What is the most shameful lending criteria you have encountered?

K

Kerrigan

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My partner works for a debt management practice and came across a case recently were a builders laborer with a yearly income of 33k gross was offered a mortgage of 300k during the boom. Needless to say the are majorly in the hock. One of the worse cases of mis-selling of a product I have heard of.
 
Someone I know got €5000 loan from the local Credit union to go on a holiday to Thailand.
They had no job at the time - still don't. Had/have no intention of ever working, or paying back a cent. Do not have any other assets etc. Basically told the CU to stuff it, and got away with it.
 
I'd say 99% of mortgages, personal loans, car finance and credit cards were made from crazy decision making during the boom.

I laugh when people say, 'well so and so must have inflated their salary etc'. Absolute nonsence. The banks never bothered checking the vast majority of P60's, payslips etc. Surely they knew that unskilled workers weren't earning the wage they claimed. No sympathy whatsoever for the banks.
 
A friend of mine asked me for advice some years ago when they wanted to buy a house. They had an offer accepted for €180k. I reckoned that their salary was around €30k . At the time the salary multiples were only about 2.5. I strongly advised him against buying. He showed me his p60 - his salary was €60k . I was really surprised he was earning that much and I told him so. He told me that his employer ran a separate payroll system to generate false p60s for employees. He was actually earning only €30k.

Bank of Ireland had approved the loan in principle but refused it when the bank statements were produced. He went back to the auctioneer who said "no problem" and introduced him to a local mortgage broker. The mortgage broker said that IIB (now KBC) was the only lender not to check bank statements so he got the loan from IIB.

Of course the house doubled in value. He subsequently remortgaged it for a deposit on an investment apartment. He has now lost his job and is calling for debt forgiveness.

I am sure that others have similar examples of shameful borrowing.
 
I know someone who went into a credit union and asked for 45K to put on a horse. They laughed at him and then helped him to fill it out for a valid reason, they gave him the money and he duly put it on the 3.15 at Kempton. He was on the average industrial wage. Later he took redundancy and spend two or so years slowly gambling and drinking his way though that and now works in a pub. He was always a hard worker, had two jobs but no good with money.

A relation told me it was easy to falsify P60's. At one time they used to be hand written, I got the impression that during the boom everyone was at this. Self employed people also seemed to be able to produce wonderful accounts.

A relation of mine went into the AIB for a loan, cannot remember the amount, probably about 300K and they told him they would give him 700k, that he should be living in a house of that value, luckily my relation did not take up the offer. Since unemployed. I'll double check the figures on that later.
 
Bronte said:
I know someone who went into a credit union and asked for 45K to put on a horse. They laughed at him and then helped him to fill it out for a valid reason, they gave him the money and he duly put it on the 3.15 at Kempton.
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really? I find that difficult to believe.
 
This is an interesting story (I think). My sister (who earns about 30k/year and has done so for the last 10 years) was talking to a friend of hers back during "the boom", who is a Chartered Accountant (and now earns her keep acting as a liquidator). Chartered Accountant asked my sister why she hadn't bought a house, she was in her 30s & really should cop herself on & buy a place etc etc. To which my sister said, I don't earn enough money to pay a mortgage. Chartered Accountant said: just get a false P60. It's easy - I can help you get one.

Thankfully, my sister didn't take her advice.
 
Interest only mortgages on PPRs, 100% mortgages, mortgages of 5 and 6 times salary, 3 and 5 year fixed rate mortgages given specifically to avoid the more strict stress tests associated with variable rate mortgages. All criteria came with the blessing of the Central Bank, Regulator and the Government. :rolleyes:
 
Note that legal limits on LTVs and loan durations have still not been introduced.

100% mortgages are not illegal, as they should be, to prevent this ever happening again.

The max should be 80-85% LTV over 25 years for mortgages.

That may force house prices down, but people would have less debt.
 
Bronte said:
I know someone who went into a credit union and asked for 45K to put on a horse. They laughed at him and then helped him to fill it out for a valid reason, they gave him the money and he duly put it on the 3.15 at Kempton. He was on the average industrial wage. Later he took redundancy and spend two or so years slowly gambling and drinking his way though that and now works in a pub. He was always a hard worker, had two jobs but no good with money.

A relation told me it was easy to falsify P60's. At one time they used to be hand written, I got the impression that during the boom everyone was at this. Self employed people also seemed to be able to produce wonderful accounts.

A relation of mine went into the AIB for a loan, cannot remember the amount, probably about 300K and they told him they would give him 700k, that he should be living in a house of that value, luckily my relation did not take up the offer. Since unemployed. I'll double check the figures on that later.
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Surely we are not expected to take this post seriously.I have not heard such creative recall since Bertie took the stand at the Tribunal.
 
