Why are those who borrowed 100% LTV complaining?

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feltox

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100%LTV said:
I am one of the unfortunate first time buyers who applied for a mortgage in mid 2006. Like most first time buyers, I took the amount on offer to me from my bank to get my 1st foot on the property ladder.
This was over 7 times my base salary and a 100% loan to value mortgage.
I was not aware at the time I took my mortgage, but banks historically lent around 3.5 times base salary, at a maximum of 80% loan to value (LTV).
Around 3 years later, I now find myself also with €300k negative equity.

I am interested to hear from those out there who;
- Were give a 100% loan to value owner occupier mortgage during the boom.
- If your mortgage represented over 6 times you base salary at the time when drawn down.

Did you read the recent article in the Sunday Times Business by Damian Kiberd, 10-07-10 or some of the recent calls from IMF on debt forgiveness, negative equity, and 100% LTV possible negligent bank mortgage lending?

If you meet the LTV & mortgage salary multiple above and are interested in exploring what legal avenues might be open to us please email me outlining your position.

Regards

Stuart

stuart@letterboxes.org
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Just to clarify for others to comment

What was your base Salary in 2006?
What was purchase price of House?

What is your base salary in 2010?
What is value of house now?

€300k seems a lot of neg equity.
 
OP, presumably you are an adult who agreed to take out a 100% mortgage and took what was offered rather than what you needed? You signed a legal contract to this effect??

The same old story but the banks did not make you take out the loan with a gun to your head - as an adult you had a choice.

What avenues do you want opened to you? Do you want the banks to write off the debt and let the other taxpayers pay for your loan??

Is the problem now that you can't afford to pay back your mortage due to redundancy for example, or the fact you don't want to pay it back?


And yes, I am in Negative Equity myself but will do my very best to continue to pay back the loan as agreed in my contract that I signed.
 
Oh yes here we go again the pro-choice argument, the you signed a legal contract argument, no-one forced you argument.....blah, blah...

Why didn't you just pay most of your monthly salary to rent out a pokey little room from a property developer instead of wanting to you pay towards home???

We've all been shafted!

Good grief............
 
Please note 100%ltv is the opening poster here and not me.(Admin moved a reply I made and set it up as first one on this forum)

Personally I agree with last two comments made.

100%ltv please explain more of how you feel you were misled/missold a product
 
Going forward (!) we should learn from the mistakes:
- rules about income multiples / disposable income
- non recourse mortgages
but that does not help the people in current difficulty so we should:
-make bankruptcy an option for individuals in extreme difficulty
-NAMA for the people. restructure debt for individuals payable to a state bank, maybe use Anglo operation. This would be a restructure not a write off.

It is very important that banks, businesses and individuals that took excessive risk during the boom feel the pain of their wreckless decisions so that a more cautious approach to credit returns and the importance of individuals understanding and managing their finances is reinforced.

When ignorance becomes a defense or a reason to bail out people, we make education a liability.
 
While I do feel and sympatise with those people on 100% mortgages in negative equity I do think they should look at the choices they made themselves.

I bought my current house in 2005 - I could of bought a more expensive house or added an extension to the house I bought - But I thought about it and said no that despite the money being available from the bank I did not feel comfortable making the repayments and that they would be consumming too much of my income.

just because the money was offered did not mean people had to accept.

I think its wrong to blame the banks as society at large was to blame. Everybody wanted biger houses, new cars 2 holidays a year etc etc.

I myself feel into this trap and had significant CC debt - thankfully mostly repaid.

People who bought recently not only bought a house but also ahd to insist on furnishing it to a high standard sofas, kitchen tablesa spare rooms decorated etc. Very few of these people took a step back to think realisticaly how they would pay for all this, what will happen if we have kids etc

15-20 years ago people bought a house and then saved and scraped to decorate it over the next few years.

Taking legal action against the banks for giving you a mortage - come on. If anyone took out a mortgage 7 times their salary did they not stop to think how they could afford to repay it??
 
Shelleyb said:
Oh yes here we go again the pro-choice argument, the you signed a legal contract argument, no-one forced you argument.....blah, blah...

Why didn't you just pay most of your monthly salary to rent out a pokey little room from a property developer instead of wanting to you pay towards home???

We've all been shafted!

Good grief............
Click to expand...

My point is that the banks did not MAKE you take out a 100% mortage for 10 times your salary. You could have taken out a mortgage for a more reasonable amount....

I rented myself for years, got sick of this so took out a mortgage, I did not take what was offered to me but took what I needed for where I wanted to buy.

I'm in NE as I said in my previous post but it was my decision to move away from renting to paying my own mortage - the banks did not force me to make this decision!

People should be responsible for their own actions and not just blame the banks - they should take some of the responsibility themselves.
 
So, as an adult, you didn't think taking out a 100% mortgage at 7 times your salary was a bad idea?

For the most important purchase in your life, you didn't do a bit of reading up on it to find out basic information such as historical ratios?

And now that your investment has gone bad, you want me and others like me to pay for it?

Do you take cheque or credit card?
 
Threads about scenarios like this are why I don't post on AAM so much any more. What can you say?
 
peno said:
I think its wrong to blame the banks as society at large was to blame. Everybody wanted biger houses, new cars 2 holidays a year etc etc.
Click to expand...

I dont agree with this. Most people I know in NE (including myself) are in small 'starter' homes, 2 bed apartments etc... I personally dont know anyone who took out a crazy mortgage just to have a bigger house or two cars etc..

