Increase in House Repossessions, are borrowers sufficiently warned about risk?

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whathome

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An article in the Independent today highlights a significant increase in the repossession of houses by financial institutions.

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1783214&issue_id=15301
EVIDENCE is emerging of a significant increase in the repossession of houses by financial institutions as owners struggle to meet their mortgage repayments and are finding it difficult to sell their houses at realistic prices.
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Is the standard "Your home is at risk" small print warning sufficient to make borrowers aware that they can actually lose their home if they do not keep up payments?

Is there a general impression amongst Irish borrowers that financial institutions in Ireland don't repossess homes?

No discussion about house prices please.
 
Re: Key Post: How risky is property investment?

It's worth pointing out that Brendan's post on How risky is property investment? is from nearly five years ago, and referring for present-day context to this article in today's Sindo (free registration required) regarding the increase in house repossessions in recent years.
 
Re: Key Post: How risky is property investment?

That Sindo article is purely anecdotal. The only numbers quoted are as follows:


The rest of the article confused repossessions with court orders.

What did the 14 repossessions relate to? In 2006 as a whole, or just in January 2007? What share of the mortgage market does Irish Life and Permanent have? 20%? That would be 90 repossessions in 2006. Still a lot less than 1995.

Brendan
 
I think that most people who borrow money know that it must be paid back or else....................

Having said that , if one does have difficulties in repaying nay debts, there is help available to assist in rescheduling loans, such as MABS and the most important thing with home loan, is to approach lender before things get so bad that lender is chasing you.
 
Re: Key Post: How risky is property investment?

Ah, Jayzus, I said 'context', not hard facts! I was just pointing out the time lag between your observations about risk back in 2002 and the current headlines in the meeja.

By way of context, (presumably) more [broken link removed] would point to a significant increase in personal debt, which trebled in the decade to 2005. To date, this has been matched by the exceptional growth in house prices over the same period, and the value of their house accounts for a significant percentage of most people's net worth. But while 82% of households in Ireland are homeowners, only 36% hold any other form of wealth. If property values are inflated at the moment, and/or if interest rates continue to rise (by up to 0.75% this year, some predict), and/or if property values fall or stall, might this not lead to an increase in repossessions, given the number of 95% and 100% mortgages out there?

Are you telling me we're not [broken link removed]?
 
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Re: Key Post: How risky is property investment?

I would have thought that in the contest of a rapidly rising property market, house repossessions would be extremely rare as in the event that someone could not make their repayments they could either refinance or sell without much difficulty. Even in the current slowing market unless someone bought in the past 6 months they should have enough equity built up in their house to refinance/sell at a profit.

Brendan is absolutely right, this is what typically passes for analysis in the Sindo - anecdotes with no solid data to back it up.
 
Re: Key Post: How risky is property investment?

Even in the current slowing market unless someone bought in the past 6 months they should have enough equity built up in their house to refinance/sell at a profit.
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Wow!! I bought a house nine months ago and paid 9% Stamp Duty + .5% legal fees + surveys + moving expense. Do you really think there has been sufficent growth in the market to allow me to sell at a profit? My impression from the media/daft report was that there had been no/negative growth in the last six/nine months.
 
Re: Key Post: How risky is property investment?

I agree about the (un)reliability of the Sindo article; nothing new there — and I only linked to it because the 'eye-catching' headline had caught my eye this morning.

But what is it exactly that's so different about the situation in Ireland compared to, say, N. Ireland, where house price growth is now the most rapid in Europe, at 36% in 2006 (source BBC business news, here) or even the UK generally — the only one of the 'big four' markets to have outstripped its 2005 performance last year, growing 10% despite forecasts — and where repossessions are distinctly on the rise (source Beeb news, again).

My question's genuinely borne of curiosity, as I know very little about the hard economics of it all — is it just down to differences in demographics (our low density and high immigration rates vis-à-vis the UK?) Regulatory climate (a government that loves the construction industry?) Better legal protections for homeowners? ECB vs Bank of England interest rate policies? Some other kind of market dynamic? Surely an increase in house repossessions isn't something that 'just couldn't happen' here...(?)
 
That was a very poor article, low on facts and high on hype.

I would say people are sufficiently warned of the dangers. But (for example) if someone is willing to lie about income levels to get a mortgage, no amout of warning them will help.
 
shanegl said:
I would say people are sufficiently warned of the dangers. But (for example) if someone is willing to lie about income levels to get a mortgage, no amout of warning them will help.
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When I went bought a house a few years ago, the possibility of repossession was not mentioned once. Do people really need to be warned that they are obliged to pay back a mortgage though? Surely if you take out a loan to purchase a house you must understand that it is not yours until the loan is paid off?
 
Couldn't get into that link to read article...keeps bringing me back to registration. I am registered but having login problems.

In general though, I think there is an impression out there that family homes will not be repossessed. I don't have anything to back that up except conversations with friends who feel it will never happen here.

Perhaps that was the way in the past but banking has a whole 'new face' in celtic tiger Ireland. It wouldn't surprise me to hear of more and more repossessions. However it's not that easy to repossess a family home, particularly where couples have contacted the institution and tried to work something out with them. There is a lot of help out there as another poster has already suggested.

