A Repossession Guide for Irish Home Owners

A Repossession Guide
for Irish Home Owners
by1 karl deeter
A Repossession guide for
Irish homeowners
By Karl Deeter,
Operations Manager with Irish Mortgage Brokers.
The purpose of this guide is to give you a clear
understanding of the arrears and property repossession
process in Ireland, the rules and codes of conduct banks
must follow and the steps you can take to reduce or
eliminate the damage to you, your family, and your
finances.
This guide does not constitute legal or financial advice.
It is not intended to give false hope, nor is it a cure for
money problems. Instead it has been written to help you
through a potential repossession and its ramifications.
I hope that should you be reading this out of necessity
rather than curiosity that you are able to keep your
home and not suffer unneccessarily.
There are some sample documents at the back of the
guide which you can edit to your own requirements. The
solutions to any problem is action, not inaction and for
that reason reading this guide will hopefully help you to
start doing something about your situation.
Sincerely,
Karl Deeter
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What is Repossession?
Repossession: The legal process by which an
owner’s right to a property is terminated, usually
due to default. Typically involves a bank or lender
taking a property from the borrower, it may involve
forced sale of the property at public auction, with
the proceeds being applied to the mortgage debt.
In simple terms: If you don’t pay your mortgage
then eventually the lender will take your home.
Arrears (missed payments) are normally the first
warning a bank gets regarding a borrowers situaiton,
reposssessions don’t jump out of nowhere, they are
the result of legal proceedings brought about by
arrears and they are a solution of last resort for banks.
Once you have missed a certain number of payments
your lender will likely initiate proceedings which, if
successful, will take several months to complete,
but will end with your home being taken back by
the bank. If you contest a repossession the time
frames may change, depending on your situation.
What people are involved in a
repossession?
First of all we will look at some of the people
involved in the property market and how being in
arrears/pre-repossession may relate to their trades.
Lenders: Lenders are (other than you) a primary
party to the mortgage, if you miss payments to the
lender then they will come after you eventually,
and when they do the law is on their side as they
are not the one breaking their contract.
For this reason we constantly advise throughout
this guide that you stay in contact with your lender
and don’t allow a lack of correspondence to affect
your case. The Collections Department is generally
the area of the bank that deal with you when you
are in arrears later in the guide contact details for
the banks and their collection teams are included.
Your home mortgage is normally covered under the
Consumer Credit Act and you can find details on
this at the Irish Statute Book website (see pg 4-5).
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The new code of conduct for Mortgage Arrears
was just brought out by the financial regulator in
February 2009 (links on pg 4-5)
Estate Agents: In Ireland estate agents generally
work with clients who are selling a property
and they deal with buyers and help the client
to determine the selling price of their property
and various ideas for presenting it to the market.
If you are in arrears or you can’t pay your mortgage
you may wish to sell your home, estate agents
will be happy to work with you as they can list
your property and make a commission/profit
from selling it. If you are in danger of getting
repossessed are they profiting from your misery?
Quite the opposite, they will help you to get your
property sold and potentially avoid repossession
and possibly bankruptcy.
If you are in the situation where a repossession is
likely an estate agent is definitely worth talking
to, they may be able to help find buyers for your
property, they will have a good idea of what price
your property is worth and therefore what price
may be required so that it is ‘priced to sell fast’ as
a protracted sale may have you working against
deadlines which the court system can dictate.
They may also have a list of clients who are looking
specifically for ‘distressed sellers’ by definition
that ‘seller’ is often a person in danger of being
repossessed. While this practice may not be
palatable, your situation is not the buyers fault, and
you must remember that if you can sell your house
and walk away without any debt that it is a far
better option than getting removed by the courts.
If your property is listed with an estate agent
is its also a sound basis for requesting a ‘stay of
continuance’ from the courts [allowing you to
stay put in order to arrange your affairs / move
etc.] as you are making every effort to meet your
obligations. It is important to deal with an agent
who is recognised by a professional body such as
the IAVI.
Investors: Naturally you need to know that a buyer
who is out looking for a distressed seller will try to
get as much as possible for as little as possible and
that buying property at less than its regular market
price is their job.
With this in mind you should still understand
that investors can solve your problem if they pay
a price that allows you to walk away with little or
no debt. As well as that – they may be willing to
rent the property back to you depending on your
situation which would mean you are free of the
debt of a mortgage and can still live in your house.
