Cerberus warning of costs between €4,000 and €40,000

Discussion in 'Mortgage arrears & negative equity case studies' started by newtothis, Feb 5, 2017.

  1. newtothis

    newtothis Frequent Poster

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    Apologies if this is high jacking this thread, but I have exactly the same question as the OP.

    I recently got a letter from Capita, who are managing my mortgage on behalf of "Promontoria (Pluto) Ltd." (aka Cerberus, apparently) who purchased it from Danske. It includes the charming statement: "If proceedings seeking possession of the mortgaged property are initiated against you, substantial costs may be incurred which will be payable by you in addition to the amount due on your loan". They then go on to estimate these costs to between €4,000 and €40,000, and state "….you will remain liable for the outstanding debt, including any accrued interest, charges, legal, selling and other related costs".

    I’ve checked he original loan agreement. There’s no specific clause related to this in the general conditions, but in the section "Statutory Notices and Other Warnings", it includes the statement "If we have to enforce our mortgage or take legal proceedings against you will be liable be liable to pay all costs incurred by us in such enforcement and proceedings". [Side note: I’ve just noticed in copying that statement out that it is missing a word, rendering it pretty meaningless, but I’ll ignore that and assume it’s valid].

    So, the question is will I have to pay any such costs if they are incurred, and if so in what circumstances?

    I’m no lawyer, but I’d suggest an assertion I would be liable to pay is not the same as agreeing to pay a specific amount, and any such costs are definitely not something that can be just added on to the (secured) amount of the mortgage itself. Would any such liability only become effective if ordered to pay by a court?
     
  2. Brendan Burgess

    Brendan Burgess Founder

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    I would expect such a clause to be in the general conditions if it is to have any effect. A notice or a warning doesn't seem like part of the contract to me, but I am not a solicitor.

    Brendan
     
  3. newtothis

    newtothis Frequent Poster

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    It's definitely part of the agreement, it's on page 2 of 22, where page 1 of 22 starts with "This agreement is made between.....". I guess I'll have to get a legal opinion on if it's enforceable or not in the absence of a direction from a court. I was hoping for a more informal opinion to guide my initial response to them; I'm in the middle of putting together a letter to them. That is, do I just ignore it? tell them to stop threatening me? report them to someone (who?)?

    To be honest, I'm not thinking so much of myself here (water off a duck's back at this stage - I've been dealing with this for years now, though only very recently with this crowd); what I am concerned about is how others might respond to such a threat. Vulnerable people (and anyone who's home is under threat by someone with vastly greater resources is vulnerable) may well respond in ways that are not in their interest if threatened with stuff like this.
     
  4. Brendan Burgess

    Brendan Burgess Founder

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    OK, I see where you are coming from.

    Under Central Bank rules, they have to tell people that they may incur legal costs when they start sending arrears letters to them.

    You could write to the Central Bank and ask them to tell the banks to change their wording.
    "We will apply to the courts for our costs and they could be between €4k and €40k."

    What is your own situation? Have they charged you yet? I suggest you ignore it until they actually charge you.

    But bear in mind that the courts do award costs against borrowers where the borrower doesn't show up in court or has acted irresponsibly.

    Brendan
     
  5. newtothis

    newtothis Frequent Poster

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    No, no charge yet. It's only the second letter I've had from them, but already there's a noticeable change in tone from dealing with Pepper and Danske (not that they were particularly good to deal with). I'm aware the courts can award costs, but I doubt they would do so to someone who has always engaged with the lender, never missed paying at least something and has always paid at least the interest owed even when we had no income other than social welfare.

    Interestingly, on a recent phone call they offered to meet: this is in complete contrast to Pepper/Danske. I will probably take them up on this, if only to understand their position a bit better, but only after I've written to them setting out the background and my current situation. I'd be curious to know if they will make any kind of offer. Our mortgage is on our home, on a tracker rate of 0.59% at the moment, with some previous arears, but currently paying the full amount due. Although we haven't had a recent valuation, I doubt we're in negative equity.
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    You should definitely meet with them.

    They may well offer you a deal to refinance elsewhere. Unlikely, but possible.

    How much is the balance on your mortgage?
    How much is the arrears?
    If you are making the full repayments, you should ask them to capitalise them.

    You should follow up any meeting with a letter setting out what you asked for and their response.

