What if bank adds 60k to borrowers salary on loan application?

[Clamball]

Yes, something does not add up here at all. There is this woman purchasing a house in the west, for about €550000. With an interest rate of say 4% that is €1833 per month, she is paying in interest only. That is an very big loan to service and pay off, but she is on interest only and off she goes.

Now of course after the ten years she had signed up to pay interest and capital. She still owes every penny of the €550,000. Over what term did she sign up to pay off the loan? Let’s be generous and say 30 years, because say she was 25 getting the loan and it will be all paid off by the time she is 65. So that is only €1528 per month capital every month for 360 months. Being simplistic she only has the back of the envelop and the biro, but at least she knows month 1 will be €3361.

Unfortunately she cannot access a computer to look at a mortgage calculator. (at 4% interest €2667 per month)

So here she is 10 years later and she has paid €220,000 in interest but not a penny off the capital. She has borrowed €550,000 and not paid a penny back. She only remembers this once a year when she gets a statement from the bank. She has never heard of the banking crisis or the hundreds who lost their homes because they could not pay their mortgage since she is living up a hill in the back of beyond in the west. So she is supremely relaxed when the bank asks her to pay off the capital.

Oh no, she has heard of the banking crisis, because she knows the banks were reckless, and doing bad things to the poor worker, so she blames the bank for her problems. So she checks and the paperwork shows the bank estimated the ability to repay incorrectly, she in all her 10 years of sacrifice, of changing her lifestyle to service this loan never gave it a moments thought, how she was going to repay the loan. It does not ring true, she should have contacted the bank years ago to begin paying off the capital, or sold the house to lessen her losses.

I am sorry I do not have sympathy for this lady but she had multiple opportunities before this to figure out she could never pay back the loan and she should have acted then.

 

[RETIRED2017]

Out of Interest did she buy house off family member a 3 bedroom house in the condition stated appears to be over priced for 11 years ago or did she take out a loan to buy off other family members,
Someone did well out of transaction the problem is she over paid even allowing for the prices of houses 11 years ago you/ she cannot blame the Banks for buying a pig in a poke which she could never afford to re pay off unless she is expecting a windfall later in life,

 

[dub_nerd]

I am sorry I do not have sympathy for this lady but she had multiple opportunities before this to figure out she could never pay back the loan and she should have acted then.

Not to mention that another bank turned her down for half the amount she eventually borrowed. The OP is claiming that the "mortgage experts" misled her, but skips over the bit where a different set of "mortgage experts" told her she was nuts and she went ahead anyway.

 

[usernameinuse]

There is this woman purchasing a house in the west, for about €550000.

Out of Interest did she buy house off family member a 3 bedroom house in the condition stated appears to be over priced for 11 years ago

No, it was not off a family member or friend. Not her family member anyway. 11 years ago, houses in nice scenic areas were often in the ball park of €400,000, 500,000 or Clamballs guess of 550k.

Someone did well out of transaction the problem is she over paid even allowing for the prices of houses 11 years ago you

The people who done well out of the transaction were the banker and his cousin the valuer: they would not have got their commission if they submitted correct facts and figures.

So here she is 10 years later and she has paid €220,000 in interest but not a penny off the capital.

Almost €200,000 in interest. When taking out the loan the banker said her salary would be much higher in 10 years time and also she could always roll over for another 10 year interest only period.
Why did the banker assure her she could afford the loan? Why do the banks say they look for, and I quote from them "proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future."?

She only remembers this once a year when she gets a statement from the bank. She has never heard of the banking crisis

She remembers it very often, not just once a year. Of course she heard of the banking crisis. Her salary and take home pay was reduced as a result of bank mismanagement. She has not married or had kids or gone out much as a result of financial worries.

It does not ring true, she should have contacted the bank years ago to begin paying off the capital, or sold the house to lessen her losses.

She had not the money to pay off the capital years ago. Because the house more than halved in value during the crises, then was not the time to sell. Even now it is worth a lot less than she paid for it at the top of the bubble. Shortfall of maybe €180,000. Maybe if it was a 5 bedroom with double glazing it would be worth more?

The OP is claiming that the "mortgage experts" misled her, but skips over the bit where a different set of "mortgage experts" told her she was nuts and she went ahead anyway.

