Tracker Appeal - Observations

TomTron

Registered User
Messages
31
Ok Gents!

The Tracker issue has worn a lot of people down. We all need to keep a sense of humour (and an open mind).
 

bluestilton

Registered User
Messages
40
I follow this forum with interest but I do not like the high minded attitude of some when differing views are expressed. When someone with expertise makes an effort to to put forward a different view which may help others I don't see why they should be ridiculed.
 

Brendan Burgess

Founder
Messages
41,542
When someone with expertise makes an effort to to put forward a different view
Hi Stilton

If you see any examples of this, please report it.

The problem we have on askaboutmoney is when newly (re)registered users come along with astonishingly ill-informed analysis which misleads people.

This is not a matter of opinion.

And it's not his first time doing it either. In his previous registration, he had a little bit of legal knowledge and was giving people completely misleading legal advice. But doing it with such confidence.

Brendan
 

RedOnion

Frequent Poster
Messages
4,597
When someone with expertise makes an effort to to put forward a different view which may help others I don't see why they should be ridiculed.
I guess this is aimed mainly at me, and I fully realise I come across as arrogant on this thread. I'd be more than tempted to report myself under normal circumstances.

I would hope that my reputation on AAM isn't set by a single thread. My reason for posting on AAM is primarily to try to help people, along with gaining some knowledge myself.

There is no benefit to be gained by anyone from someone posting made up logic and numbers to an internet forum. It distracts from real issues that people should be raising. And people are easily blinded by terminology.

If the poster actually had expertise in the area, and they were correct, they would have been able to explain the logic very clearly and easily.

They have the opportunity to do so, and I'd be the first to apologise and support them in getting attention to the matter if they are correct. What they are talking about is as big as the tracker scandal itself. If a partner at a well known accounting firm had worked this out, we'd all know about it in tomorrow's papers.
 

TomTron

Registered User
Messages
31
I feel very strongly that ordinary people in Ireland, the UK (with the GRG scheme) and the USA are being hookwinked by a banking industry. The Central Banks have not yet demonstrated they are on the side of the people in any of these jurisdictions.

In the tracker appeal I have seen how the banks are engineering to minimise their exposure, which is their right.

You're right Brendan that it will take a High Court ruling or possibly an Ombudsman decision to test this. I must admit I expected a different response having posted what I have, but realise you may have experience of basement keyboard have a go heroes.

RedOnion - I'm unsure why the Parnter would 'go to the papers' when I am the one who discoverd this and funded an independent expert to prove the method. I have explained things simply, and given some background, I cant help if you dont believe me. I can do nothing about that. People will make up their own minds.

Perhaps I was naive in thinking to bring it to peoples attention on an internet message board. In the last 24 hours both you and Brendan have effectively called me a liar and untrustworthy.

I've corrected your calculations in my post.

Brendan, I've never posted to this board before this last week. I've been stuck in Ireland since COVID 19 lockdown and felt I should share to help people. I've not offered any pseudo legal advice. Can you send me a PM with a link, thats worrying.
 
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RedOnion

Frequent Poster
Messages
4,597
I've corrected your calculations in my post.
Sorry, I didn't make any calculations. I used what I thought were yours, but you only gave little bits and pieces, but I didn't interpret them the way you expected. You didn't give any data that would help to perform proper calculations. You'll know that already. What you've posted makes no sense.

If you provide the necessary data for a specific scenario, I'll perform the calculations under 2 different methods and show the results. We can then compare to the Banks calculations.

I still stand by my comment that you haven't explained this at all. Until you do explain it, I stand by my comments that it's all nonsense.

You've single-handedly discovered a 600m+ shortfall in the tracker redress, but you can't explain it? And posting to an anonymous internet forum is how you decided to bring the public's attention to it? Do you realise how big this is if you were right?
 

Megafan

Registered User
Messages
120
The posts have been written with such certainty/zealousness by TomTron, it feels like there must/should be a lightbulb moment in there someplace but it's not jumping out.

It might be the language used and throwing things like arrears etc into the mix rather than a vanilla type explanation on a standard mortgage. I wish I was an expert on mortgages, the use of the word amortisation is interesting.

As I say, I have no idea but do we assume the reverse of a mortgage interest statement we receive is what a bank shows on their systems for an individual mortgage over the course of a mortgage, I don't know if this is the case. That is the principal reductions are lower at the start of a mortgage repayment cycles and higher at the end. I wonder does the bank straight line the writedown of the principal of a mortgage equally over the course of the mortgage so they might have reconciling adjustments on the mortgages on their books throughout (even if they did, would that even matter?).
 
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Brendan Burgess

Founder
Messages
41,542
Hi Megafan

It's very easy to understand mortgages. They are not that complicated.

The banks do not write down mortgages as a matter of course.

The increase the balance by the addition of interest.
They reduce the balance whenever a repayment is made.

However, as it's the custom and practice to keep mortgage payments constant over the life of the mortgage, people get confused.

Brendan
 

Megafan

Registered User
Messages
120
Hi Megafan

It's very easy to understand mortgages. They are not that complicated.

The banks do not write down mortgages as a matter of course.

The increase the balance by the addition of interest.
They reduce the balance whenever a repayment is made.

However, as it's the custom and practice to keep mortgage payments constant over the life of the mortgage, people get confused.

Brendan
Thanks Brendan

I suppose I was wondering more so if mortgages are accounted for a little differently other than what would be disclosed to the customer on the statements, maybe that some of some of the IFRS' impact on the books of AIB or fair values of mortgages but that probably wouldn't be relevant to the wider conversation between the customer and the bank. That was where I would like to understand a bit more, just from a personal perspective, to see if there was anything that could be added to the conversation of value..
 