    Brendan
     
  7. newtothis

    newtothis Frequent Poster

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    I almost certainly will meet with them, for the reason you mention if none other. However, I'd like to write to them first to set them straight on a few points (they claim I've missed payments in the past, which is not true for example): they may or may not have the full background.

    Balance is about €450k. Arears about €12k. Only making full repayments for a couple of months: I'm not at all confident we can stick to this, though.

    I've found the last 5 years or so a real struggle in dealing with Danske/Pepper: impossible to talk to any decision maker and rejected what I would have thought reasonable offers on the most bizarre grounds (I only found this out after making a recent data protection request). I wasn't even looking for any write-offs: an ideal solution would be a split mortgage. I know Cerberus won't go for this, but if they did offer a significant discount and we could re-finance elsewhere I'd take it like a shot.

    I really resent the threats though (Danske/Pepper were no better, though they only ever did it over the phone), hence my original question, not so much for myself, but for others. We're actually in not too bad a position and I'm well used to business negotiations, but for someone with other debts and no experience of anything like this, I can well understand it pushing them over the edge.
     
  8. Brendan Burgess

    Brendan Burgess Founder

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    They will not split such a cheap mortgage. Most of your repayments are capital anyway.

    They are losing money on this mortgage. There is no point in them giving you a further deal which will only increase their losses.

    With €12k arrears, they would find it very difficult to succeed in any legal action.

    How much is the house worth?

    I don't think you will be able to refinance to a bank, if you have arrears.

    Brendan
     
  9. Brendan Burgess

    Brendan Burgess Founder

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    Just make the appointment to meet with them.

    Don't delay it by correspondence back and forward.

    It's probably a good idea to write to them correcting any errors they have made. Again, if there is legal action, it's better to have a file of documents on which you can base an affidavit.

    Brendan
     
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  10. newtothis

    newtothis Frequent Poster

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    Good to know you think they would find it difficult to succeed in any legal action.

    No proper idea of house value, but at least €600k at a guess.

    If forced to, we could probably clear the arrears: the issue we have is that we're trying to build up cash to fund expansion of our business. The business (started when both myself and partner were unemployed due to redundancy) is going well, but really needs to be bigger to provide us with long term stability. The more cash we take out, the harder this becomes. Hence our best option is to defer payments as much as possible. If we were to clear the arrears, we'd have to take the cash out the company (plus pay whatever tax is owed when we do that), which compromises our income level into the future. We repeatedly told Danske/Pepper we fully intended paying off everything owed; all we were looking for was time. Very unlikely to be an option with Cerberus. If they don't offer a write-off, were faced with struggling to meet the repayments, running the business hard to stand still and having little scope for adding to its value, and vulnerable to any slow down in business. I appreciate our dilemma in far from the worst out there, but it is pretty debilitating, having been going on now for about five years. We took a massive risk in starting the business (cashed in pensions, borrowed from bank etc.) and it would be good to put it all to bed so we can move on.
     
  11. Brendan Burgess

    Brendan Burgess Founder

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    That is some dilemma o.k.

    My gut feeling is that a €450k tracker at 0.59% is probably worth around 30% or €150k.

    You are fairly well protected by the CCMA and the inefficiencies of the court system. However, be careful not to put it at risk through not paying, when you can.

    If, and it's a huge if, if they offered you a 30% discount to settle, what would you do? I reckon sell the house and have €300k cash. Rent for a while and fund the business properly. Or trade down to a €300k house and live without the hassle of a mortgage.

    But be very careful not to put your very valuable cheap tracker at risk.

    Brendan
     
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  12. Lone Star

    Lone Star Frequent Poster

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    It will be interesting to see if Cerberus offer you what other vultures are starting to do - One recently Suggested to an elderly couple that they voluntarily surrender their house and offered them a loan to buy another property - seems like some vultures have bought mortgages where they now realise they cannot enforce anything!!!! Explore all avenues and get on the internet researching. I would suggest you talk to someone who is actively dealing with Cerberus on behalf of mortgage holders - they will know first hand what Cerberus are likely to agree to. Be prepared.
     
  13. Brendan Burgess

    Brendan Burgess Founder

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    Most of the lenders do trade down mortgages. I am surprised the Cerberus does. But if they got the mortgage down to a manageable amount, they might then be able to sell it on.

    Brendan
     
  14. newtothis

    newtothis Frequent Poster

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    Any ideas on who?
     
  15. Lone Star

    Lone Star Frequent Poster

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