Brokers: Brokers are responsible for over half of all
the mortgages placed in Ireland, If you are having
problems servicing your loan it may be a good
idea to call a broker and get some advice, many
brokers are hold a QFA certification (Qualified
Financial Adviser), making them astute financial
planners. However, make sure that they are fully
qualified, regulated, and preferably are a member
of a professional broker trade body such as PIBA.
Solicitors: A solicitor is a vital point of contact in
a repossession situation. There is a system for legal
representation in Ireland if you cannot afford it. You
can get all the information required on the legal
aid website (see page 4-5). There are ‘Free Legal
Advice Centres’ (FLAC) as well who may be able to
help. Qualifying for help from the Legal Aid Board
may not apply as your house (an asset) may also be
considered in your application.
Barristers: Generally a barrister will only be
required for court appearances and the likelihood
is that if you can’t afford to repay your mortgage
then you won’t be able to afford their services either.
If you will be using a barrister they are generally
instruced to represent you by your solicitor.
Consultants: There are debt consultants, many
of them specialise in corporate situations such
as insolvency, examinership etc. For an individual
you may want to hire a person with expertise
in this area or you can go to MABS (Money and
Advice Budgeting Service) which is a state funded
operation, their contact details are below.
Contact Details for help:
MABS (Money Advice & Budgeting Service)
2nd Floor, Commercial House
Westend Commercial Village
Blanchardstown
Dublin 15
1890 283 438 (mon – fri 9 a.m. to 8 p.m.)
http://www.mabs.ie
Court Service
The Courts Service,
15 - 24 Phoenix Street North,
Smithfield, Dublin 7.
01 888 6000
http://www.courts.ie
Free Legal Advice Centres
13 Lower Dorset Street,
Dublin 1, Ireland
1890 350 250
www.flac.ie
Legal aid
Quay Street,
Cahirciveen,
Co. Kerry.
1890 615 200
http://www.legalaidboard.ie
[email protected]
Code of Conduct for Mortgage Arrears:
can be found on the Financial Regulators website
http://www.financialregulator.ie
01 410 4000
A good website reference for Irish law is
http://www.irishstatutebook.ie/
Look up the Consumer Credit Act 1995
Professional Insurance Brokers Association
(PIBA)
01 492 2202
www.piba.ie
(There is a map to help you find a broker in your
area)
The Law Society (Official Solicitor
Organisation)
http://www.lawsociety.ie
There is a link on the homepage for finding
solicitors
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AVOID a Repossession – what are
the options?
Reinstatement: If you were unable to pay and
then your situation changes for the better and
you are again able to service your debt then you
can simply continue with your mortgage, you will
still have to pay the arrears, penalties and perhaps
other associated charges/costs but you will not
have to go down the route of repossession.
Repayment: If you are able to settle your loan in
full then you will avoid repossession. It is fair to ask
‘if I couldn’t pay the mortgage monthly then how
does a person clear a loan in full?’ and generally it
is because the person receives financial help from a
relative or friend or they liquidate other assets and
pay off the loan, or they inherit money.
Term adjustment: If you hare having problems
repaying your loan the first line of defence should
be to talk to your lender and see if they will extend
the term of your loan. Increasing the term means
that you will pay less each month (although more
interest over the life of the loan). There may be
restrictions based on your age as to how long you
can extend the term. Your lender can provide you
with the repayment calculations depending on
your term and loan amount.With a term adjustment
you are still paying off the principle each month.
Interest only: An interest only loan is a loan
where the capital is not paid down, only the
interest is served, as an example, if you owed
€250,000 over 25 years and had a rate of c.
4% a repayment mortgage would cost about
€1300 per month before Tax Relief at Source
(TRS), and after 25 years you would be debt free.
However, with an interest only mortgage it would
be €833 before TRS but at the end of 25 years
you would still owe the full €250,000. For this
reason interest only mortgages are not (as a rule)
considered a good idea on a family home unless
you have good reason to do so. Having said that,
if your situation requires reduced payment in
the short term in order to keep your home at
the sacrifice of working down the capital owed
then it can be a great first step towards getting
by when money is in short supply. Your lender
will naturally have to agree with this first though.
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Payment freeze: This is where you literally don’t
pay anything for a certain amount of time, however,
this generally means that interest is added to the
principle and that can quickly add thousands
to your total cost of credit over the lifetime of
your mortgage. However, the ability to ‘freeze’ all
payments for a short amount of time can sometimes
give you enough room and time to get back on
track and this is something you can ask your lender
about should you find yourself in arrears. This is
also known as ‘Negative Amortization’ meaning
you owe more over time rather than less, be careful
about taking this option for anything other than a
short amount of time.
