[*Owners simply abandon homes as debts mount * (https://www.independent.ie/national-news/owners-simply-abandon-homes-as-debts-mount-1231138.html)
Oh, how we are following the U.S. Walking away from mortgages has become increasingly popular there in the last couple of years. But how do our bankruptcy laws compare to those of the United States?
Are mortgage defaulters liable to be chased for their outstanding debt, or can they simply leave the keys with the bank and walk away from their liabilities? The article above doesn’t indicate that creditors are chasing debtors for assets beyond their homes, but could this change if the bank is unable to reclaim all of the debt on the sale of the home alone?
When will the bloody Irish media get the idea that you can’t just leave the keys back??
Not until one of the people who walked away and thought they were ‘free’ suddenly gets a court order from the bank looking for the balance.
Just wait and see … they will then complain to the media about not being able to start a new (debt-free) life !
Only a matter of time.
You can read up on Bankruptcy here
irishstatutebook.ie/1988/en/ … index.html
My understanding is that in Ireland bankruptcy last for 12 years or until you have paid half the debt back. In bankruptcy all your assets are liquidated house, pension, savings, and a certain amount of your earnings are taken to repay your debts.
If you walk away from a house in Ireland the bank sells the house and then you are liable for whatever shortfall there is. That is, if you have a mortgage for 500k and you walk away and the bank sells your place for 350k you still owe the bank 150k.
I’m sure the general public is about to get a lot more familiar with our harsh bankruptcy/debt laws here.
My Missus used to work for one of the well known banks chasing arrears, and mortgage cases often involved couples who have split up. The party outside the home ceases paying the mortgage. “I don’t live there anymore”, “I’ve nothing to do with her anymore” etc etc.
Very often the other spouse won’t be able to meet repayments (they may not even be able to meet half of it). So plenty of kids can look forward to not only mummy and daddy splitting up, but a nice move away from the family home into somewhere more “suitable”.
This should work two ways. What if a Bank goes belly up and can’t pay depositers back their balance. The Depositer should according to Irish Law follow the Directors and past Directors for reckless trading over the past six years for the balance lost less refund from Irish Government. Various statements from Central Bank Governors over the past seven years will attest to the fact that Directors of Irish Banks were involved in reckless trading practices.
Families that have difficulties with mortgages repayments could also have a case for reckless lending against the Banks and the Government for allowing such a chaotic situation to develop. Is there not a concept of Natural Justice? For five to six years after the above warning, Property Developers could not build property fast enough to match the speed that Bankers were lending out mortgages. You see, the Bankers thought that such lending followed by Securitisation was Risk Free! The Government or Leinster House could not see further than the $$$$$$$$$$$ in extra Revenue that this situation led rise to!
That’s what the Deposit Protection Scheme is supposed to be for.
I don’t agree with this. Reckless lending can’t happen unless people are willing to borrow recklessly.
There might be a case for making banks shoulder some of the legal costs involved in dragging people through court, there might be grounds for attaching financial health warnings to some products and advertisements.
But nobody hasa gun to their head in Ireland when it comes to buying a house.
It reminds me of the Shock Horror story, Bank gives credit card to girl with €28000 debt.
Things that help people who make bad decisions makes everything more expensive for those who make good decisions.
But when a bank hands out a mortgage it must value the property and be satisfied that the valuation is reasonable. The mortgagee is entitled to take some comfort from the fact their lender agrees with their decision to buy the property at that particular price.
Therefore if the property market falls dramatically, the lender has screwed up just as much as the borrower and should (at least morally) shoulder some of the blame.
Blue Horseshoe wrote
What I was on about is the difference between the total deposit lost and the government guaranteed amount.
People have lost their jobs for far less misdemeanors, then been the cause of people losing their lives savings.
The value of a property falling should have no impact on a persons ability to pay. The question of value or negative equity only comes into play if the person can’t keep up payments and has to sell.
First things first, people shouldn’t take out loans they can’t repay. If they default it WILL cost the bank money, that’s a given, the only question is whether it should cost the borrower, and I think it should. It should cost them dearly.
Taking out a loan on an assumption that your salary will increase, that the value of the house will increase, interest rates will remain low etc, is all very risky. Hiding a Credit Union loan from a mortgage lender, exagerating overtime etc, is also risky.
I don’t care if the bank encourages it, the borrower has to be aware that they shoulder a piece fo the risk. The bank has already priced in the risk into their interest rate, the problem is the borrowers rarely bother to price in risk, they borrow up to the absolute max and leave themselves little or no cushion.
Just because a bank will loan you 300K for a house, doesn’t mean the house will always be worth at least 300K, nor does it mean that you can afford 300K, or that you will always be able to afford the repayment.
It just means that the banks idea of your current credit worthiness, combined with the banks outlook for property means that they reckon you’re worth the risk from their perspective.
The Banks continuing to extend mortgages to people at a faster rate than Builders could put them up; after been warned about the ballooning of house prices in 2000 by the CB Governor is to say the least irresponsible. By this course of action, they jeopardised the lives of Mortgagors, Deposit Holders, Shareholders and staff. https://img.photobucket.com/albums/v383/orgybot/DuplexGraph.jpg
The Central Bank Governor’s 2000 warning was ignored. Why did the Government of the day not support the CB stance? House Prices increased by 100% since the warning. The people are led by their Leaders and can be swayed to buy over priced houses by former highly respectable organs of the State and Business. It is just not justice that people get screwed and loose their houses because the advice from Government and Pillars of the Community etc was highly prejudiced. It was at the Pillars etc that the CB warning was aimed at. Most people are unaware of warnings from CB, they can not be held responsible for heeding the Pillars advice.