I said her own bank refused her the money. The banker who did lend the money only could do so because he mislead his superiors about her salary in the loan report ( by over €60,000 ) and because the valuer lied about the quality of the security (5 bedroom instead of 3 bedroom, double glazing instead of all but one single glazed etc).

The banker and valuer no longer work for the bank, but do you think punishment is needed, just as a shop employee who stole a €1 bar of chocolate from his employer was severely punished?

 

[PaddyBloggit]

I said her own bank refused her the money.

She was a willing participant in the scheme. She knew from her own bank that she couldn't afford the loan but took it out elsewhere when it worked in her favour... unless she's a complete idiot, she knew that the figures had been twisted to nake her eligible for the loan.

She's guilty by omission, ignorance or just plain stupidity. It's gone belly up now so she trying to justify her position by blaming the fault she was complicit with first day.

 

[usernameinuse]

She was a willing participant in the scheme.

She did not know of the fraudulent bank scheme until many years after she took out the loan, when she obtained her file after paying €6.35

She knew from her own bank that she couldn't afford the loan

Her bank would not lend her the money. Who she did borrow of assured her they had examined her figures after she gave them her P60, payslips etc. That bank said she could afford the loan.
Some house buyers got interest only loans then, just as some car buyers now effectively get car loans (pcp?) to fund the use of a car, they will never own the car outright. At the end of 3 years they have to roll over again or whatever.

unless she's a complete idiot, she knew that the figures had been twisted to nake her eligible for the loan.

As said before, she did not know of the fraudulent bank scheme until many years later.
She also did not know what loan criteria the banks used in 2007. I think few people did. Nowadays I think banks cannot lend borrowers say 10 or 15 times salary. Why do you think that is?

Will you answer the question, do you think punishment is needed for employees who may do wrongdoing or mislead their superiors about large sums of money or figures, just as a shop employee who stole a €1 bar of chocolate from his employer was severely punished?

 

[Monbretia]

The valuer probably got €120 for the valuation, that was the going rate, hardly a massive return for a 'fraud', there wouldn't have been commission payable to the valuer and in fact probably not to the banker either, I never heard of them being paid commission unless you mean a broker.

Banker may have been trying to reach lending targets to reach a bonus or similar, that would be only return to them.

 

[dub_nerd]

When taking out the loan the banker said her salary would be much higher in 10 years time and also she could always roll over for another 10 year interest only period.

So now these so-called "mortgage experts" are also experts on the level of nurses' salaries in the far future? He couldn't possibly have known that and if she had an ounce of common sense she must have known he couldn't have known that. Also, she knew the level of interest repayments from day one, so she knew she was going to spend 200 grand on interest payments in the first ten years. That's nothing to do with being misled, nothing to do with the fall in property prices, nothing to do with the recession. That is what she voluntarily signed up for. And you're telling us that she actually took comfort from being told she could roll this over and spend another 200k, and still not have paid a penny off the loan or owned a single one of those single-glazed window panes. What is she, some kind of eejit? When did she think she was going to repay the loan? Even ignoring what she was told, and whether she was misled on certain issues, she had enough information right there in front of her before she put pen to contract to be easily able to tell that this was a crazy, crazy decision from day one. Do you accept that?

 

[Sarenco]

Like practically every other poster on this thread, I have zero sympathy for this lady.

She took out an imprudent loan and now wants to blame the bank for her difficulties.

Whether or not the bank takes any action against its employee is solely a matter for the bank. It has absolutely nothing to do with the borrower.

The courts have repeatedly made it crystal clear that reckless lending is no defence to an action for enforcement of a loan.

 

[LDFerguson]

It is more than just wrong. As asked before, what is the difference between a bank employee who while working defrauds his superiors (and the bank shareholders) by a misleading loan report or valuation, for personal gain (commission, bonus, promotion or whatever) and a supermarket shop employee who steals a single bar of chocolate while working, for personal gain, from his employer? The supermarket employee got fired, even though the sum involved was very small, say a euro.

And I've answered this before. But seeing as you've asked it again, I'll answer it again. It's not a valid comparison in this case. It's at best only partially valid as it only compares the aspect of this story in which the employee acts dishonestly for his own gain. It is not valid in that it makes no reference to any customer of the shop applying for a loan and accepting the offer of a loan.