For a lot of 30 somethings, they bought within their means at the time, but their means have come down and the value of their property has also come down.
 
musicfan said:
The same old story but the banks did not make you take out the loan with a gun to your head - as an adult you had a choice.
Click to expand...
True - there was no gun to his head.

But do have a close look at the actions of the bank. They explicitly fuelled the property bubble by increasing their lending limits. Simple economics 101 rules of supply and demand will tell you that if you allow people to borrow more, prices will increase. They foolishly gambled that the bubble will never burst.

Most property buyers (particularly first-time buyers) could see no other option than to pay the market price at the time.

I'm not avoiding personal responsibility for buyers, but it is important to remember the context. I'm not sure where this leaves us. The banks are effectively defunct, so any attempt to hold them responsible will simply land a bill to taxpayers.
 
I do feel sorry for people - many of them inexperienced in buying property - being "conned" into jumping on the property market bandwagon. Personally I couldn't believe the prices that people would pay for property over the last few years & refrained from buying myself, but that is easy for me to say, seeing as we bought our 3 bed-semi 25 years ago & have no mortgage. We were considering "trading up" but didn't & I'm glad of that. (the main reason was that we hated to take on another mort after just having cleared it off - we were considered quite "sad" by some friends at the time). I'm not being smug, far from it, I just think that there is no point in berating those who fell into the "trap" & it was a "trap" - aided & abetted by the government, banks & estate agents. Looking back we can all see that it couldn't continue, but people where really being put under pressure to buy before they were priced out of the market. Some and I do stress "some" of the current media commentators were pushing property abroad up until very recently but they seem to have forgotten that - as have the newspapers who carried these ads & editorials praising them So lets have a bit of understanding for people who now feel trapped & find themselves in difficulties please.
 
canicemcavoy said:
For the most important purchase in your life, you didn't do a bit of reading up on it to find out basic information such as historical ratios?

And now that your investment has gone bad, you want me and others like me to pay for it?
Click to expand...

well we are paying for the developers and the banks,
 
It's a vicious circle. Everybody has their part of the blame to accept. Maybe some, more than others.
 
I have sympathy for some people in this position, but not everyone.

Firstly anyone who took out 100% LTV for investment properties was not an "investor", but were instead speculators and they should be made deal with the consquences of their own actions.

I also have sympathy for people who were buying homes, rather then properties to "get on the ladder". (a phrase I hate).

However a lot of people were very foolish. Why did people ever think that they could buy an unproductive asset, do nothing with it and that it would magically increase in value over a few years and they could sell at a profit, with no risk. ? Nobody forced them to buy.

Having said that, and whilst we all know the bank's lending policies played a large part in fueling the boom, on an individual case, I do wonder if there were cases of banks/mortgage advisers engaging in mis-selling. For example, if an mortgage advisor told an applicant to put false earning figures on the application, does the mortgage holder now have a case against the broker? Not sure what the answer to that one is. I can't help thinking of the endownment mortgage mis-selling fiasco in the UK in the 90s and wonder if there are elements of similer bad practices here
 
canicemcavoy said:
So, as an adult, you didn't think taking out a 100% mortgage at 7 times your salary was a bad idea?

For the most important purchase in your life, you didn't do a bit of reading up on it to find out basic information such as historical ratios?

And now that your investment has gone bad, you want me and others like me to pay for it?

Do you take cheque or credit card?
Click to expand...
Well said. It is very common human behaviour, when it comes to investments, that people take responisibility for their good investments, but blame someone else for bad investments.

peno said:
Very few of these people took a step back to think realisticaly how they would pay for all this, what will happen if we have kids etc
Click to expand...
I think this is what it all comes down to. Inadequate planning for adverse conditions in the future.

Complainer said:
But do have a close look at the actions of the bank. They explicitly fuelled the property bubble by increasing their lending limits. Simple economics 101 rules of supply and demand will tell you that if you allow people to borrow more, prices will increase. They foolishly gambled that the bubble will never burst.
Click to expand...
You are right, but that is what banks do, lend out money at a level of risk they choose. What is ignored by ALL politicians and pretty much all of the media is the question of "Where did the banks get the money from?"
If you want to pinpoint blame then you have to point to government and the central bank. The ECB significantly increased the money supply (created inflation) and lowered interest rates; then banks used that money to lend it out cheaply in a fractional reserve system that allows for up to 50:1 leverage. The ultimate fault lies with government and ECB for their inflationary monetary policy (not some lack of mystical regulation).
Banks also didn't gamble that the bubble wouldn't burst. They knew/gambled that the risks associated to a burst would be covered by governments through interventions/bailouts.

truthseeker said:
For a lot of 30 somethings, they bought within their means at the time, but their means have come down and the value of their property has also come down.
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But very, very few made any provisions for the rainy day. If you took on a mortgage that was realistically within your means and you didn't take out a credit union loan to pay for the deposit and furnishing, AND you took into account what would happen if you became un/under-employed, then you wouldn't have much to worry about. But this what people in general did not do.

musicfan said:
And yes, I am in Negative Equity myself but will do my very best to continue to pay back the loan as agreed in my contract that I signed.
Click to expand...

This is the only way to solve the problem.
 
PaddyW said:
It's a vicious circle. Everybody has their part of the blame to accept. Maybe some, more than others.
Click to expand...

I don't. I didn't buy an over-priced house and I spent a considerable amount of time and some expense trying to warn others of the dangers. For my effort, I was told that I was talking down the property, being unpatriotic, etc. After the bubble burst, I was then told I was merely lucky. Now, seemingly, it's all my fault too. I have absolutely no intention of the Fianna Fail scam that "since everyone's to blame, noone is to blame".
 
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