The Government warns the Trade Unions against excessive wage demands. The CB warns the Bank in connection with the dangers of ballooning house prices. If either advice is not taken, then society is in for a hard time.
The people of Ireland deserved to be protected from those who set out to exploit them. The major institutions of the Irish State have been found wanting!
Of course it’s terrible that business misleads people into taking out bigger mortgages than they should. But is it any more terrible than business convincing people to:
- Buy a bigger more expensive car than they need.
- Buy a razor because it’ll make beautiful women want to
sleep with you.
- Buy an anti-acne cream because even one pimple will be enough to
stop members of the other (or same) sex wanting to talk to you.
- Buy Beer because it’ll make you better at talking to members of the
- Buy the lastest diet fad because this one will work and will make you
look like Beyonce.
Banks sell loans, just like Coke sells coke and Ford sells cars. It’s the business they’re in.
Of course it’s terrible that governments lead people to think that everything is great, until it’s too late and the lie can no longer be sustained, and when that happens it’s the people, not the government who are have to cut back.
If people are out there committing to 35 years of mortgage payments on the word of either the Government, or Big business, then that’s the problem we need to address.
The wierd thing is, if you ask 100 people if they believe politicians 99% of them will say no. If you ask them if they trust their bank the figures might not be as bad, but it’ll stiull be bad.
We don’t ask for compensation for people who buy brand new BMW’s, who end up getting them repossessed, and who discover that the car is worth a lot less than they paid for it.
It’s horrible but what Ireland needs badly is for a few people to make it into the newspaper with the truth about houseprices. the phenomenon of negative equity needs to be burned into the nations memory right beside Italy '90, Moving Statues and Eircom Shares.
I feel bad for these people, but compensating them just adds fuel to the myth that property is a one way bet.
There were lots of people going around over the past few years anyone who’d listen about the risks of buying houses, and warning that houses were overpriced. Most people didn’t want to hear it.
There job wasn’t made any easier by Government telling everyone that you’re a nut that should commit suicide. The job certainly wasn’t made any easier by sites like AskAboutMoney shutting down discussion about house prices because it’s wasn’t balanced enough, thus helping to reassure people who just wanted to be reassured, and helping dig the hole a little deeper.
Fianna Fail have probably done long term damage to their brand (at least I hope so). The banks have almost certainly done some financial damage to their balance sheets.
There’s lots of blame and pain to go around, but the people who borrowed and overextended themselves can’t be left off the hook. If they are we’ll have all of this again, but much worse.
Most people including many politicians do not know their ass from their elbow when it comes to business matters.
A house purchase will be the major business decision in people’s lives. This is not a luxury good, but a necessity. All houses went up in price, not just the odd brand here and there. The whole country can be ripped off, if those who are watchful for these things are not on their toes.
The CB warned Bankers and Government in 2000 that existing lending practices would result in a possible disaster. The warning was not heeded. The extra €100Bn debt which the country owes to outsiders as a result of Securitisation will very likely be not supported by property values. This is like a Net Debt that somebody slapped on us for losing a war, to be paid back €7,000,000,0000 annually over the next 20 years. It is goodbye to getting any tax from this quarter, unless we want all Mortgage Holders to default.
If families are not compensated for in some way; why should we keep the Central Bank? It serves no useful purpose as an overseer of banking practices. Because of its ineptitude; we are saddled with the greatest personal debt in the Capitalist Western World, not to even mention the $2Trillion External Debt that we so easily clocked up! USA External Debt is c. $10Trillion and the arse is falling out of the dollar.
Paddy the Mortgage Holder will have to discover oil in their back garden, and keep it quiet from the Government (less they give it away) to pay back the massive debt that Paddy the plumber. the local shopkeeper, the civil service worker so responsibly took on under the watchful eyes of the well paid business PhDs, MSc in banking, public administration and business personnel of CB and Govt.
Loser pays seems to be one argument.
Losers don’t exist but inadequate rules do, is a second argument.
The Law, seems to mitigate civil tolerance of ignorance on one hand and yet ignorance is the fuel the system needs to exist in the first place.
So what is it ladies and gentlemen, how do we want to live?
Who are you and how do you want to live I ask!
Well it seems that access to information is paramount. This site is testament to the fact that when access to relevant, impartial information is available, ordinary people such as myself without a background in economics can start to join at least some of the dots. Granted there are also invaluable insights provided by the more knowledgable posters on a regular basis, but it has really demonstrated to me at least, that our media are nothing more than parasites and mouthpieces for the various vested interests. Its possible that peoples actions could change if they actually knew what was happening in the world around them.
Of course theres also the distinct possibility that 80% (maybe more) would still prefer to look at Im a celebrity get me out of here.
Maybe Fianna Fail’s secret is they just realise that being sheep, most people just want to be led.
Yea, if you can’t join the dots its the slammer for you! Skid row for others! Those who can join the Dots fastest get to be Councillors and TDs, then there are those who are the DOTS and finally those who own the DOTS!!
The problem with joining the dots is this, If all the dots are not on the drawing table then even those with the ability to join dots can’t get a clear picture.
It’s true for PTG, its all about access to the info. Sadly dots are in scarce supply in Ireland and I’m prretty sure the purchase price can be high.
I think that covered by some “owning” the dots. Time for a central National “Dot” database so no one can hide there dot vested interests.