Pepper Vulture Fund Escrow A/C and refusal to reduce Mortgage Balance

Hi Brendan/All

Have a cross securitized Mortgage 5 properties unfortunately bumped into Pepper from PTSB 2023 no arrears.

In the process of selling 3 of the 5

After 6 months finally got consent from pepper and property 1 sold.

275k immediately lodged to pepper. However 1 month later they charge the same Monthly repayment as the month previously despite overall mortgage 275k less!!

After a phone call it emerges as this is considered a split mortgage which it wasn't, it was an interest only mortgage with an overpayment, they will not reduce the capital until the mortgage in full is cleared 1.6 million. They intend to hold the 275k in Escrow until the balance is cleared but will allow interest reduction on the 275k towards the overall balance.

This was never agreed pre sale nor any documentation provided that this potentially could be the case.

This however means, I have lost rent on this property due to the sale, but received no reduction in monthly outgoings, this would also mean I cant proceed with any future sale as interest being charge on original principle and not todays balance.
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Any help much appreciated

RecoveryMan said:

it was an interest only mortgage with an overpayment, they will not reduce the capital until the mortgage in full is cleared 1.6 million. They intend to hold the 275k in Escrow until the balance is cleared but will allow interest reduction on the 275k towards the overall balance.

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First of all, they are not charging you interest on €1.6m.

They are charging you interest on €1.325k.

I would be fairly sure of that. But their systems are odd so you will need to check that.

Brendan

RecoveryMan said:

it was an interest only mortgage with an overpayment,

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RecoveryMan said:

received no reduction in monthly outgoings,

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Were the 5 mortgages originally interest only or were they converted to interest only as a result of a reschedule.

If they are interest only, why are you making "an overpayment"?

Brendan

I am assuming that they were interest-only for the full term from the start.

If so, then the balance today is €1.325m and that is the only interest you should be charged and it is the only repayments you are obliged to make.

Brendan

The fact that Pepper thought it was a split mortgage, probably means that their paperwork is all over the place.

You need to write a letter to them setting out the full facts of the case and telling them to reduce the overall balance to €1.325m

Don't rely on what someone has told you over the phone.

Brendan

Hi Brendan,

yes Interest only for term at start in 2007 but agreed to go into partial repayment in 2021 with PTSB after ther first "review" in 14 years and signed new contract to that effect. interest Only +2k per month until 2032

Trasferred to Pepper Feb 2023 regardless:
So Mortgage Payment it Dec 23 €8777 per month mortgage payment in january 2024 after paying down 275k €8777 per month

You are correct in that the interest allowed on the 275k in the escrow A/C ultimat;ey means I am paying interest on €1.325m

But they are taking that portion approx 1270/month and deducting that from the overal principle monthly as oppossed to reducing my monthly outgoing



Problem here by this logic is if I sell the next 2 which are sale agreed for 600k (300 each) I will still be charged €8777 per month but the escrow A/C will have a balance of 875k While this will mean the Capital reduces quicker it also means there is zero affordibility to now pay the €8777 as Im down to only 2 rental properties from 5

Hope this makes sense

RecoveryMan said:

Hi Brendan,

yes Interest only for term at start in 2007 but agreed to go into partial repayment in 2021 with PTSB after ther first "review" in 14 years and signed new contract to that effect. interest Only +2k per month until 2032

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Hello,

What exactly does the "new contract" say, in relation to repayments?

You need to read this very carefully, along with any associated standard terms and conditions.

Thereafter, and assuming it does specify interest plus a fixed repayment of €2,000 per month, you need to get Pepper to provide you with the current monthly calculation, based on their current lending rates (don't foget, they haven't been shy about increasing their standard lending rate, albeit it's a different scenario if you are on a Tracker rate), and the net loan balance. Insist this calculation is provided in writing (you'll need to put the request in writing, albeit I'd also phone looking for it, and confirm that the call is being recorded, at the start of the conversation).

Hi Contract states Interest Plus 2k per month until 2032 with remaining balance to be paid off then

No Mention of withholding additional Overpayments or lump sum deductions.

Thx

and yes tracjer

Where does it state the €2,000 per month, plus interest (and again, are there any related "standard" terms and conditions relating to the Part Capital and Interest Repayments?)?

RecoveryMan said:

and yes tracjer

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With a fairly low lending margin, I take it?

Are you still paying by direct debit?

Has it been more than two months, since the first property sale completed and they received the sale proceeds?

And yes paying by direct debit and it has only been one month not two since the sale went through

Here's my pepper showing the problem

That escrow is nonsense.

There is no provision in the contract for them to show it like that. But it does not matter.

Your repayment should be interest on €1.325m + €2k a month

So the interest would be €1,325k @5.25% = €70,980 /12 = €5,915k
So the repayment should be €7,915k

Brendan

The problem for you is the contract which says €2k a month capital. That was fine when the balance was €1.5m

But after the sale of the next two properties, your balance will fall to €725k
The interest will be €725k@ 5.25% = €38,000/12 = €3,200 a month
The repayment, according to the contract, will be €5,200 a month.

But even with that capital repayment, your loan won't be repaid for another 18 years.

So on the maturity date in August 2032, the balance will still be about €450k

Brendan

Hi Brendan thanks for the figs they concur with my own.

The contract was never going to be paid off by 2032 the balance as you stated would be cleared with either a cash sum, a sale or a remortgage with another institution

The escrow is a deliberate change of contact terms and as such will be challenged with Pepper and unfortunately legally if required

BR

R

and yes its a small margin for the banks Tracker +0.75%

RecoveryMan said:

And yes paying by direct debit and it has only been one month not two since the sale went through

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Depending on the timing of the receipt, of the sale proceeds from the first property sale, they might have been too late to amend the first payment, hence my question.

I'd get on to them immediately, on a recorded call, and ask them to confirm what the next month's direct debit amount will be, and how it's calculated. I'd also put the same questions in writting to them, seeking a written response.

If they try to tell you that they will be maintaining the direct debit at the previous level, I'd tell them that they are wrong, per the loan agreement, and reference Mr. Burgess' calculations above. If they persist, I'd immediately ask to make a formal complaint, and ask them to talk you through their complaints procedure (regardless of whether you know it, or not ).

That's the beginning of the escalation process, albeit may not be the final stage.

While tempting, I wouldn't cancel the direct debit authority for now, unless you've really got a problem with cashflow and can't risk them taking the higher payment again, for fear it'll leave you short for other essentials. It's something to keep in the back of you mind, for now, but do also remember that it'll really in your loan going into arrears, unless you make manual payments to replace the direct debit amount, until the issue is resolved.