AIB What to do if you lost your home and are in the Prevailing Rate Cohort

[Brendan Burgess]

Edit: I moved this from the longer thread to focus on what to do.

Take a typical case of a voluntary sale for loss.

• You sold the house with the agreement of AIB
• You had a mortgage shortfall of €150k
• AIB wrote off €100k
• You agreed to pay the €50k remaining over 6 years @€700 per month

There are variations of this - including PIAs etc.

What AIB has done so far
They have applied the 12% write down to the shortfall

They have sent you a cheque for interest on the write-down

You should apply to AIB in the first instance for further compensation

You don't need to worry about the courts of the Ombudsman at this stage.

You should write a simple letter to AIB saying that if they had offered you a tracker at the end of the fixed rate, you would not have had to sell your home. You should ask for the full compensation package offered under the Central Bank Tracker Redress Scheme.

Then wait until you see what response you get from AIB.

For most people, getting offered the Central Bank scheme would be a very good result

1) Anyone who lost their home had their shortfall wiped and was paid €50,000 compensation whether or not the loss of the tracker was causal.
2) If the loss of the tracker was the cause of the loss of the home, then more compensation would be paid.

AIB will probably reject it

I have no idea what AIB's approach will be to this.
1) They might offer you the Central Bank Scheme
2) They might ask you for more information
3) They might make some other offer e.g. writing off whatever is left of the shortfall
4) The most likely outcome is that they will just reject it and tell you to go to the Ombudsman

Making a case for the Ombudsman
Wait until you hear back from AIB before deciding what to do.

If you have to make a case to the Ombudsman, email me and I will review your submission.

 

[JACJAC]

Hi Brendan,

I am part of the 5900 and I am thrilled with the write down and the interest cheque.

After spending 4 years between 2014 - 2018 battling with AIB on restructuring our mortgage and being treated like dirt by AIB which included some major mistakes on their part (to which they owned up to) that wrecked our credit rating for a couple of years. I had no more energy to fight with them.

In the end we had to sell our house for a substantial loss and agree that AIb would write down a portion of the remainder and we would pay the rest which we are still paying today.

Could all of this been avoided if we had a tracker rate – honestly I don’t know because I don’t know enough about interest rates and trackers to understand it fully, but based off a lot of the replies in the forum, it could have made the repayments much more manageable to a point that we could have sold our house a number of years later without the significant loss.

I suppose at the end of this and given that AIB wrote down our mortgage by a significant amount and we received ~€31k in redress and €11k from the interest cheque, do you think the Ombudsman would award more compensation for my case if I made a complaint.

I am not doing this to get more money (although that would be nice) I just do not want to let AIB away with how I was treated, but if there is only a slim chance that I would get compensation, I am not sure I am up for that fight.

 

[Brendan Burgess]

Hi JAC

I have updated the opening post to take a more systematic approach to it.

Can you provide some figures please

1) What was the balance on your mortgage when you sold the house?
2) What was the shortfall?
3) How much did AIB write off?
4) What deal did they do with you e.g. 6 years at €500 a month to clear the remainder after the write off
5) How much was left to pay on this before the 12% write down under the Prevailing Rate Scheme?
6) How much was the 12% write down? Is that the "€31k redress" figure?
7) Did they reduce the balance by this amount?
8) Do you still owe them money?

 

[RealDeal]

Hi Brendan,

I am in a similar situation - I "voluntarily sold" my home following court action by AIB

I was left with a 100k shortfall - in July that was written down to €76k and in August I received €9k interest
AIB refused to write off any of my residual and it now haunts me in terms of credit rating etc. (I was a temp staff member with AIB for 6mths years ago so they said there was a revenue issue re: BIK???)

I inadvertently complained in July to AIB when I replied to the letter outlining the 12% + interest ... I replied stating that I felt due to the loss of property I was due additional redress - they wrote to me with a complaint reference and said they would revert in due course.

I received one holding letter 1 month later and await further contact - I have a case "on hold" with the FSPO - originally on hold until Sept 11th however I have had no update from FSPO since.

I would be happy for AIB to make contact with a view to offering the CB's scheme but as yet no word...

 

[Nailligo]

@Brendan, would you feel the case is stronger for people who sold their houses? Mine was a surrender, not that I chose that route. Had I been on the tracker, I would have been able to afford it. I offered to sell it and discuss a shortfall, but that was rejected.
So I did argue against paying the shortfall when AIB sold it, and got that cleared. Would they argue that that was enough of a write down potentially?

