BoI agrees to €152,000 write-down of mortgage debt
A Bank of Ireland customer has secured a settlement on mortgage debt allowing her to repay the bank €18,000 – at a rate of €250 a month for six years – to settle an outstanding debt of €170,000.
Laura White, a 35-year-old nurse from Dublin, agreed a deal with the bank on Monday, settling a case taken over a shortfall arising from the sale of a house she voluntarily surrendered in 2009.
The settlement means she will not have to repay the remaining €152,000 but she will be prohibited from borrowing for six years and faces a €120,000 judgment if she fails to make the repayments.
This is one of the first settlements of mortgage debt to come to light in which one of the country’s main banks has written down mortgage debt to a level the borrower can afford to repay.
Tánaiste Eamon Gilmore has welcomed the agreement. “I welcome any measure that is taken by banks to help people who are in mortgage distress,” he said at an event in Kilmainham this morning.
Bank of Ireland has said it doesn’t have a policy of debt forgiveness and deals with distressed borrowers on a case-by-case basis.
The bank’s subsidiary ICS Building Society, which lent Ms White €245,000 to buy the house in Coolock in 2005, took a legal action against her in late 2010. She handed the house back to the bank as she was struggling to meet repayments and wanted to leave Dublin and take a job in the west.
She thought the sale of the house would cover the debt. Her lawyers argued the property should have been sold more quickly, before the market fell further, though there was a dispute over when it was surrendered.
Ms White said she made mistakes like many others a few years ago by wanting to buy property but now she wanted to repay the bank what she could afford.
“I am just grateful I can pay something back and they have shown leniency. You can’t get blood out of a stone but it’s important to pay something reasonable and what you can,” she said.
Barrister Marie Mullarkey, who represented Ms White, said both sides wanted to agree a repayment amount she could afford to pay and was motivated to pay. “It is in everyone’s interest to take a realistic view of what can be repaid,” she said.
The settlement is similar to the new out-of-court personal insolvency arrangements proposed by Government whereby banks agree to write down debts to a level that a debtor can repay over six years.
The bank seem to have fucked up somewhat here in terms of selling the property.
Her lawyers argued that if they had sold the property in a timely fashion when she handed back the keys she wouldnt have been left with such a big debt.
That is going to cause hassle for them in the future i would say. I know of a property up the country, the owner relinquished it to the bank almost two years ago and they have done fuck all with it. It wasnt worth a huge amount to start with, but two years idle it will be worth fuck all.
Banks refuse to lend on property thus asset value falls.
They are eating themselves.
Banks taken to task for refusing to sell homes in ghost estates
Saturday April 28 2012
THE head of the agency in charge of completing the State's 2,000 ghost estates has sharply criticised banks for "stupidly" refusing to sell houses to local authorities.
Chief executive of the Housing Agency, John O'Connor, told the Irish Planning Institute's annual conference that instead of selling the homes at reasonable prices, banks preferred to hold the properties as assets on their books.
In one case, a local authority had offered €140,000 for homes in one ghost estate, which was refused by the unnamed bank. A second offer some months later was also refused, even though the homes were unoccupied and deteriorating.
"There's no point in leaving housing idle," Mr O'Connor said. "One local authority offered to buy a number of unfinished houses to complete a development, but the bank wouldn't agree to the price being offered.
"Six months later the local authority went back, and offered €100,000 per house and the bank wouldn't sell. It's very stupid to have an asset lying there."
His comments were echoed by Declan Taite, a receiver with RSM Farrell Grant Sparks, who said there was often a "huge difference" in the prices people were willing to pay, and amount banks were willing to accept.
This was because accepting a lower price would impact on the bank's balance sheet.
The latest figures show there are 2,066 unfinished developments across the country, made up of almost 37,000 units, of which 18,638 are complete but vacant.
Chris McGarry, planning and development advisor with State bad-bank NAMA, said it controlled about 12pc of all unfinished estates, about 250.
Some 28 needed urgent works, and 15 had been dealt with and work was due to start shortly on the remaining 13.
Mr McGarry said that most of its property portfolio was based in the Greater Dublin Area, meaning it was likely to be developed in the medium-term.