trying to get out from under Vulture

Discussion in 'Mortgage arrears & negative equity case studies' started by endofourtether, 11 Mar 2019.

  1. endofourtether

    endofourtether Registered User

    Posts:
    13
    Income details
    Net monthly
    €3,500 - PAYE salary
    Net monthly income partner/spouse: €4,000 PAYE Salary
    Amount of child benefit received €420
    Amount of Mortgage Interest Supplement received Nil

    Personal circumstances so we can calculate your reasonable living expenses

    Two adult family
    Do you need a car for work or do you use public transport? Yes 1 car
    Number of children 0- 2 years old: 0
    Number of 3 years old children: 0
    Number of 4 - 11 years old: 1
    Number of 12 - 18 years old: 2
    Monthly childcare costs: €530

    €5,168.58 - From the backontrack.ie calculator

    upload_2019-3-11_19-56-28.png



    Home loan
    Lender: A Vulture Fund
    Amount outstanding: €340
    Value of home: €600-750k
    Interest rate: specify whether tracker or SVR or fixed rate - SVR 4.95%
    Monthly repayment €2,200
    Amount in arrears €3k - This is a missed payment almost 2 years ago that we didn't realise was missed for a few months - We tended not to open the almost daily letters from the Asset manager.

    We have been in discussions (not all meaningful) with the bank since day 1 - They were leaving the country and sent our BTL to receivership after only 5 missed payments - due to void and general nature of the economy at the time 2010. We missed some payments on the PPR but went through MARP and capitalised the arrears and interest, iirc about €35k.
    Some History - I was working for myself with just a couple of regular gigs - these were state funded enterprises that lost their funding almost overnight and the trickle down meant that I was no longer affordable. My Income halved overnight, we had small children and big outlays - not a typical Celtic Tiger lifestyle however, modest enough, it just all added up.
    My wife works for a state enterprise and the FEMPI and pension payment reduced her take home income by about 35%
    BTL was on interest only and even then we had to fill a gap of about €500/month for about 5 years. It was our starter home and we leveraged it to the hilt.

    Investment property -
    Was sold by a receiver - c.€200k outstanding - They are now talking about a judgement mortgage.
    This is my pain point - I literally begged for them not to do this, they ended selling through an Allsop auction for a lot less than would have been done had we sold it ourselves - And then the receivers fees etc.

    Credit Union

    None


    Other loans and creditors -
    None


    Other savings and investments
    Some shares - under €5k

    Do you expect any lump sums in the medium term future?
    No


    How important is retaining the family home to you?

    I really want to keep the Family home. At least until the kids have left school - another 9 years.

    Any other relevant information

    What is your preferred realistic outcome?

    We just want to try to get back to normal. We want to get a mortgage with a proper bank but nobody wants us...because of the residual debt on the BTL.
    We have been offered an number - I am loath to go into specifics because any asset manager worth their salt will be checking here - but even though it's a decent write off of the residual debt it appears that no banks want to be seen cleaning up the the fallout of the boom that they created.
    The number that has been offered would leave us with about 60% LTV.
    So, we have good income, a good asset and a massive currently unsecured debt - They say they are going to apply for a judgement mortgage which would secure it.
    I was so angry about the sale of the BTL and didn't engage with them constructively for a few years after that.
    I want to see what strategy might be useful in order to pay them as little as we can for the outstanding debt.
    I don't want to hear opinions on the morality or otherwise of this - As far as I am concerned the VFs are the absolute bottom feeders our dealings with them have been exceptionally unpleasant. I want to find out how to give them as little as I can and to try to safeguard our future.
    We have a broker who thinks that they will be able to get us money with no problems, the main reason that we believe this is that everybody else is completely negative.

    The other option is to allow them to get a judgement mortgage and then to live forever...
     
  2. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    36,813
    Can you explain what this means. Who has offered you a number? What is a number?

    Is the lender on your family home the same as the lender on your BTL?

    You have a home worth €650k

    You have two loans €340k and €200k.

    So you are in positive equity overall.

    Why on earth don't you clear the arrears on your home? That is an absolute priority. If this ever goes to court, you want to be able to say "I cleared the arrears 5 years ago and have met every payment since". As it is, the lender will be able to say "They have been in constant arrears for 10 years."

    Brendan
     
  3. endofourtether

    endofourtether Registered User

    Posts:
    13
    The Vulture fund have offered us an amount to clear everything .
    Both loans are with them.
    Regarding the arrears, we naively thought that due to the potential LTV that we could refinance easily.
    The lender seems to be quite happy with how this loan is performing.
     
  4. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    36,813
    So you owe €540k

    The vulture fund has said that they will accept, say €440k in full and final settlement.

    Is that what you mean?

    It's probably a bit irrelevant unless you are prepared to sell your home to pay it off or unless you have a friend who will lend you the money. No bank will lend you the money with your credit record.

    Brendan
     
  5. endofourtether

    endofourtether Registered User

    Posts:
    13
    And that's it?

    We can't be the only ones in this predicament, we engaged from the beginning, have done our MARP, capitalised our arrears and missed one payment in the last 6/7 years and that's it?

    Stuck to be paying 60% over the odds interest to a VF that doesn't want us.
     
  6. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    36,813
    You made a risky investment in property. You handled it badly by your own admission. So you are down €200k.

    But you have over €200k equity in your home.

    Brendan
     
  7. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

    Posts:
    244
    I am not really sure what you are asking here.

    You have a net income of about €8k which puts you at or near the top decile nationally for households. A house of that value is comfortable for your needs unless you live in D4 or D6.

    If they give you a settlement of 50% you would have total borrowings of (say) €440k with a term of maybe 20 years. This would put your monthly payments up to €2,900. This is heavy but not impossible on your income.