 

[Brendan Burgess]

What do you mean that it was a surrender?

Please summarise exactly what happened and what the figures were
1) Sales price of house
2) Mortgage outstanding
3) Amount of arrears when "surrendered"
4) Shortfall - 2) - 1)
5) What agreement you reached over the shortfall

Brendan

 

[Nailligo]

What do you mean that it was a surrender?

Please summarise exactly what happened and what the figures were
1) Sales price of house
2) Mortgage outstanding
3) Amount of arrears when "surrendered"
4) Shortfall - 2) - 1)
5) What agreement you reached over the shortfall

Brendan

I wasn't given any option other than to surrender the house as part of an Insolvency arrangement (I know, not usual and I don't know how it was the only solution that the Bank and PIP could settle on but that's what happened)

1) 190k
2) 248k
3) 7k
4) 58k
5) I got it written off as the original agreement never explicitly said the shortfall would be collected. The bank were planning on chasing the estate of my Father (co-borrower) which would have been my Mother, which I had never agreed to as I was being treated a single entity by the bank at the time of going Insolvent.

Nailligo

 

[Brendan Burgess]

Hi

You have had a number of threads on this complex story before and I am not sure that you have told us what happened.

Forgetting about the prevailing rate issue, your father was a co-borrower. Are you saying that AIB did not pursue his estate for the shortfall? I am astonished at that. But so be it.

It's a fairly dramatic step to go for a PIA for arrears of €7k.

Was there any other debt written off?

What do you mean by "surrender"? Do you mean that you gave the house to AIB and they sold it?

Brendan

 

[Nailligo]

Hi

You have had a number of threads on this complex story before and I am not sure that you have told us what happened.

Forgetting about the prevailing rate issue, your father was a co-borrower. Are you saying that AIB did not pursue his estate for the shortfall? I am astonished at that. But so be it.

It's a fairly dramatic step to go for a PIA for arrears of €7k.

Was there any other debt written off?

What do you mean by "surrender"? Do you mean that you gave the house to AIB and they sold it?

Brendan

My father died in 2011,(he was co-borrower, not guarantor or anything like that and no life assurance taken out against him). I was to the pin of my collar with repayments at that stage but by 2013 things were even tighter so I went to the bank to talk about possible options for my mortgage going forward.
Initially the bank were willing to discuss shelving a portion of it, that was taken off the table.
Meanwhile, as everyone knows, the interest rates were going up so my repayments were getting higher. I asked for interest only, tracker rate, capital only, all options were refused.

I then offered to sell the house and come to an arrangement regarding the shortfall, that wasn't accepted.
I asked the bank to come up with suggestions and they told me to get financial advice (they paid), he didn't tell me anything I didn't know, we filled out the SFS etc and came back with the same numbers I'd already presented the bank.

They then told me get legal advice, I did. That solicitor suggested to the bank that they should write down a portion of the mortgage due to the death of a co-borrower and their lack of life assurance etc, AIB refused.
He then suggested, as I had, that I sell the house and write off the shortfall, they refused.

They then told me to get a PIP.
The PIP offered the same suggestions and over the course of a couple of years there were offers, refusals, and the bank finally decided they wanted me to surrender the house. In order for all of that to happen I would have had to go in to Insolvency or Bankruptcy.
I was given a protection certificate and that's when the arrears starting building up, they kept adding interest and marking me down as not paying despite the fact that the cert is meant to stop that.
That is why the arrears are low.
I didn't give up the house because of arrears of a minimal amount but I was struggling with repayments and needed assistance for a period of time. The bank kept refusing what I thought were reasonable offers and settled, with the PIP, on surrender.
The house went back to them in 2016, was sold in 2017 and they then approached me about the shortfall and my mother paying that. That had never been discussed prior to signing over the house so I argued that it wasn't going to be paid, funnily enough that was the easiest part of my discussions with AIB.

I then got the letter in 2018 and here I am.
I've tried to shorten the story, but there is a lot more over and back to it.

 

[Brendan Burgess]

So you had a shortfall of €58k written off as part of a PIA

Did you have to contribute anything to it?

Did you have any other debts written off?

Brendan

 

[Nailligo]

So you had a shortfall of €58k written off as part of a PIA

Did you have to contribute anything to it?

Did you have any other debts written off?

