Raging Bull
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I got a Pepper rate reduced from 6.25% to 2.5% variable in a PIA
Key Post What can a PIA reasonably achieve for a mortgage holder?
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Can you provide details on how this was acheived? Thanks.
Unfortunately, that doesn't quite answer the question.
Little consideration seems to be given on this detail and regarding the implications for a PIA. Particularly with regard to the interest rates being applied in any proposal put to a meeting of creditors on behalf of the debtor.
Pepper, it seems, have announced that they will not be applying rate changes to those currently in a PIA. However Start Mortgages have already been issuing rate changes for those currently in a PIA. This is a separate matter.
Either way, those in PIA's are now trapped by these vulture funds and are at the mercy of whatever rates they apply, with no option to move - particularly when the standard clawback provision of a PIA is included in the arrangement. This prevents them from ever being able to "move" or adjust rates for at a minimum, the duration of the clawback term (usually 20 years). This is a very dangerous and already predatory position that these vultures now hold over those who entered into a PIA in order to "keep their own home".
So, in this context how interest rates are "got" from 6.25% to 2.5% begs a question. How, exactly?
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Raging Bull
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It does, you can do many things in a PIA subject to eligibility which is primarily mortgage arrears and can't paying bills as they fall due. Everything is subject to negotiation but a PIP has the ability to impose solutions on a Creditor subject to certain provisions. Most people as long as they are not on a tracker should be fixing
Well, I refer you to my edited post above for context, but unfortunately your reply has only further confused or skipped over the fundamental question. Simply saying a PIP does some negotiation is not an answer to the question of how, for example, this is "imposed" by a PIP, as you say. I was hoping you might reveal this information and your process.
Raging Bull
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A PIP can reach a consensus or not. They are an intermediary and Independent. All the cases in the paper are mostly where the PIP imposes a solution contrary to the WIsh of a creditor go to www.backontrack.ie for more information
Ok so in the absence of a detailed response, a PIP looks at a clients financial situation. They prepare a proposal for a meeting of the creditors. In that proposal, they outline a proposed variable interest rate, which they consider the client can afford because they are insolvent and wish to return to solvency. In your inimitable case, they either agreed with the proposal quietly, including any other exceptions to the proposal that the PIP does not remain silent on. Or, if the lender does not agree to the proposal, the PIP may "impose" the proposed solution or part thereof. What are the circumstances on or around the creditors meeting in this event, through to the ISI and Courts. As you suggest, afterwards it "makes the papers". That's news, not information. Perhaps you will give some insight. Perhaps you could give examples using the case you mentioned above, or similar. As any details on the negotiation of interest rates is pertinent here, especially for those entering into insolvency arrangements who may well be trapped with their lender/vulture and looking at (hugely) increased rates in the future when considering their overall situation.
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Fixed interest rates for the remaining duration of the mortgage are common in PIAs, and in particular where the creditor is a fund rather than a bank.
Well, now you have put your finger on it.
You will find the vast majority of PIAs, particularly with lowered interest rates (for the purposes of ensuring repayments are affordable for the debtor) are often "negotiated" down on the basis that they are proposing a variable rate to be applied in the debtors arrangement. In particular, with funds rather than banks. It is funds who primarily bought non-performing loans, and we need not explain the reasons why or how a large proportion of these loans stopped performing in the first place (read: thread title)...
Any information regarding the process leading up to and including this should be made available for the knowledge and benefit of those facing into arrangements that will allow the lender/vulture to "impose" excessively high interests rates on the debtor for the duration of the term of the mortgage on their own home. While they may now become solvent, they also may now be facing the same problems as before - presumably their RLE's have not changed, but their interest over the term may well be higher now than what brought them to insolvency in the first place. In this circumstance or under certain types of arrangements (e.g. typical arrangements with vultures), the debtor has no recourse to seek a fixed rate or seek a better rate from another lender now, or in the future. In particular, if their secured debts (e.g. their own home which "they get to keep") is subject to any write down as part of the arrangement.
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You need to get a better PIP to look at your case.
The high court made a decision on this very early on. Just Google the Jacqueline Hayes case.
This is not my case. However this is the case for many (I assume you are aware or any practitioner should be). But I am not at all surprised with the fluffiness of responses here to specific questions about the specific detail, processes and procedures to guide debtors, those going through or facing into insolvency. But while it may not answer the original question, thank you for the link to backontrack.ie and your reference to the above case for information and the practical advice to "get a better PIP".