Refinance: Sometimes you will be able to
refinance away from a lender, but if you are doing
this because of missed payments it may mean that
your only other option is a specialist/sub-prime
lender who will actually charge a higher rate of
interest, however, if you have a lot of short term
debt and need to consolidate your loans in order
to meet your repayments then this may be the
only option. Before considering this choice get
advice! The pitfalls of consolidation are many and
about the only advantage is short term cashflow
improvement.
Loan modification: Sometimes a lender will let
you make several modifications such as moving
to a different rate so that you can service the debt
more effectively and mixing this with a longer
terms or interest only options, modification can be
a mix of anything described so far.
Arrangements/Repayment plans: This is where
you cannot make your repayments and you come
to an arrangement with the lender to pay a certain
amount so that they can recover at least part of
the debt. Should you do this be sure to get a letter
from them stating the ramifications of doing so, if
they are going to add interest to capital (negatively
amortize) your loan then it could mean you end up
worse off further down the road.
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Options where you will not keep
your home
Sell your home: If you are willing to sell your
home or have it on the market already then be
sure to ask for continuance from the courts while
you attempt to sell. This may buy you more time
whether you can pay the loan or not. The number
of repossessions in Ireland may be relatively low
(3 per 100,000 existing mortgages versus the UK
average of 200 per 100,000 existing mortgages)
but this doesn’t take into account the people who
sell up rather than have their house taken back.
This option is used far more often than any official
statistics in Ireland reflect.
Jingle mail: This is where you literally ‘send
back’ or ‘hand back’ the keys to your property,
while this is sometimes the basis of sensational
stories the reality is that it is an unwise decision,
you will still owe the full debt to the bank and
the terms around a judgement may be swayed
against you by taking this action. Communicate
with your lender before vacating a property
even if you have no intention of repaying them.
Send the bank a letter stating that you consent to
an order of possession, at least then if bank only get
the proceedings issued and executed a year later
you can argue that you should not be liable for the
interest or penalties accrued during that period.
Just because you give back your home it
doesn’t remove your obligation to repay any
remaining debt, at the end of the day your
home is merely a security for the debt and for
that reason the bank may not stop chasing you.
The judgement for the debt will be executable
(valid) for up to 12 years after the date of judgement,
this has massive implications for your future as you
will not be able to raise a mortgage or (generally)
any credit while this is outstanding.
Short sale:
This occurs specifically when
a person is in negative equity, if you owe
€300,000 on your mortgage but the property
is only worth €250,000 then your lender may
agree to let you sell at that price if you carry
over the €50,000 shortfall as a direct liability.
Nobody will buy a property for more than it is worth
so sometimes a ‘short sale’ is the only option –you
sell at a loss. The advantage for a bank is that they
clear the majority of the debt on your property and
they still hold a debt for the remaining €50,000 with
you personally. The advantage for the borrower is
that they will not have had to face a repossession,
the majority of the debt is cleared and they can go
rent somewhere cheaper and their credit history is
(hopefully) not completely ruined.
Consent to repossession:
This was partly
described in the ‘Jingle Mail’ section. If you know
you are not going to be able to make repayments
and you are willing to move out and rent then
you should talk to your lender about this option.
Basically you agree to vacate the property as soon
as required and you fast track the process so that
minimal costs arise and in return your interest is
removed from the deeds. If you have any equity
you may be forfeiting it, if you are in negative equity
and a bank was to agree to this you would have to
carry the remaining debt out of the deal.
The reasons for your arrears
In the next section we will look at some of
the preparation work you will have to do and
the letter of explanation you will be writing.
Generally arrears come about for one of the
following reasons. If one of these reasons apply
to you then be sure to outline everything you
can about it when drafting your Hardship Letter.
Job loss: The international financial crisis is
showing up in the jobless figures, if a person loses
their job [be they single, one person in a couple or
sometimes both people in a couple] it has an instant
and extreme effect on their finances. Our firm would
always be a strong advocate of ensuring you put
aside savings,if you have some savings this is a buffer
against missing payments and it allows you some
time to manouvre and find a new job, if you don’t
have savings then you will feel the pinch instantly.
Job loss is one of the number one reasons for
arrears that lead to repossession. There are
insurances that may cover you in the event of
redundancy, if you want to investigate this further
you can call our firm or a broker in your locality.
Redundancy: If you were made redundant and
received a lump sum then you need to figure out
how you will use that to get by until you enter
employment again, if you have enough to clear
your mortgage it may be an idea to do so, if however
you are left with very little from a redundancy then
you will experience a situation that equates to a
standard job loss.
