Thanks TLO
How could it be a fair balance of the lender's interests to write down a tracker mortgage to the value of the property and leave it at the tracker rate?
With a mortgage of €200k , the repayments are about €9,600 a year, of which, €7,600 is capital. So they will be balance sheet solvent anyway in about 10 years.
If the mortgage were to be written down to €120k under a PIA, the repayments would drop from €800 to around €500. So they would be paying down €400 a month in capital. After ten years, they would have a very valuable asset. A house worth €120k and a mortgage of €60k.
But it's not my opinion which counts. If the judge doesn't understand mortgages, and forces a write-down, then the borrower should probably go for it.
A fair balance might be to write down the mortgage to €120k and increase the interest rate to ECB +3%, so at least, the lender is not losing money on the mortgage. This would bring the mortgage repayments down to €600 a month.
Brendan