There were also 'agents' being met in hotel lobbies who were capable of getting mortgages through 'the net'. These called themselves the 'Patron Saint of no hope-ers'. You would laugh out loud if it wasn't so serious.
 
In 2000-6 I ,and almost anyone, could have borrowed incredible amounts. I did ,and was far too experienced and supposedly mature to have done so. My fault. So I feel honour bound to pay back every penny.
If I was young ,inexperienced and relatively poor and the banks were throwing money at me I'd feel less obliged, and I wonder whether I'd repay them.
 
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Falsifying P60s was not a new exercise in the boom/bubble. It was common enough in the 90s too. It just spread from the professional classes down.
 
oldnick said:
If I was young ,inexperienced and relatively poor and the banks were throwing money at me I'd feel less obliged, and I wonder whether I'd repay them.
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I was young, inexperienced and relatively poor. A broker friend assured us we could get a mortgage despite no savings or assets, 'all' we had to do was amass a large deposit of 'gifts' from family. That was the end of that.
But I believe that was the norm to, sure there were even products and ads based around making your family feel guilty enough to lend to you to borrow :eek:
 
I didn't expect to generate so much heat on this story, to clarify, the money was not used on one bet, I just flurished it a bit for emphasis, sorry for that. My husband does the odd horse himself, particularly when we are in Ireland or when they are big racing festivals, St. Stephen's day, Cheltenham, Aintree etc. I used to work many years ago in a pub so would have a fair idea of punters etc and gambling in general. Pre boom people used to do 5 Euro and 10 Euro bets, during the boom this went up to 50 Euro a pop and more, nobody seemed to be doing any less. I know people who would lay more than that, in the thousands. I also know people who take bets in pubs, become the bookie as it were. My first cousins husband who owns a pub for example does this as does a cousin of my husband from time to time. Anyone who's been to Cheltenham or Galway knows how crazy the betting world was, but it went mad altogether during the boom. Still today, just take Galway, the serious gamblers don't just gamble on the horses, there are huge card games going on all night. We are talking serious money.

The person in this story boom or no boom, would despite being on the average industrial wage do 500 Euro bets, this I saw myself, many times. When the money was gone he went home and didn't gamble again until the next pay check or income (which he got from a second job working in pubs). Sorry if the story is far fetched to some of you.

I also know a professional whose sister re mortgaged (took out equity 3 times) to fund lifestyle, cars holidays etc. I know someone who borrowed to build 2 houses, still has the houses, cannot sell them, cannot pay the mortgage, this person would have been on I'd say about 60K, one income. And some of my own family also got the celtic tiger bug, (which I'm not going to go into) but some others did not, one of those (PAYE)is hopping mad at having to pay for everybody else mistakes.

You only have to look at some of the stories on AAM to see how much people managed to borrow to see how crazy it all was. I bought in 2005 at the height of the boom, the bank was in such a hurry to give me the money they decided instead of giving me a normal mortgage that it was easier to dish it out as a commercial loan so as to avoid paperwork. It was so easy for me to borrow money it was unbelievable. No life insurance needed, no long form filling, no grief from head office in Dublin. To this day there is very little paperwork on it and I believe the bank doesn't have proper records as they were so eager to lend and get commissions. Recently they telephoned me about interest rates, for various reasons we had a dispute and somehow the bank discovered I had overpaid (I haven't gotton to the bottom of this yet) and they repaid me a 5 figure sum. Every January I get a bank statement showing account balance in previous January, my monthly repayments, the interest taken and balance owing as of December and despite this I apparently overpaid. To me that's a crazy story but it's true.
 
Most shameful loan?
Wasn't there a case highlighted in AIB when they did an audit of internal staff loans of someone being lent 500k and on a wage of 30k a year?

Priceless..
 
I've now clarified the other story. The couple had a meeting with AIB, and the lady there told them they should be living in a million Euro house and they were prepared to loan them 750K on a salary of 150K, one of which was in construction. That they should sell the house they were living in and the bank official thought they were idiots and laughted at them for not taking up the offer of 750K. In addition they had built another property to sell and that they should keep that and rent it. Another pre mad boom investment property was also to be kept.

This couple would have been in their late thirties about this time.

Remember this is not a Dublin home but an ordinary large town in the country. An hours drive from a major city.

They sold the newly built house for a large profit, kept the investment, it's performing well and I think about 10 years to go on it. They kept their home and recently put about 70K into doing a large extension to suit the family rather than moving. Needless to say the construction job went a few years ago, but has recently secured employment.
 
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