Divorce: The hardships caused by a lack of
money are one of the top three causes of divorce/
seperation. Obviously the international financial
crisis will bring this hardship to many people
from varied backgrounds and on a wide scale, this
can result in a break up, if one person moves out
and leaves another to pay the mortgage on their
own then this can result in arrears and ultimately
repossession, it is vital to remember that parties
on a mortgage are ‘jointly and severably liable’ that
means that irrespective of who actually lives in the
property both parties to the loan are liable as a
couple and as individuals.
Death: Perhaps the most tragic circumstance is
that in which a person dies and the survivor of the
couple then faces a repossession order. Sometimes
when money is tight the first thing to go is the ‘life
assurance’ as it is seen as un-neccessary, this is a
mistake, if you die and don’t have life assurance
then your debt passes to the survivor. The only way
to prevent this is to make sure you keep up to date
on your life cover payments, if you are really against
the wall then you can consider taking out a policy
with less cover so that (should the worst happen)
the majority of the capital will be paid off but having
a huge debt and being uninsured against death is
essentially irresponsible. This is one of the reasons
that people must have a life policy in connection
with their homeloan and it is only under certain
circumstances that you can opt out of having one.
Make sure that your Life Policy is accurate, if you
have ommited any ‘material facts’ it may turn out
that you dont’ get paid or you receive only a very
small sum / premium refund. This could happen
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if you said you were a ‘non smoker’ when your
records show that you actually are a smoker. As
well as this, you should make sure that you are
not underinsured as this can have an impact on
clearing a mortgage in the event of death [if you
did an ‘unsecured top up’ this could be the case].
Health: If a person gets a serious illness, or if a child
does then it can have a huge impact on family life
and often this is also manifested in your finances. It
would be virtually impossible to manage if a couple
with a child encounter a situation where one of
the parents suffers a serious illness (for example
a stroke) and the other person has to become the
breadwinner and child/partner minder all at once.
Addiction is a health related matter than can
manifest itself in job loss, relationship breakdown
and health all at once.
We strongly advocate people having health
insurance, there is also cover you can get to protect
your income if you are out of work for a long
period of time and insurance you can take out of
you have a heart attack, stroke, cancer or other
types of serious illness, the downside of any of the
insurances mentioned so far is that they can be
expensive. Again, you can talk to our firm, a broker
in your locality or call an insurance company
directly if you want to find out about them.
Other: Sometimes there are mixtures of
circumstances as listed above or other reasons that
you cannot service your mortgage, the reasons
people get into financial difficulty are numerous,
the end result for many unfortunately are not,
often a seriously negative impact on your life and
decreased living standards as well as facing issues
such as repossession come into play.
Mortgage Interest Suppliment
If you are on social welfare there is a suppliment
available, taken from http://www.welfare.ie/EN/
Schemes/SupplementaryWelfareAllowance/
Pages/MortgageInterstSupplement.aspx
If you are getting a social welfare or Health Service
Executive (HSE) payment, you may qualify for
Mortgage Interest Supplement from your Local
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Health Office. It provides short term support to
help you pay your mortgage interest repayments.
The amount of Mortgage Interest Supplement
will be worked out by the Local Health Office’s
Community Welfare Officer and will generally
ensure that your income after paying the interest
on your mortgage does not fall below than a
minimum level. This level is the Supplementary
Welfare Allowance minus €18.
You will only get assistance with the interest
portion of your mortgage repayments. You will not
get help with the portion that pays off the actual
loan and house insurance. You should contact your
lender to discuss repaying the actual loan.
Mortgage Interest Supplement is subject to
conditions that:
• When you began your mortgage, you could
afford the repayments
• Your house is not up for sale
•The Community Welfare Officer considers
the amount of interest reasonable in your
circumstances
•It is reasonable to award mortgage interest
supplement having regard to any arrears on the
loan
Some income is not taken in account by the
Community Welfare Officer (CWO) when calculating
the amount of Mortgage Interest Supplement you
will receive. Since June 2007, income from the
following sources is not taken into account:
•Supplementary Welfare Allowance (SWA) rate
for your household circumstances
• Child Benefit
• Mobility Allowance
•Foster care payments from the Health Service
Executive
•Payments for accommodating children under
the Child Care Act
•Income from Gaeltacht students
•Grants or allowances from schemes promoting
the welfare of blind people
•Money received from charitable organizations,
for example, St Vincent de Paul
•Compensation awarded by the Compensation
Tribunal in respect of Hepatitis C contracted
from certain blood products, to those who have
disabilities caused by Thalidomide and to those
receiving compensation under the Residential
Institutions Redress Board
•Maintenance grants paid by Local Authorities
for Higher Education
• Domiciliary Care Allowance
•If you are getting the standard Carer’s Allowance
payment for caring for two people, the amount
of Carer’s Allowance above the appropirate
SWA rate for your situation (either the adult
dependent rate or the personal rate of SWA) is
not taken into account.