I think everyone who purchases realises that they must pay their mortgage in order to retain the property. Small print or not, it's included in advertising everywhere. I don't think that's the problem. The problem is that people seem to think it will never happen to them! When Michael McDowell hinted that there would be a change in stamp duty in the budget, FTBs held off. Subsequently he was blamed for making people miss the boat, i.e. interest rates rose and those who could have borrowed X amount based on their salary, could now only borrow Y amount! To my way of thinking, he did them a favour. Perhaps they might not have been able to afford the increase. The view seems to be that they should have gotten in there while lending institutions would give them the max!

It's the above attitude that I find particularly worrying and I think that those who share that view are also the type who probably wouldn't seriously look at what a 'warning' means, even if it was written in letters ten feet high.
 
I don't think that there is any doubt that more people are falling into arrears on their mortgages. People have borrowed heavily and repayments have risen.
As long as they are still in work and making some repayments on their mortgages, they are unlikely to face repossession.

House price falls,in themselves, won't force anyone to lose their home. It doesn't actually matter to me what value my home is as long as I am keeping up my repayments.

If people fall into arrears and don't speak to their lender, they may get into trouble. Most of the lenders claim that they are forced to issue repossession proceedings simply to get the borrower to talk to them. Even then, the borrower often does not show up in court. The Registrar of the court then issues a repossession order, but usually puts a stay of execution on it.

In my limited experience of a few such court cases, the registrars/judges have been very reluctant to grant repossession. My experience might be biased as these were all Irish Nationwide cases.

When the borrower is absolutely unable to make repayments, the lender will usually allow them sell the house themselves so as to maximize the proceeds. I am not aware of any recent cases of eviction followed by a "repossession" sales.

I don't know if any such statistics are kept.

Brendan
 
Re: Key Post: How risky is property investment?

gearoidmm said:
I would have thought that in the contest of a rapidly rising property market, house repossessions would be extremely rare as in the event that someone could not make their repayments they could either refinance or sell without much difficulty.
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I think the rising property market is more than counterbalanced by rising interest rates. As many posters on AAM seem to be unable to grasp, just because your house is worth more than you bought it for, does not mean a lending institution will be automatically willing to "top-up" your mortgage.

I would think that if interest rates continue rise then repossessions and short sales are inevitable.
 
liteweight said:
In general though, I think there is an impression out there that family homes will not be repossessed. I don't have anything to back that up except conversations with friends who feel it will never happen here.
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Absolutely, that's the impression I am getting from conversations with friends and family. They know that the banks can repossess but the feeling is that it doesn't really happen in this country. I don't know where that perception originates from.

I wonder if the recent trend of mortgage securitisation by institutions will make them more likely to repossess due to liability on the securitisation package.

One good thing about yesterday's article is that it will increase awareness of risk when taking on a mortgage - repossession can happen in this country.
 
bankrupt said:
When I went bought a house a few years ago, the possibility of repossession was not mentioned once
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I'm pretty sure that the mortgage related documentation states that "your home may be at risk if you do not keep up your mortgage repayments" in at least one place (and not necessarily just the detailed terms & conditions).
 
ClubMan said:
I'm pretty sure that the mortgage related documentation states that "your home may be at risk if you do not keep up your mortgage repayments" in at least one place (and not necessarily just the detailed terms & conditions).
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Sure it does, but my experience is that many people don't read their home loan offers. Every time I go through mortgage documentation with a client I tell them if they do not keep up the repayments the house can be repossessed. However as this is often part of an hour long meeting ( or more) where I am also trying to impart many other facts and details to clients, it may be just one more thing that passes over their heads. There is a certain glazed quality that comes to their eyes at which point I am fairly sure they have stopped listening to me and are merely waiting for me to point to where they must sign. I do keep asking if they understand or if they want to ask a question but there are only a few clients who seem to really want to understand the process and all the details.
 
In my limited experience of a few such court cases, the registrars/judges have been very reluctant to grant repossession. My experience might be biased as these were all Irish Nationwide cases.
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This is my impression too. Explanations given have mainly been based on the 'family' being enshrined in the constitution and this creates a reluctance to repossess. However, I think this might well change as has everything else in Ireland in recent times. I don't mean the family will be taken out of the constitution, but the respect and duty afforded to it will no longer apply as more and more people turn to foreign banks. As Whathome says, securitisation may begin to play a role as I believe lending institutions obviously seek to cover themselves and will utilise whatever means necessary.

Repossesion in Ireland, I'm told, is a long drawn out affair at present. Perhaps Vanilla could comment on that. I agree with her about the 'glazed look' and people seem to think that all they need to know is whether they can get the money or not. Our solicitor has always informed us that property can be repossessed if we don't keep up payments.
 
Repossesion in Ireland, I'm told, is a long drawn out affair at present. Perhaps Vanilla could comment on that.
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It is, yes. I'd agree with Brendan that judges are reluctant to grant an order for repossession until every avenue has been explored and the mortgagees have been given every opportunity to deal with the matter. I couldn't comment on whether they are more frequent, I simply don't know. I personally haven't seen any increase in repossessions among MY clients, although I have seen a huge increase in remortgaging, top ups and equity releases of varying kinds.
 
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