Caroline Lennon Nally Posterwoman for mortgage arrears
- Thread starter Brendan Burgess
- Start date
I listened to Catherine Lennon on this interview and I did actually understand her position, irrespective of how illogical it might appear.
This is a person who bought at the top of the market and like a lot of other people at that time made a very bad property buying decision. It seems that she is in significant negative equity and she is concerned about her future.She tells us that she is in the 2nd part of her working life.
Catherine Lennon is thinking to herself - What should I do now.
If she continues to repay her mortgage for the next fifteen years to retirement, she will probably arrive at a situation (at best) where she manages to eliminate the negative equity on the mortgage. If this happens she arrives at retirement age when the value of her house = the value of her mortgage. So in other words she works her butt off for the next fifteen years to retirement and will have nothing at all to show for it at that time. She might quite justifiably conclude that she is merely working for the bank over that time. The bank would really love her to repay her mortgage for the next fifteen years but whether you like it or not, she is right when she says that there is nothing in that scenario for her. She would end up having to sell her house at retirement time to repay the mortgage.
So she is challenging the bank to understand her predicament. If the bank repossesses her house now, the bank will lose out to the extent of her negative equity. She doesn't want to pay interest only because this is more than it would cost to rent the house in the current market. She has withheld all payments to force the matter to a conclusion.
So, on one hand she is saying, if she continues to pay her mortgage she will end up with nothing at retirement and the bank will lose nothing.
If she continues to withhold her mortgage, the bank will repossess her house and lose a large sum of money due to the negative equity. She is asking the bank to meet her somewhere in the middle "a deal"
Many commentators have made a point that negative equity is not a problem as long as the mortgagee keeps paying. I have always made a point that negative equity is a huge problem as people will not want to continue paying if there is no ray of sunshine at the end of the tunnel.
This post is not about the rights or wrongs of the situation. We have thrashed through that thousands of times already. People like Catherine Nally are not going to take their medicine just to keep the banks happy.
Human nature is human nature. We cant expect her to take all the pain and have nothing to show for it at the end. In theory "Yes", In practice "No"
A better outcome would be for the Mortgagee to continue payments and for the bank to agree to writing off 50% of the negative equity (as measured in todays terms) at the end of the mortgage term.
There are thousands of cased like Catherine Lennon, who can afford to keep up payments but have littkle appetite to continue paying into the black hole we know as negative equity. There is very little said about this category of borrower at the moment but it will be a problem before too long.
Take the "what if" one step further. What if Catherine Lennon arrives at retirement and has made regular payments over the ensuing fifteen years. Lets say that the negative equity has reduced somewhat but she is still in negative equity of 100K.
She retires from her public sector job. She can no longer afford her mortgage. The bank then repossesses her house and also takes her retirement gratuity to defray the remaining negative equity. I assume that this is what she means when she says that "I am not stupid" She knows that any solution must be balanced and she cannot be allowed to get backed into a corner by her bank.
This is a person who bought at the top of the market and like a lot of other people at that time made a very bad property buying decision. It seems that she is in significant negative equity and she is concerned about her future.She tells us that she is in the 2nd part of her working life.
Catherine Lennon is thinking to herself - What should I do now.
If she continues to repay her mortgage for the next fifteen years to retirement, she will probably arrive at a situation (at best) where she manages to eliminate the negative equity on the mortgage. If this happens she arrives at retirement age when the value of her house = the value of her mortgage. So in other words she works her butt off for the next fifteen years to retirement and will have nothing at all to show for it at that time. She might quite justifiably conclude that she is merely working for the bank over that time. The bank would really love her to repay her mortgage for the next fifteen years but whether you like it or not, she is right when she says that there is nothing in that scenario for her. She would end up having to sell her house at retirement time to repay the mortgage.
So she is challenging the bank to understand her predicament. If the bank repossesses her house now, the bank will lose out to the extent of her negative equity. She doesn't want to pay interest only because this is more than it would cost to rent the house in the current market. She has withheld all payments to force the matter to a conclusion.
So, on one hand she is saying, if she continues to pay her mortgage she will end up with nothing at retirement and the bank will lose nothing.
If she continues to withhold her mortgage, the bank will repossess her house and lose a large sum of money due to the negative equity. She is asking the bank to meet her somewhere in the middle "a deal"
Many commentators have made a point that negative equity is not a problem as long as the mortgagee keeps paying. I have always made a point that negative equity is a huge problem as people will not want to continue paying if there is no ray of sunshine at the end of the tunnel.