 

[usernameinuse]

So now these so-called "mortgage experts" are also experts on the level of nurses' salaries in the far future?

The banker assured the borrower, when he would not tell her what the capital and interest repayments would be, that she could afford them, had not nurses salaries increased so much in the previous 10 years ( 1997 - 2007 ) and anyway in 10 years she could roll over for another interest only period. Inflation would eat away at the loan amount, he said. The bank were mortgage experts and had decades of experience.

The valuer probably got €120 for the valuation,

He actually got paid a bit more than that. And why did the banker pick a relation of his as the valuer? Why did the valuer get even basic facts incorrect on his valuation?
The file also shows the bank broke s125 (I think it was) by not giving a copy of the valuation to the borrower at the time of the loan. She only saw it many years later when she requested her file.

It is not valid in that it makes no reference to any customer of the shop applying for a loan and accepting the offer of a loan.

Fraud can be fraud without making reference to the method by which the fraud was carried out.
An employee of a business (a bank) who misleads / defrauds his superior by adding over 60,000 to the borrowers salary, for his own benefit in getting bonus, promotion or whatever, ends up costing his employer the bank a six figure sum when the property is eventually sold etc. The bankers actions had knock on effects for the borrower too, as if he did not believe fraudulently then the loan would not have been made.
The employee of a supermarket who steals a euro bar of chocolate, for his own benefit, and who misleads and defrauds his employers over same, ends up getting sacked. There is zero tolerance for wrongdoing and costing the employer money. And rightfully so.

Out of interest, how would it be if the Nurse in question gave you incorrect information regarding medication or treatment for say your 6 year old Child or your 80 year old Mother and it caused them serious harm. Would the nurse be to blame or would it be your fault for being stupid in acting on her expert advice?

Clearly according to the bankers it would be the patients fault entirely

the credit approval process in most banks is pretty rigorous, involving several sign offs at different levels and the credit risk officers are very experienced. So the idea that someone could add 60K to a nurse's salary and that it would go unquestioned over several reviews, seems highly unlikely.

And if the file shows it happened, and if the file also contained the nurses proof of earnings (copy of P60, payslips etc), then surely that is clear evidence of criminal wrongdoing? Given the bank will not explain how it happened?

my suggestion would be to report this to the regulator (the Central Bank)

As said before, the Central Bank will not investigate individual complaints, but contacting the Garda National Economic Crime Bureau has been suggested.

 

[Sarenco]

The bank was not acting in a fiduciary capacity in advancing the loan. Put simply, the bank was entitled to act in their own interests - not necessarily in the best interests of your friend. It's bizarre that you don't understand this at this stage.

Again, if the bank has a problem with their ex-employee or their valuer then they can pursue them as they see fit. They can even report them to the Gardai if they want.

But it has absolutely nothing to do with your friend and the bank is under no obligation to explain anything to your friend about their underwriting process.

It doesn't matter if the bank was reckless in making the loan. It doesn't even matter if the loan was only advanced to your friend because of fraudulent misrepresentations on the part of a bank employee or the bank's valuer.

She is still liable to repay the loan she obtained from the bank and if she can't afford to do so she will have to accept the consequences.

That's the reality. Ranting about the conduct of an individual bank employee or valuer will get you absolutely nowhere - it's a complete waste of time and energy.

 

[dub_nerd]

The banker assured the borrower, when he would not tell her what the capital and interest repayments would be, that she could afford them, had not nurses salaries increased so much in the previous 10 years ( 1997 - 2007 ) and anyway in 10 years she could roll over for another interest only period. Inflation would eat away at the loan amount, he said. The bank were mortgage experts and had decades of experience.

So to summarise my points again, which you ignored:

1. Your friend believed that bankers can mystically see a decade into the future to predict salaries, interest rates and inflation.
2. She knew the interest repayments before signing, and that she would spend 200k on them in the first ten years.
3. She wanted to be able to roll over the loan and spend another 200k, and still own nothing
   
4. The repayments had nothing to do with being misled, nothing to do with the fall in property prices, nothing to do with the recession.
5. She never did anything over the ten years when salaries and inflation did not match expectations.