    Once it's settled, is there any way that you can get a lower interest rate from the vulture?
     
  8. endofourtether

    endofourtether Registered User

    Posts:
    13
    I'm not disputing that we handled it badly - it was a torrid time! Our income dropped by over 50% and we were trying to keep the wheels on, which we did, just about.
    However if we were with an Irish bank we wouldn't be in this position. The equity in our home is eaten up by the loss and fees etc on the investment.
    As you said Brendan, no bank wants to touch us - We can't be the only ones in this position.
    That's the problem, and that's what I'm looking for a steer on. Is there anybody in a similar position who has negotiated there way out of this?
    The fund will only settle for the whole amount and banks won't loan based on the whole amount.
     
  9. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

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    244
    This is very confusing.

    Is the fund offering you a write-off or not?
     
    RedOnion likes this.
  10. endofourtether

    endofourtether Registered User

    Posts:
    13
    Fund is offering a write off - Can't get refinance from any banks.
    When I say whole amount, we tried to offer something on the residual (unsecured) because they are going to get a judgement against us but the fund only want the whole lot gone.
     
  11. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

    Posts:
    244
    @endofourtether By the looks of it the write-off being offered leaves you in a financially sustainable position.

    We'd all love less debt, and you'll still have had the benefit of a big chunk of yours written off.

    Long-run, you want to get to a position where you can re-finance with someone else. I am not the best to give advice on this, but I would presume that a track record of several years of payment of the consolidated debt would leave you in a much better position to seek re-financing.
     
  12. RETIRED2017

    RETIRED2017 Frequent Poster

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    773
    Sell house take your equity and start again that is what happens in other Countries,possibly what the Fund/Banks are more used of outside of Ireland,
     
  13. Bronte

    Bronte Frequent Poster

    Posts:
    13,016
    Last edited: 12 Mar 2019
    It's not clear what is going on here but I'd take issue with some of your points. Looks like you had a starter home, presumably you were some years into a mortgage and you then borrowed massively against the 'equity' in it to purchase your current home. So some of the money from your BTL went into your PPR. Presumably part of the deposit or more. Particularly as your equity is quite good in it. So the two properties were always linked. If you didn't have the BTL's equity I'm guessing you would not have been able to purchase your forever home.

    So one could reasonably suggest that some of that 200K is actually now part of your equity.

    It also seems that you borrowed so much on the BTL it didn't cover the mortgage, despite it being interest only.

    I'm not critising you but I'm showing you how bankers and others may view it.

    You were unfortunate perhaps that the Vulture appointed the receiver so quickly. Maybe they were pissed off they were not being paid on two properties, particulalry if rent was coming in and you were using that, I'm not say you were but if I were a bank that's the thing to do.

    Alsopps you were very unlucky.

    Is your house worth 600K or 750K, there's a vast difference.

    This is where I'm lost.

    Are the bank saying give us X now in cash and we'll write off some of the 200K.

    Or are they saying consent to the judgment mortgage and we wil write off some of the 200K leaving you with 65%.

    600K X 60% = 360
    or 750 X 60% = 450

    200K + 340 = 540. Means a write down of 90K, 540 - 450 unless I've misunderstood you.
     
    Last edited: 12 Mar 2019
  14. Bronte

    Bronte Frequent Poster

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    13,016
    750 - 200 - 340 = 210, less say 10K costs. = 200
    Or
    600 - 200 - 340 - 10 = 50

    He can't do that as he won't be able to purchase another property due to his credit rating.

    Now can he take 200K or 50 K, (might be more if the bank is writing down some of the BTL debt). And on an income of 8K a month he can rent easily.

    And he's out from the Vulture who he can't wait to get rid of.
     
  15. endofourtether

    endofourtether Registered User

    Posts:
    13
    The write off obviously leaves us in a better position but the banks won't loan us the money to both remortgage and pay down the residual debt. We are being told that it is just bank policy.

    So when the fund wrote to us telling us they were about to get a judgement on the residual debt we thought that we only had to find the money for that element of the debt. We believed that this would then put us into a normal position and just have a mortgage with the fund which would be a lot easier to refinance.

    We then found that they wanted us to clear all of the debt and can't get finance for that.

    How can we get them to do this in a two step process?
     
  16. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

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    244
    OP seems to want to keep his house, avail of a write-off, and have a lower interest rate too!
     
  17. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

    Posts:
    244
    I'm still confused.

    They are presumably giving you a write-off on some portion of the €200k.

    Are you saying that:
    • they will consolidate the remainder as part of your existing mortgage with them?
    • they are forcing you to re-finance the remainder with another provider?
     
  18. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    36,813
    You currently owe them €540k on a property worth between €600k and €750k

    In any other country, they would just repossess the property redeem the loan and give you whatever is left over.

    You are very lucky in that this rarely happens in Ireland.

    How much have they agreed to take in full and final settlement of the €540k? Do you have that in writing or was it verbal?

    (Don't worry about the vulture fund reading this. I doubt they are, but so what?)

    Brendan
     
  19. endofourtether

    endofourtether Registered User

    Posts:
    13
    Yes. I want to extract myself from this position to ensure that I am left in the best position financially.
    I thought that this forum was where I would get advice. I don't need to be judged, I have done that myself for the last 10 years.
    They are offering an amount to fully buy out our total debt with them - This includes PPR and residual debt.
    We can't get finance for that debt even though as a percentage of the value of our family home it would be just 60% and our current incomes can support it.
    They are not forcing us to refinance with another provider another provider would have far cheaper rates.
     
  20. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

    Posts:
    244
    My advice would be to take the offer, get a few years of full repayment under your belt, then seek to re-finance with another provider. It's just a switch at that point.

    Anyway, I'm off now to pay some of the highest mortgage rates in Europe!