Will a bank agree to a deal on shortfall after sale of property?

S

southside100

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Hi,

I'm just wondering if anyone has had any experience negatiating a deal on a Neg Equity shortfall after the sale of a property.

Basically we are stuck in a one bed apartment and we have a 5 year old son, all 3 of us sharing the same bedroom. We moved out and rented a house for a year but as we were trying to cover the mortgage on our apartment and the rent of the house we ran into arrears. We moved back into the apartment with the idea of clearing our arrears, tidying up our finances and moving out.

We've got to the stage now where we have to move, our kid needs his own space, we are cramped on top of each other.

Outstanding Mortgage: 310k
Value of property: 200k
Savings: None
Loans: None
My Salary: 48k
Wife's Salary: 39k

We were wondering if Banks would come to a deal over the Neg Equity left over, say if we offered to pay them 50k over ten years or something along those lines.

We feel we could manage paying rent and the neg equity repayments and most importantly give us a better quality of life.

Any advice would be greatly appreciated.

Best regards
Southside100
 
The awful thing about your situation is, deals are being done, but not officially. The person making the decision in whatever financial institution seems to be invisible, has no name, no address, is uncontactable, but yet they are present. How you contact them is a secret we would all like an answer to. Sorry about my answer Southside, but this seems to be the situation.
 
Thanks noproblem, I'm going to write to the bank for more information. I started this process a couple of years back and they do look for guarantees on how you intend to pay the shortfall before allowing the sale. The property has to be valued by a valuer of the banks choosing. I think your application then goes onto a "credit committee" where they discuss each case on its individual merit. But you are correct, you will never find out who made the final decision, you will just receive a letter saying Yes or No.

I will update this post over the coming months as and when I have more information.
 
I believe the bank will chase you for all the shortfall and will try to squeeze the money out of you even after a sale, if you can pay you probably should but if you cannot then don't try.
If you are decent with the bank don't expect them to be decent or fair with you, they have behaved horribly with me , you could ask the imho for some advice.
 
May I also add that your bargaining power is stronger when you still own the property.
 
michaelg said:
May I also add that your bargaining power is stronger when you still own the property.
Click to expand...
The problem is you don't own the property and unless the bank allows you to sell it, you can't. A lot of people forget this.
 
Hi southside100. I operate on the bank side of these deals. In terms of doing any deal you must approach this from a position of best strength. I.e. deal to be agreed before any agreement on sale of the property. Ideally you should seek assistance from a good negotiator. The short answer is that some banks are prepared to deal realistically with the shortfall up front and others are not. In circumstances where a bank is being unrealistic and not prepared to negotiate you need to put the gun to heir heads by threat of the insolvency option. Given the level of negative equity you are carrying and your incomes, I would see the 50K option as being reasonable. However 10 year timeframe would not be attractive to the Bank. I.e. If you came to me with 50k external funds in this situation I would definitely be prepared to talk. However, I would have difficulty in getting a 10 year loan for 50K accepted. Either way you will need to play hard-ball with most banks to get a deal accepted and a good negotiator will be in a better position to get you an agreement that you can live with!!
 
Good advice from Brendan here, playing hardball is the way to go.
Get advice from a pip or debt advice expert,
Don't let them control your life.

Btw I'm guessing renting out the apt is not an option ?
 
Banks have veto on insolvency arrangements , as far as I know only some banks will go for an insolvency arrangement, so a good advisor will know about your own banks policy.
Many banks are now selling unperforming mortgages to vulture funds, early indications seem to suggest these guys will be ruthless .
 
Thanks 44Brendan, michaelg and noproblem for your input, this is precisely the advice I need. I have been considering approaching somebody to Negotiate on my behalf with the bank. I will research this a little more. I did try MABS before but they said I had to be in serious arrears, no job, no options left before I could use their services which ruled them out.

If anyone has any suggestions about a person or entity to contact that would be willing to help out with the negotiations side of things I'd be really greatful.

And just to finish up, the option of renting it out is a non-runner. We tried this before and ran into Arrears as the rent doesn't cover the monthly mortgage repayments, then on top on this we have to pay income tax on rent received, monthly maintenance fees for the upkeep of the communal areas and then maintenance for the apartment itself, if the washing machine broke down for example, which did happen the last time we had it rented out and we had to pay for a new one for our tenants. There are a lot of extra costs in being a Landlord which we really can't afford.
 
Is there any possibility of your lender allowing you to port your mortgage to another property?

I'm sure you could get a suitable property for less than the outstanding amount of your current mortgage. I don't know what part of the country you're in but the median asking price for a three bed semi in Dublin, for example, is now €265k (per the most recent MyHome.ie Quarterly Report). Your lender would obviously have to accept that the balance of your outstanding mortgage would, effectively, be unsecured but they would be in no worse position than they are now (in fact they would be in a better position if the house was worth more than €200k) and they would have a happy, committed borrower.
 
Thanks Sarenco, it is an option we explored before, but because we had outstanding loans at the time and no deposit the bank refused our application. Although we have since cleared our loans, we still don't have a deposit, so its unlikely they would let us move to another property.
 
I think it would be worth re-visiting again as it seems to me to be the obvious answer. You can clearly service the full amount of the outstanding loan from your income but are simply in the wrong type of accommodation for your needs. Your lender may well want you to bring some additional cash to the table (to bring down the NE somewhat) and there would obviously be transaction costs but at least you would have a savings target that you could aim for and you could work out a timeline for addressing your problem.

Good luck whatever you decide to do.
 
Thanks Sarenco, it might be worth another shot alright. I'm going to get advice from a Financial Advisor who works for this bank to see what our chances are realistically of getting approved to move to a house without having a deposit.

We can't commit to staying in this apartment for another 2-3 years while we save for a deposit, our son in 5 and still sharing a room with his parents, its just not viable.

And there is no way I am in a position to clear down any of the Neg Equity, I have no savings, no rich parents and last time I checked I still hadn't won the lottery ;)
 
Yes, I can certainly see that staying where you are for any real length of time is not viable in the circumstances. Good luck with the Financial Advisor and do let us know how you get on.
 
Being dragged through The High Court for a Judgement....a shortfall of 110,000.....bank in 2011 said they would meet 50:50.....once i sold voluntarily and netted them 30k more than had they got receivers in - they forgot all about that and looking for FULL amount!!!! Danske!!!!!!!
 
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