This post is not about the rights or wrongs of the situation. We have thrashed through that thousands of times already. People like Catherine Nally are not going to take their medicine just to keep the banks happy.
Human nature is human nature. We cant expect her to take all the pain and have nothing to show for it at the end. In theory "Yes", In practice "No"
A better outcome would be for the Mortgagee to continue payments and for the bank to agree to writing off 50% of the negative equity (as measured in todays terms) at the end of the mortgage term.
There are thousands of cased like Catherine Lennon, who can afford to keep up payments but have littkle appetite to continue paying into the black hole we know as negative equity. There is very little said about this category of borrower at the moment but it will be a problem before too long.
Take the "what if" one step further. What if Catherine Lennon arrives at retirement and has made regular payments over the ensuing fifteen years. Lets say that the negative equity has reduced somewhat but she is still in negative equity of 100K.
She retires from her public sector job. She can no longer afford her mortgage. The bank then repossesses her house and also takes her retirement gratuity to defray the remaining negative equity. I assume that this is what she means when she says that "I am not stupid" She knows that any solution must be balanced and she cannot be allowed to get backed into a corner by her bank.
When she originally got the mortgage if she had stuck to the terms at that time would she have had her mortgage paid back by the time she reached retirment. Was her mortgage term based on payments beyond retirement age. Was the lump sum on retirement factored into this. Or was there an assumption that capital appreciation would actually mean she could have sold and made a profit.
If she can afford to do so should she not continue to pay the mortgage after retirment. Many people managed to get mortgages to 70 years of age. (I don't agree with that but other people did).
Are you saying that people in NE should have their mortgages written down? Because if you are I'm going to the top of the queue.
If she can afford to do so should she not continue to pay the mortgage after retirment. Many people managed to get mortgages to 70 years of age. (I don't agree with that but other people did).
Are you saying that people in NE should have their mortgages written down? Because if you are I'm going to the top of the queue.
A better outcome for who?
Ultimately we the tax payers will pay for her write off/ bad investment decision.
If I borrowed to buy shares and they lost 50% of their value would you give me money to repay the money I borrowed?
No; you would tell me it's my problem, I made a decision so need to face up to the consequences.
What I'm saying is 100% of nothing is nothing. 50% of something is something. Something is better than nothing for the bank and for the tax payer
If the bank says "No deal" and Catherine Lennon sticks her heals in (as she is doing now) presumably the house will be eventually repossessed and the bank loses out to the full extent of the negative equity.
If Catherine Lennon loses her house , she can rent another one for less than the interest on her mortgage. She is putting it up to the bank and from what I can see she is holding some of the aces.
If the bank says that we will write off 50% of the NE and Catherine Lennon agrees to this, then the bank and the tax payer is better off to the tune of 50% of the NE.
@TRS30 you might be right that the tax payer ends up paying for some of the bad investment decision. Do you want to pay 50% or 100% ?
If the bank says "No deal" and Catherine Lennon sticks her heals in (as she is doing now) presumably the house will be eventually repossessed and the bank loses out to the full extent of the negative equity.
If Catherine Lennon loses her house , she can rent another one for less than the interest on her mortgage. She is putting it up to the bank and from what I can see she is holding some of the aces.
If the bank says that we will write off 50% of the NE and Catherine Lennon agrees to this, then the bank and the tax payer is better off to the tune of 50% of the NE.
@TRS30 you might be right that the tax payer ends up paying for some of the bad investment decision. Do you want to pay 50% or 100% ?
I believe that you are wrong on this. It will by Ms. Lennon who ultimately loses out. She is a permanant employee on a good salary. She has no wriggle room. Bank can throw the book at her and then some.
This is where your whole argument falls down, as pointed out by Bronte.
She is in a permanent well paid job with a guaranteed income going forward. She also has a guaranteed lump sum on retirement with a guaranteed reduced income afterwards.
Notice my continued use of "guaranteed". Banks love this and would have no problem selling the house out from under her and recouping the negative equity over time.
What is retirement age? I know lots of people working in their 70s and 80s, some because the like to and others because they need to.
In her situation it is more likely that she would need to use her retirement lump sum. Luckily she has that.
Please explain why you think that the bank can not effectively pursue her for the shortfall?
I also have been hit by a bad week with Cheltenham results, please tell me where I recoup 50% of my losses.
