing to start again. Not helped by the banks' refusal to give us a basic account - as was mentioned by another poster a few weeks ago.
Hi Sarenco
I agree with everything you've written. Our bank - not BOI, if people are wondering - deemed that we had to sell our house as we were incapable in the short / medium term of making 1100 mortgage payment and yet ended up demanding 800 per month for 26 years in the full knowledge that this 800 euro amount would be in addition to rent which we'd have to pay for a different property.
I was aware at the time that we could have probably continued to stay in situ for a few years without paying anything and that we could have used this time to build up a survival fund. If I'd had a young family I probably would've decided on that course of action.
However, neither my wife nor I have much tolerance for uncertainty and, as a result, we decided to move jurisdiction to an insolvency system that works. We did find the UK move to be particularly stressful as we initially struggled to find work to defray our expenses and we were surprised re. how expensive everything was (council tax, water, car insurance).
However, we eventually managed to get some dead end work and successfully petitioned for bankruptcy after 6 months. We didn't even have to meet the magistrate and we returned home a week after meeting the OR.
On our return to Ireland we found it impossible to get rent allowance as every property was above the threshold and no landlord would accept it.
There's a 10 year waiting list for social housing.
We found it impossible to open a bank account.
We 're now discharged and attempting to start again - still being refused a basic bank account.
Short term recommendations:
Ireland needs to reduce the discharge period for bankruptcy to 1 year and the IPO period to 3 years.
Ireland needs to force state owned banks to offer basic bank accounts - no overdraft facility and cheque book - to (un)discharged bankrupts to enable them to work, pay bills by direct debit or to use a basic card to purchase goods and services.
Up the rent allowance threshold for people who voluntarily surrender or engage in voluntary assisted sale on behalf of the banks - at least for a couple of years until the couple can find work. Most people who purchased a house are not interested in remaining unemployed long term.
The Gov should use its leverage in state owned banks to outlaw 26 year (my wife just reminded me it was actually 28 years) repayment schedules for people who fully co -operate with their lender re. voluntary sale / surrender.
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