Brendan

It wasn't written off as part of the PIA, the bank tried to chase my Mother for the €58 (+interest that they had applied the entire time the PIA was being met). My argument was that as that hadn't been discussed prior to signing the PIA, she wasn't going to pay it.
They wrote it off because I fought them on it. I believe they were being underhanded, and chancing their arm, they mentioned it in passing in a phonecall one time after I checked the balance of the account online and got my ICB with the oustanding amount still on it.

I had to pay in to a PIA yes, but as they were applying interest the whole time, it made no difference. (AIB also claimed TRS on the account the whole time I was in the PIA, something I had to report to revenue)

I had a credit card debt of €3k written off. I had been paying that off but I was told by the PIP to stop paying it.

I know the situation is complicated, and sometimes I don't explain it clearly because I even get confused by the timescale. It would take a long time to go through every little facet of what happened but at the end of the day, had I been on the tracker rate back in 2013 when I first started to struggle with repayments, the mortgage would have been affordable.
The bank saw someone who was single, therefore they never treated my house as the 'family home' - I was on the back foot all along with the situation undermined even more by the interest rate situation.

 

[JACJAC]

Hi JAC

I have updated the opening post to take a more systematic approach to it.

Can you provide some figures please

1) What was the balance on your mortgage when you sold the house?
2) What was the shortfall?
3) How much did AIB write off?
4) What deal did they do with you e.g. 6 years at €500 a month to clear the remainder after the write off
5) How much was left to pay on this before the 12% write down under the Prevailing Rate Scheme?
6) How much was the 12% write down? Is that the "€31k redress" figure?
7) Did they reduce the balance by this amount?
8) Do you still owe them money?

Hi Brendan, this was our PDH that we changed to a BTL as an investment mortgage that we put all our savings into - this was to become what we thought was our retirement fund.

1) What was the balance on your mortgage when you sold the house? 263,510
2) What was the shortfall? 129,110
3) How much did AIB write off? 75,074
4) What deal did they do with you e.g. 6 years at €500 a month to clear the remainder after the write off - 800/month for 8 years
5) How much was left to pay on this before the 12% write down under the Prevailing Rate Scheme? 37,297
6) How much was the 12% write down? Is that the "€31k redress" figure? yes
7) Did they reduce the balance by this amount? yes
8) Do you still owe them money? yes, 5,911 - which we are going to pay off with the interest cheque

 

[Brendan Burgess]

8) Do you still owe them money? yes, 5,911 - which we are going to pay off with the interest cheque

Are you sure that this is the right thing to do?

If AIB's breach of contract contributed to the decision to sell the property, then you should be looking for money from them and not giving them money.

Brendan

 

[Brendan Burgess]

Hi JacJac

Could you check those figures for me please.

You reached this voluntary sale agreement back around August 2018

Your mortgage was €263k
The house sold for €134k
Leaving a shortfall of €129k

Write off €75k
Balance: €54,000 - I presume it was €800 a month for 6 years and not 8 years?

Balance before write down: €37,000
Write down :€31,000
Balance still due: €6,000




Brendan

 

[JACJAC]

Sorry Brendan you are correct.
This is confusing because of (not surprisingly) how AIB handled this.

The house was sold in Dec 2014 for 134,400. with a remainder of 129,110
The compromise agreement wasn't put in place until January 2016 with the mortgage balance at 133,810 (4700 increase due to interest)
Compromise amount 70,855 - residual debt 62,955

The compromise reduction from AIB did not happen until Nov 2016, by that time the remaining balance had risen to 138,624 due to interest.
In Nov 2016 AIB wrote off 75,074 (increase from January figure) remaining amount 63,794 (increase of 839 to me from January figure)
Repayment is 797 for 96 months | 797= 655 capital repayment +141@5.1% BTL variable interest rate
Total amount repaid by us 76,522

Balance before 12% write-down 37,297
Remaining balance now 5,911

interest cheque ~11,751 which I think is about 2000 off what it should be due to interest calculation.

 

[JACJAC]

Are you sure that this is the right thing to do?

If AIB's breach of contract contributed to the decision to sell the property, then you should be looking for money from them and not giving them money.

Brendan

Agreed, but if I refuse to pay this, it only affects me as it goes against my credit rating until AIB take the thumb out and sort this out.
That's one of the major problems I had back in 2016 and it took years to get fixed.

May aim was to pay this off and then get money back from them through FSPO rather than impact on my current credit rating.

I may have to get a redemption figure from AIB as well, but this in theory would also save me ~6k in interest as well.

 

[Brendan Burgess]

OK, so let's roll back the clock.