RedOnion

Frequent Poster
Messages
4,597
to see if there was anything that could be added to the conversation of value..
That's a different conversation altogether.

At an operational level, the bank handles your mortgages exactly as you see on your statement.

There are accounting adjustments for Expected Credit Losses and Effective Interest Rates. There are potentially other accounting treatments where your mortgage has been included in a securitisation or covered bond for example.

None of those impact in any way on this particular discussion.
 

Trackscandal

Registered User
Messages
24
I feel very strongly that ordinary people in Ireland, the UK (with the GRG scheme) and the USA are being hookwinked by a banking industry. The Central Banks have not yet demonstrated they are on the side of the people in any of these jurisdictions.

In the tracker appeal I have seen how the banks are engineering to minimise their exposure, which is their right.

You're right Brendan that it will take a High Court ruling or possibly an Ombudsman decision to test this. I must admit I expected a different response having posted what I have, but realise you may have experience of basement keyboard have a go heroes.

RedOnion - I'm unsure why the Parnter would 'go to the papers' when I am the one who discoverd this and funded an independent expert to prove the method. I have explained things simply, and given some background, I cant help if you dont believe me. I can do nothing about that. People will make up their own minds.

Perhaps I was naive in thinking to bring it to peoples attention on an internet message board. In the last 24 hours both you and Brendan have effectively called me a liar and untrustworthy.

I've corrected your calculations in my post.

Brendan, I've never posted to this board before this last week. I've been stuck in Ireland since COVID 19 lockdown and felt I should share to help people. I've not offered any pseudo legal advice. Can you send me a PM with a link, thats worrying.
Hi TomTom,

Just a small bit of background because it may be relevant. I am an accountant and I got the actual spreadsheet that AIB used to calculate my refund. Under the Central Bank guidelines a person is entitled to a soft copy. AIB tried to fob me off with a PDF but I eventually received the spreadsheet with all the formulae etc.

I feel their calculations are incorrect and I'm not sure if it is the same reason as you do.

AIB calculated two scenarios one showing what actually happened and the other showing what should have happened i.e. how much one should have repaid. However just imagine if someone was in arrears in the actual scenario by not making a payment for one month in 2012. However in the "what should have happened scenario" they, in AIB's model, are not credited with any repayment even though cumulatively, at that point in time, they would have overpaid their mortgage. In the" what should have happened scenario" they would be charged interest of 4% in 2012 for this deemed non payment and it would accumulate on their loan. I think the model should assume cumulative payments actually made are utilised against the what should have happened scenario. This would result in a reduced refund in cash but a higher reduction in loan balance.

The TVM calculation does not compensate for this as the interest rate is lower than the interest charged on the mortgage for the assumed non repayment.

I hope everyone can understand what I mean.

I also agree with you that the TVM is based on an incorrect interest rate. AIB conveniently utilise their deposit rate however for example if one has marginal borrowing on a personal loan at 9% for example during the period of over payment then maybe one would have a solid argument that the TVM should be based on this rate. I also feel the court interest rate of 8% should be a basis. In a pinned tweet I think Jim Stafford sets this out too.

Brendan references above that the BOI calculation is incorrect and again from memory, (subject to correction), I think this relates to the fact that BOI refunded overcharged interest versus reducing the loan balance?? Anyway, I recall reading the Central Bank's "Principles Of Redress" where it sets out how the calculation of redress should be carried out. Again from memory I re-read and re-read it last year and there was ambiguity as to whether the BOI interpretation was correct. In effect this would mean that everybody redressed by AIB, and most other banks, would be refunded more money and charged a tracker rate for same.

TomTom - is what you are saying similar?
 

TomTron

Registered User
Messages
31
Hello Megafan

I think this may be of help. It shows how you pay back interest and the principal over the life of a loan.

You can put in any numbers you like it doesnt matter that its shown in dollars.

I think all mortgages when they are drawndown include an amortisation schedule - that shows over the life of your mortgage what the repayments are based on assumptions. The final sum paid is always good to check, generally you pay back twice what you borrow, good job house prices go up!

IFRS9 is something that is relevant to Risk and Treasury - where Capital Adequacy and 'Tiers' of Capital are held in a proportion to the types of debt the institution has and how its expected to behave based on risk models they maintain. I wouldn't expect it to have any bearing on your mortgage statement!
 

TomTron

Registered User
Messages
31
Hello RedOnion,

I am aware of the size of that issue. Until its challanged in the Courts, where a borrower would claim the Central Bank has no statutory authority to intervene in the calculation of monies applied to their mortgage account, it is what it is.
 

TomTron

Registered User
Messages
31
Hello Trackscandal,

Good job getting your soft copy spreadsheet!

I agree with this "I think the model should assume cumulative payments actually made are utilised against the what should have happened scenario. "

The TVM is being used (as you point out, in line with the Central Bank Principles) instead of amortisation - when the bank subtracts the 'should have paid' from the 'actually paid - or overpaid'- I think the rate is good to check, but fundamentally the TVM calculation method reduces the refund very significantly. RedOnion gave his view on what the scale of this would be across the country above.
 

bluestilton

Registered User
Messages
40
Based on the information contained in the posts above If I sent a letter to my bank asking them to explain how they calculate the monthly repayments and the reducing balance would they be obliged to provide me with this information and would this provide me with any information as to what method they are using to calculate what I owe them?
 

Brendan Burgess

Founder
Messages
41,542
They should just refer you to a book on finance and calculations.

They are not required to train you in these matters.

If you understand these calculations and think that they are doing it wrong, then you can raise it with them.

Brendan
 
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