 

[usernameinuse]

The bank was not acting in a fiduciary capacity in advancing the loan. Put simply, the bank was entitled to act in their own interests - not necessarily in the best interests of your friend.

But the bank did not act in its own interest. The bank will be at a considerable loss. The value of the property is much less than the loan amount. Neither did it act in the interests of the borrower, who they must have known could never repay the loan.
The banks advertise that they look for "proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future.". They did not do that in this case.

if the bank has a problem with their ex-employee or their valuer then they can pursue them as they see fit. They can even report them to the Gardai if they want.

But it has absolutely nothing to do with your friend and the bank is under no obligation to explain anything to your friend about their underwriting process.

If they had nothing to hide perhaps they can explain why the bank made out a fraudulent loan report concerning the borrower; why the valuer they appointed, a relation of the banker made out a false valuation, which was not given to the borrower like it should have been etc?
Given the bank will not explain how it happened, and there is evidence of criminal wrongdoing in the file, is it time to alert the GNECB?

So to summarise my points again, which you ignored:

1. Your friend believed that bankers can mystically see a decade into the future to predict salaries, interest rates and inflation.

Actually I did not ignore them, but here are answers again in any case. My friend did not believe that bankers could mystically see in to the future to predict salaries, interest rates etc. The banker would and could not say what interest rates would be in 1, 2, 5 or ten years. That was the excuse he used for not telling the borrower what her capital and interest repayments would be. As said already, the banker assured the borrower, when he would not tell her what the capital and interest repayments would be, that she could afford them, had not nurses salaries increased so much in the previous 10 years ( 1997 - 2007 ) and anyway in 10 years she could roll over for another interest only period. Inflation would eat away at the loan amount, he said. The bank described themselves, and advertise themselves as mortgage experts with decades of experience.

1. [*]She knew the interest repayments before signing, and that she would spend 200k on them in the first ten years.

No she did not, she was on variable rates and accepted the experts opinion that rates would fall. She did not know she would spend almost 200K on them in 10 years.

1. [*]She wanted to be able to roll over the loan and spend another 200k, and still own nothing
   
   [*]

If the bank had put her on a tracker she would not have spent almost 200k. The banker said she could roll over the interest only period.

1. 
   

   [*]The repayments had nothing to do with being misled, nothing to do with the fall in property prices, nothing to do with the recession.

2. She was not even told what her mortgage repayments would be (capital and interest) before she took out the mortgage. The file shows that. Would not such activity on the part of the bank be not allowed nowadays?

never did anything over the ten years when salaries and inflation did not match expectations.

She made changes to her lifestyle, never married or had kids or socialised much, due to financial worries. She "never did anything" says you! She kept working. She maintained the property and she paid almost 200k in interest. What more do you want her to do?

Now dub nerd I have answered your questions, perhaps you can answer one of mine, asked earlier. Do you think punishment is needed (for the banker and his relation, the valuer he appointed), just as a shop employee who stole a €1 bar of chocolate from his employer was severely punished?

Do you think the banker could have added over 60k to the nurses salary on the loan report by mistake? Not very likely, given the nurse supplied P60, payslips etc? And over 60k would be a huge increase on a nurses salary anyway surely?

If the bank deliberately falsifies information, why do they give the pretence that they will "look at your repayment capacity", as they advertise? They advertise and claim to check the borrower (quote) "will be comfortably able to afford your mortgage repayments with enough money left over to live your life in comfort."

 

[Suebee]

This thread is painful! It' the same rant over and over and not listening to anyones advice!
I'e heard of people being confused by finances but this clearly takes the biscuit. In my opinion either this nurse new full well she was borrowing well above her means and just ran with it or she is that stupid I would question how she ever managed to qualify! Bottom line she signed,she's paid 10 years she can't afford to ever pay the capital so its' time to surrender the property.

As for the bankers of course it shouldn't have happened but she also shouldn't have been so naieve as to take the loan!

As for the banker saying her salary would increase he probably also thought a young woman would get married and have an additional income to help pay the capital after 10 years. Maybe she looked in the same crystal ball and thought she would be married and have a partner to contribute too .. . Who knows? I mean she surely must of considered how she would pay interest and capital at some point!