Brendan Burgess
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Surfinky has asked a very relevant question. And I would like to know the answer as well.
Well done. But surely a 2.5% variable has no guarantees in it? Many of the deals which are done are for fixed rates. What is to stop the mortgage lender upping the variable rate to 6.25%?
As Red points out, many of the PIAs are fixed rates, so why did you negotiate a variable? And did the lender agree to it, or did you have to go to the High Court?
Brendan
Well done. But surely a 2.5% variable has no guarantees in it? Many of the deals which are done are for fixed rates. What is to stop the mortgage lender upping the variable rate to 6.25%?
As Red points out, many of the PIAs are fixed rates, so why did you negotiate a variable? And did the lender agree to it, or did you have to go to the High Court?
Brendan
Brendan Burgess
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Are there any guidelines for what a borrower might expect?
1) Do they have to be in negative equity? I assume not.
2) There doesn't seem to be any guidance. I have been shocked at some of the deals which the court imposed on borrowers. So does that mean it's well worth chancing your arm.
3) If I rock up to a PIP and say "I have a mortgage of €300k on a house worth €400k but I can't afford to pay 6.5%" Could you please propose a PIA for me. If you reduced the interest rate to 2.5% fixed for the next 30 years and maybe wrote off €50k, and set the period of the PIA for 1 year, I would be very happy with that. And if the lender refuses, let's go to the High Court.
1) Do they have to be in negative equity? I assume not.
2) There doesn't seem to be any guidance. I have been shocked at some of the deals which the court imposed on borrowers. So does that mean it's well worth chancing your arm.
3) If I rock up to a PIP and say "I have a mortgage of €300k on a house worth €400k but I can't afford to pay 6.5%" Could you please propose a PIA for me. If you reduced the interest rate to 2.5% fixed for the next 30 years and maybe wrote off €50k, and set the period of the PIA for 1 year, I would be very happy with that. And if the lender refuses, let's go to the High Court.
Indeed. And with respect to the likes of Start and Pepper, with respect to any "deal" under the "proposed" arrangement and subject to their PPR, this may be seen as a deadly trap.
So, at a very basic minimum, in line with the above (moved) thread title - it should certainly be expected that a PIA can reasonably achieve a situation where the debtor becomes solvent and is not facing an unsustainable situation on completion of their PIA.
A situation (which from the outset was determined based on RLE's) which now suddenly involves spiralling interest rates at the behest of a vulture. The debtor is captive and having no alternatives or options.
I posted a thread a long time ago, regarding codes of practice for insolvency practitioners. It was also an attempt to elucidate what one can reasonably expect from a practitioner in the course of their work and in their responsibility to their client that the above doesn't happen. Crickets.
Raging Bull
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Firstly that was the result. That does not mean that I was overly au fait with it because I wasn't. I was pushing for a fixed rate but Debtor did not want it. They (Debtor) wanted a consensual deal.
By going for a Fixed Rate it would have almost certainly ended up in a court appeal where the onus is on the PIP to set out the justification and the rationale.
The role of a PIP is not to ensure solvency for ever. There are many PIAs done and completed that will not be able to absorb anything like a 5% interest rate increase.A buffer is built in at the end of the arrangement because the budget the Debtor is to live on during the arrangement is not realistic over a long timeframe.
The PIAs are overseen by the court. A court would challenge if there was a reasonable basis to forsee sustainability issues.
The current environment is exceptional which is why calls have been made to allow Debtors to avail of a second PIA as you can do once in your lifetime.
Raging Bull
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You can't write off Debt if in positive equity. To make it affordable in this scenario you would adjust rates and most likely extend.
At that level of debt it's circuit court. You would also need to be arrears and usually being through MARP to start.
Raging Bull
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It's section 115a of the legislation
Raging Bull
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Wouldn't say common but is permissible. Easier to impose on a fund on the basis it's bought as investment.
Against original lender would be more difficult in an appeal anything 10yrs plus. Though I did get a 10 yr fix on consent before against a bank.
This type challenge fails because of a previous error in judgement. That is, the sustainability effects on those whose loans were transferred to funds/vultures who are not subject to same regulations or in competition with any markets (the market is captive) and is refusing to fix interest rates because of their predatory lending practices.
Raging Bull
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Most deals are variable or tracker but will need to move to fixed to provide greater certainty