Mortgage in arrears and negative equity, but 69 year old joint borrower

Discussion in 'Mortgage arrears & negative equity case studies' started by sellornot, Mar 20, 2017.

  1. sellornot

    sellornot Frequent Poster

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    Summary

    €250,000 Mortgage owed to bank including €83,000 Arrears

    Value of the property €150,000 due to the fact of Pyrite so negative equity €100K

    Mortgage in joint Names 39 years working and living in the property and 69 years retired has own apartment (no mortgage)

    Disposable income 2,150.00 approx

    Current mortgage interest rate 4.490% (per annum)

    Amount of each instalment should be €1,245.69

    Paying €600.00 at the moment

    68 missed payments

    8 years left on the mortgage

    Possible solutions

    Give keys back to bank

    Pay lump sum of 250K to bank (If we had the money)

    Pay the arrears €83,000 (If we had the money)

    Ask bank to stop adding interest (freeze the interest) for now

    Extend the period of the mortgage 10/15 years

    Pay the full instalments of €1,245.69 per month (nothing of the arrears)

    Rent 2 rooms out @ €500.00 per month per room = €1,000.00

    Agree to a voluntary sale provided bank agrees to write off the balance should the sale price does not reach what is owing

    What’s the best solution or am I missing something?
     
  2. sellornot

    sellornot Frequent Poster

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    Give the keys back to the bank is looking like the best option :(
     
  3. jdwex

    jdwex Frequent Poster

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    Was the house not eligible for remediation of the pyrite issue?
     
  4. XMarks

    XMarks Frequent Poster

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    What are the circumstances of the 69 year old (I assume parent) who bought with you. Do they own the apartment they are in? Do they have any other assets? If you hand back the keys the banks will go after them.
     
  5. Brendan Burgess

    Brendan Burgess Founder

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    The lender would not have lent that amount to you on your own.

    They lent it to two of you, so they have a legal and moral right to pursue the joint borrower. And most lenders will do that.

    What discussions have you had with them?

    If you rent out two of the rooms, you can pay your mortgage in full and you should do that. Otherwise, your 69 year old friend will be on the hook for it.

    I note you are paying 4.49%. Which lender? Most lenders have some option for reducing the rate by fixing or by switching to an LTV mortgage.

    But do not hand back the keys. That is just dumping the problem onto your 69 year old friend. It's also making the problem worse as the sales price will be a lot less than the value.

    Brendan
     
  6. PGF2016

    PGF2016 Frequent Poster

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    What's stopping you from paying the full amount?
     
  7. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Why is the mortgage not being paid? There's plenty of disposable income and scope for "rent-a-room".
     
  8. sellornot

    sellornot Frequent Poster

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    ]Was the house not eligible for remediation of the pyrite issue?[/QUOTE]
    Yes the House is eligible for remediation, but it still very hard to get a loan on the property and to insure
     
  9. Brendan Burgess

    Brendan Burgess Founder

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    Pyrite or not, you would not get a loan because of your credit history.

    Brendan
     
  10. sellornot

    sellornot Frequent Poster

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    Thanks Brendan

    What discussions have you had with them?
    Tried the insolvency route but was not accepted by a pip, reason given 69 year old not insolvent

    I note you are paying 4.49%. Which lender? Most lenders have some option for reducing the rate by fixing or by switching to an LTV mortgage.
    Can I negotiate interest rates when I am in arrears? The lender is BOI


    sorry but I don't really know how to use quotes have not used this site in years
     
  11. sellornot

    sellornot Frequent Poster

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    I mean if we or the bank tried to sell the house it would be hard to sell because of pyrite in the estate

    I know my credit rating is finished because of this
     
  12. Brendan Burgess

    Brendan Burgess Founder

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    Absolutely, you should fix for at least one year and reduce your interest rate significantly.

    Do this today and start saving money.

    Brendan
     
  13. sellornot

    sellornot Frequent Poster

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    The bank are looking for repossession of the property, court date next month
    trying to get bank to meet and discuss the arrears with me. I am the 69 year old
     
  14. PGF2016

    PGF2016 Frequent Poster

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    It's hard to know what advice to give when there are so many unanswered questions. Is the disposable income mentioned in the original post relating to the 39 year old or the 69 year old? What is stopping the 39 year old from paying the mortgage?
     
  15. Brendan Burgess

    Brendan Burgess Founder

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    Hi sellornot

    This is a very tough position to be in. Is the primary borrower acting responsibly? You are in effect the guarantor of his good behaviour. If he does not act properly, you will have to pay for it.

    The following is the likely scenario:
    Bank of Ireland will eventually get an order for possession of the property.
    They will sell it, let's say for €150k.
    There will be a shortfall of €100k.
    They will get a judgement against you for €100k
    They will lodge that against your home.

    They could then seek a court order that your home be sold and their debt paid off. It's probably unlikely that they would try this. And I think it's unlikely that they would get it.

    If they are in the court, then it's mainly because there has been little engagement with them.

    The best outcome for you is if the primary borrower engages and ups his repayments.

    That will make it very difficult, but not impossible, for BoI to get an order for possession.

    In my experience in the courts, Bank of Ireland rarely go to court, but when they do, they are serious about it. The other banks are only half-hearted and use legal teams which are pretty ineffectual.

    Brendan
     
    PGF2016 likes this.
  16. sellornot

    sellornot Frequent Poster

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    [

    Brendan[/QUOTE]
    39 year old has not acted very responsible up to now but since bank has moved to take the house she is starting to act now
     
  17. sellornot

    sellornot Frequent Poster

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  18. Brendan Burgess

    Brendan Burgess Founder

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    OK,

    The good news is that it's never too late. But it's getting very late.

    She needs to talk to the lender and try to do a deal.

    If they won't do a deal and insist on proceeding , she needs to up her payments.

    She absolutely must attend the court hearing and you should attend as well. Have you been notified of the hearing by the bank?

    I have written a Key Post here:
    Advice for people facing court repossession proceedings
     
  19. sellornot

    sellornot Frequent Poster

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    [
    Time is passing,we wasted a lot of time going to mabbs and a PIP, She has asked me to talk to the lender, problem bank is not engaging with me, I have phoned the bank a few times, and today I emailed bank asking for a meeting. I think its time for an expert mortgage negotiator, I am not that good at talking in court but I know I have to as there is a lot depending on putting our point across.
     
  20. Brendan Burgess

    Brendan Burgess Founder

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    The two of you should formally request a meeting where both of you meet the lender.

    Do it in writing.

    If the bank doesn't agree, then the Court Registrar will not be happy.

    Do try to negotiate in person, but follow up everything in writing to show that you are engaging.

    You can tell them that you tried MABS and a PIP.

    However, MABS is very good. Often when people are unhappy with them, it was because MABS did not wave a magic wand and make the bank accept a very low repayment.

    Brendan