 

[Sarenco]

But the bank did not act in its own interest. The bank will be at a considerable loss. The value of the property is much less than the loan amount.

That's the bank's problem.

Regardless, your friend would still have to meet her contractual obligations or suffer the consequences.

Surely you can see that?

Given the bank will not explain how it happened, and there is evidence of criminal wrongdoing in the file, is it time to alert the GNECB?

Again, the bank is under no obligation to explain anything to you or your friend.

Fire ahead if you want to make a complaint to the Gardai.

It will be of zero benefit to your friend. She will owe the money to the bank regardless.

She made changes to her lifestyle, never married or had kids or socialised much, due to financial worries. She "never did anything" says you! She kept working. She maintained the property and she paid almost 200k in interest. What more do you want her to do?

How about she pays back the money she owes as per the loan contract that she signed?

Or if she can't perform her side of the bargain, then she should just accept the consequences.

It's really that simple.

 

[usernameinuse]

the bank is under no obligation to explain anything to you or your friend.

So the banker appoints his relation, the valuer to value the property. The banker charges the borrower for the valuation, and refuses to give the borrower a copy of the valuation, saying the bank is under no obligation to give a copy of the valuation, it is just for bank use only to make sure the property is as it is.
The bank did not comply with S125 there.

Then many years later the borrower obtains the valuation after paying €6.35 for the file. And the bank or valuer are "under no obligation" to explain why the valuation seems to be for a different property (5 bedroom instead of 3 bedroom, double glazed instead of all but one single glazed etc).


Sarenco, you claimed "The bank was not acting in a fiduciary capacity in advancing the loan. Put simply, the bank was entitled to act in their own interests".

I pointed out to you "the bank did not act in its own interest. The bank will be at a considerable loss. The value of the property is much less than the loan amount."

You then replied

That's the bank's problem.

Not when the bank had to be bailed out due to its reckless lending : it then became the taxpayers problem. Can you not see that the actions of one or more employees in the bank, who mislead their superiors, has cost the bank dearly? And the bank did not fulfill its promise it advertises that they look for "proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future.".

Sure the borrower has lost the sizeable deposit she paid on the house, the generous interest she paid the bank on the property (almost 200k) and is willing to surrender the property.
Being part of the caring profession, she cares more about others than herself at this stage though. The question is, what can she do to stop a selfish rogue banker or bankers not following bank rules and doing the same thing to others in future?

 

[vandriver]

The question is,where is she going to live.Anything else is irrelevant.

 

[Clamball]

If you think this retired banker and the vaulerer did something illegal then complain to the Gardai and see how far that goes.

Buyer beware.

Did the nurse seek independent financial advise before she took out the €550K loan? If the banker would not answer her questions then why did she proceed?

In 2004 we did a house extension, using an online calculator we plugged in our salaries and it told us that we could borrow €500K, did we borrow it? Not a chance, we looked at our ability to repay and decided no way. I am sure if we wanted to let a bank salesman convince us that it was affordable it could have happened, but we had to make the final decisions ourselves, what were we comfortable borrowing.

 

[usernameinuse]

If you think this retired banker and the vaulerer did something illegal ..

Did they retire or were they sacked over similar fraudulent acts?

In 2004 we did a house extension, using an online calculator we plugged in our salaries and it told us that we could borrow €500K, did we borrow it? Not a chance, we looked at our ability to repay and decided no way.

Good for you, you were probably one of the few houses in Ireland in 2004 which had broadband and had heard of online mortgage calculators. Presumably the online calculator told you how much your monthly capital and interest repayments would be. That is more than the bank told the nurse borrower.

Buyer beware.

Yes, buyer beware with that particular bank anyway.

The borrower can rent somewhere very cheap and will never own any property. The banker should have foreseen that as they were the experts and were supposed to, according to their own publicity, look for "proof that you have the earnings and self-discipline to repay your mortgage not just for the first year but long into the future." As said before they advertise and claim to check the borrower (quote) "will be comfortably able to afford your mortgage repayments with enough money left over to live your life in comfort."

The question is, what can she do to stop a selfish rogue banker or bankers not following bank rules, making fraudulent documentation within the bank and doing the same thing to others in future?