This was your family home.
You came off a fixed rate mortgage
They should have offered you a tracker at say ECB +1.5%
They did not do so.

So AIB overcharged you from [the date you came off your fixed rate] to December 2014.

1) What date did your fixed rate end?
2) Did you buy another home and keep the subject property as an investment?
3) How come they changed the rate to the Buy to Let rate? They don't normally do that.

What I am trying to get at here is, what would have happened if you had been offered a tracker when the fixed rate ended?

Some people got such a great write-off from AIB that it saved them much more than being on a tracker would have been.

For example if AIB had offered you a choice
1) Keep your investment property at a tracker of ECB +1.5% , or
2) Sell it and we will write off €75k of the shortfall.
which would you have gone for?

Brendan

 

[Brendan Burgess]

My aim was to pay this off and then get money back from them through FSPO rather than impact on my current credit rating.

On second thoughts, I agree with you.

But when sending in the cheque, you should send a covering note that the purpose is to stop the interest being charged, but you reserve the right to take action for compensation.

Brendan

 

[JACJAC]

OK, so let's roll back the clock.

.

So AIB overcharged you from [the date you came off your fixed rate] to December 2014.

1) What date did your fixed rate end?
2) Did you buy another home and keep the subject property as an investment?
3) How come they changed the rate to the Buy to Let rate? They don't normally do that.

This was a family home that we changed to a BTL as an investment when we bought another house.

Time line for the investment property is this:

Dec '08 - BTL standard variable rate
Mar '11 - 2yr Fixed interest rate
April '13 - 1yr fixed interest rate ( was not offered the tracker from the terms of Mar '11 agreement)
April '14 - BLT Standard Variable rate.

For example if AIB had offered you a choice
1) Keep your investment property at a tracker of ECB +1.5% , or
2) Sell it and we will write off €75k of the shortfall.
which would you have gone for?

This is a hard one as it deals in retrospect and hypotheticals but if I had the option to choose #1, I possibly could have kept the property for another 4-5 years and either sold it at a profit or at least break even given the property market today and I would not have had to take on the residual debt from the €75k write off option.

 

[LizzieMc]

Hello,

I have recently started following the boards. Thanks for all the great work.

This is our situation and am wondering if u have advice on a next move? We did make a submission to the BDO panel and were not rejected, still on hold.

Myself and now husband bought an apartment with our friend in 2006 for 360,000. We owend half, our friend owned half. We came off a fixed rate in Aug 2009 and were not offered a tracker. We were offered one in June 2007 after coming off our first fixed period.

In 2012 myself and my husband were living in the apartment with our 2 year old as our family home, paying our half of the mortgage plus rent to our friend.
We wanted to buy our own home and move on with our lives. Our 2nd child was on the way. We tried and failed to get a mortgage through various lenders in 2012 to early 2013, without having to sell the apartment. We were stress tested on rental income from the apartment relative to the mortgage rate we were on at the time (varied between 3 to 4.4%)

After failing to get a mortgage for a house without having to sell apartment, we looked at other options. Renting a house and keeping the apartment vs selling apartment at a loss so we could buy a house. Decision point was heavily influenced by our mortgage repayments vs the rent we would get for the apartment, so the rate we were on was a big factor in our eventual decision to sell at a loss in order to be able to buy a family home.

We have been through alot with AIB over the sale of the apartment, I cant even bring myself to go into it now. But at no time have we ever been a penny in arrears or 1 second late on a payment. Despite this we were required by AIB on 2 seperate occasions to go thru the arrears process.

AIB have also refused to allow us and our friend to seperate the debt.

What was the balance on your mortgage when you sold the house? 344
2) What was the shortfall? 166
3) How much did AIB write off? 0
4) What deal did they do with you - At first they said we woud just pay of the residual debt over the same time period and under same rates as we would have before the sale. Then after we were sale agreed and far into the sale process they demanded we repay all of it over 7 years, which would have meant we would never get a new mortgage for our own home. We didn't hand over the signed agreement, house sale went through and then they harassed us to sign up to 7 years until 2018 when I suspect they realised we were part of this cohort. We have repaid on our original payment schedule ontime and full at all times.

1) How much was left to pay on this before the 12% write down under the Prevailing Rate Scheme? 124
2) How much was the 12% write down? Is that the "€31k redress" figure? 43
3) Did they reduce the balance by this amount? Yes
4) Do you still owe them money? Yes 81 as of today

Sorry if this is the wrong thread? After re reading, not sure if a voluntary sale belongs here?