First of all let me just say that I am not here to represent or defend Catherine Lennon, just trying to explain her thought process as i picked up on it listening to her.
A permanent full time job is all very nice and dandy but no pleasure at all
if you're paying most of it down a black hole. Why not just take a voluntary redundancy and skip off abroad for a few years and come back later for your pension.
You might be right that the bank believes that they have such people over a barrell. I dont believe it will work out like that.
A permanent full time job is all very nice and dandy but no pleasure at all
if you're paying most of it down a black hole. Why not just take a voluntary redundancy and skip off abroad for a few years and come back later for your pension.
You might be right that the bank believes that they have such people over a barrell. I dont believe it will work out like that.
Another major flaw in your argument.
What value would you put on having a safe, secure roof over your head; able to come and go as you please; take in lodgers if you wish etc. for 15 years?
Hardly nothing at all.
Brendan Burgess
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Dr Debt
She borrowed €320k
She is now on a cheap tracker mortgage.
The interest rate is 1.9% - or around €6,000 a year on a mortgage of €320,000. With repayments of €2,000 a month, she would be repaying €18,000 a year in capital. Depending on how house prices move, she could be out of negative equity in around 5 years. She could own her home mortgage-free by retirement.
She could probably have done a deal to pay the interest and some capital and extend her mortgage beyond retirement. She would still be able to afford the repayments on her guaranteed pension.
Brendan
She borrowed €320k
She is now on a cheap tracker mortgage.
The interest rate is 1.9% - or around €6,000 a year on a mortgage of €320,000. With repayments of €2,000 a month, she would be repaying €18,000 a year in capital. Depending on how house prices move, she could be out of negative equity in around 5 years. She could own her home mortgage-free by retirement.
She could probably have done a deal to pay the interest and some capital and extend her mortgage beyond retirement. She would still be able to afford the repayments on her guaranteed pension.
Brendan
Well her reply to that would be that she could rent a similar place for a small fraction of her mortgage repayments over the same time period.
In both cases she ends up with nothing at the end
She says that the if she is going to keep on making these repayments
then she wants to own it at the end. She doesn't want to keep up the repayments if its just rent by a different name.
In both cases she ends up with nothing at the end
She says that the if she is going to keep on making these repayments
then she wants to own it at the end. She doesn't want to keep up the repayments if its just rent by a different name.
Hi Brendan
I dont remember seeing the exact negative equity figures anywhere but I gathered that it was a lot higher than 90000. I also didnt realise that she was on a tracker ?
I also missed the fact that she has mortgage repayments of 2000 per month. I dont think thats the case at all ?
I dont remember seeing the exact negative equity figures anywhere but I gathered that it was a lot higher than 90000. I also didnt realise that she was on a tracker ?
I also missed the fact that she has mortgage repayments of 2000 per month. I dont think thats the case at all ?
If she pays off the mortgage as Brendan has outlined above she will have have her house mortgage free and a comfortable pension to live off.
In many ways she is far from the 'post child' for debt forgiveness and those in true difficulty must be fuming that she is supposedly representing them.
Just curious to see what age she is. She said to Brendan she has mortgages since she was 20. Looks like she moved from Skerries (nice area) to Carlow and bought this 4 bed detached house possibly after a seperation. Was she not being naive in paying 385k as a single person in the first place.? The house must been impressive to coomand that figure too in Carlow even at the height when 3 bed semis in fairly ordinary parts of Dublin just about reached those prices. I think she bit off more than she could chew from the start but now want the rest of us to pick up the tab
From reading the post she puts mortgages etc down as a cost that she has had to bear for owning this house but puts no value on the quality of the accommodation that she enjoyed over this period. It is possible that she got tax relief on the Interest on the mortgage and this is not mentioned. Did she ever pro actively seek out a person under the rent a room scheme which is a tax friendly scheme or would this be too great an inconvenience. She is a very poor candidate for any write off. I would say that her bank manager would not be too nervous about laying out a few home truths to her. This is the type of shenanigans that I fear that will be going on while genuine people are waiting to get a barely tolerable deal. As soon as some people feel there is negative equity in their property they instantly feel they have to have it all written off. There are varying degrees of negative equity and each case will have to be dealt with individually. Negative equity does not always mean an unsustainable mortgage.
Well as regards holding the aces, as soon as she went public she blew her hand. She has one final ace she could play though. Take early retirement, throw the keys at the bank and leave the country singing the Bay City Rollers song. I think also her advisor may be the same as Pearse Doherty's.