Negative equity - can you walk away?

R

rogeroleary

Registered User
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I was talking to someone in work earlier and he told me he has 3 investment properties worth about €1 million at present . However he has mortgages of around €800,000 on these properties. When I asked if he was off loading them to cash in he told me he wasn't and if the worst came t the worst ie. they went into negative equity he would just give the keys back to the bank.

Seeing my amazment he explained that there was no lien on his own private residence from these properties his home could not be repossessed.

When I thought about it I was still bemused that he could have NO liability except for the properties themselves. Surely this is only the case if you have set up a limited company which limits your liability? I would have thought if the properties dropped to say €500k then the banks would look to recoup the difference between the mortgage and the value ie. €300k? Am I missing something here?

Rog.
 
No, you are not missing anything.

Your friend is making a mistake which a lot of people make.

The banks would get a judgement against him for any shortfall and probably register it on his home.

Brendan
 
Thanks Brendan, I won't bother spending any more time on myhome.ie trying to increase my portfolio so

Roger
 
Brendan is wrong.

Some of the main banks will be very reluctant to write off the balance of the arrears and just let you hand back the keys. However, some of them actually will agree to taking back the house and the keys.
 
Robinho i do not understand your response. Brendan is correct. Any shortfall will be most likely registered as a Judgment Mortgage against any property which debtor owns and in event of sale of such property this Judgment Mortgage will have to be cleared before any purchaser will accept title
 
Complainer said:
But the family home would not be repossessed in such a case - right?
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Wrong. I'm afraid that there is a very common misconception that the Family Home is inviolate. Its not. Certainly, on a forced sale of the Family Home, the non defaulting owner is entitled to their share of the proceeds, assuming that there is sufficient funds to clear any mortgage on the Family Home, but the other share ( the defaulters) will be taken by the Bank.

mf
 
While the bank might not repossess the home, ownership could not be transferred by way of sale or inheritance until the judgment mortgage is satisfied.
 
mathepac said:
While the bank might not repossess the home, ownership could not be transferred by way of sale or inheritance until the judgment mortgage is satisfied.
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Yes - but the judgement mortgage would not necessarily be satisfied until the guy either decides to sell up, or potentially when he dies in 50 years time.
 
OP I'm amazed that someone who has managed to accumulate 3 investment properties and mortgages of 800K is so naive.
 
Indeed. Oisin Fanning of Smart Telecom will testify to that.
 
The only time you can walk away for a mortgage obligation is if you have a non-recourse mortgage, this is where your liability to the lender is limited to the loan on the property, and this loan is secured on that property. Rare in this country.
 
Bronte said:
What are you referring to?
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The former CEO of Smart Telecom. His family home was repossessed after he was unable to make repayments on an investment loan. Proof that a judge will grant an order against a family home.
 
Raskolnikov said:
The former CEO of Smart Telecom. His family home was repossessed after he was unable to make repayments on an investment loan. Proof that a judge will grant an order against a family home.
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The loan was secured on the property, according to press reports - see http://www.independent.ie/opinion/a...-bite-itself-on-its-ample-bottom-1622866.html
 
If the family home was not taken out jointly e.g. was the property of the wife before they got married and no share in it has been "signed over" in any way to the husband (who has now got "mortgage judgement" against him) is family(wife's) house safe in that instance?

Put simply do individual debts incurred before marriage become shared debts after marriage??
 
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