•The new half-rate Carer’s Allowance
•Since April 2008, any amount of Carer’s Benefit
in excess of the basic SWA rate for your situation
(either the adult dependent rate or the personal
rate of SWA) is not taken into account.
•Income from employment with the HSE as a
Home Help
• Respite Care Grant
•Guardian’s Payment (Contributory) and
Guardian’s Payment (Non-Contributory)
•If you are aged 65 or over and have a combined
household income greater than the rate of SWA
appropriate to your household circumstances,
you are allowed a disregard equal to the
difference between the maximum rate of State
Pension (Contributory) appropriate to your
circumstance and the rate of SWA apprpriate to
your circumstances
• €120 from rehabilitative training or
employment if you are in receipt of Disability
Allowance. Any earnings over €120 from
rehabilitative training or employment will
affect your Rent Supplement. If you are earning
above €120 you can be assessed using either
under Rehabiliatative Earnings Disregard or the
Household Income Disregard (but not both)
whichever is in your interest
Household Income Disregard is a certain
amount of your household income which is not
taken into account. To calculate your Household
Income Disregard first take the SWA rate for your
household circumstances from your total income.
€75 of any ‘additional household income’ income
above the SWA rate applicable to your household
circumstances is also not taken into account. 25%
of ‘additional household income’ over €75 is not
taken into account. There is no upper limit on the
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amount that can be disregarded.
‘Additional household income’ includes income
from employment, maintenance payments in
excess of €95.23, Family Income Supplement,
Community Employment (CE), Back to Work
Allowance, Back to Enterprise Allowance or FAS
course.
Maintenance and Mortgage Interest
Supplement
All of your maintenance payment up to €95.23 per
week is assessed in full. Any maintenance between
€95.23 and €170.23 is not taken into account.
25% of all maintenance over €170.23 is also not
taken into account.
Appealing a decision made by the
Health Service Executive (HSE)
If you are not satisfied with a decision made in
relation to mortgage interest supplement, first
find out why the decision was made by asking
the Community Welfare Officer, who will give
you the reasons in writing. If you have any extra
documentation to back up your case, give this to
the Community Welfare Officer.
Then talk to the Senior Community Welfare Officer
about the decision. They can change the decision if
your case deserves it.
If the decision is not changed, ask for an appeal
form. Put in as much detail as possible and keep
photocopies of everything.
If your appeal is not successful, you are entitled to
have the appeal referred to the Chief Appeals Office
in the Social Welfare Appeals Office. You can ask for
a face-to-face hearing and you can bring along a
representative to help you argue your case.
How to apply
Contact the Community Welfare Officer at your
local health centre. You can get the address of your
nearest health centre here:
http://findaddress.citizensinformation.ie/service_
finder/
Dealing with your lender
One of the most common misconceptions is that
your lender wants to ‘take your house’, perhaps
this is something people believe due to historic
relationships between landlords and tenants or
a belief formed after dealing with a banks credit
this should be on your mortgage statement or
other mortgage relevant documentation.
2.On the inside write down the main contact
number of your bank (in the appendix there is
a list of the banks operating in Ireland and their
contact details)
3.print off the ‘Information & log entry sheet’ at
the end of this guide and put it in the front of
the folder.
4.print off the ‘checklist’ at the end of this guide
and put it in the folder as well.
5.Complete as much as you can in the
‘Information & Log entry sheet’
Keep this folder/binder in a safe place
and dilligently keep notes of dates, times,
people you spoke to in the bank etc.
control department who may not always
treat you the way you hope to be treated. The
simple fact of the matter is that the bank want to
be repaid and they want your account to be up to
date.
Banks are in the business of lending money, not
becoming landlords or estate agents. If they have
to repossess your property then they will own a
house that they are not collecting their mortgage
payments on.
The extensive legal fees involved, then hiring agents
to sell your house and making any repairs required
to make your property marketable as well as doing
so in the current falling market make the prospect
of repossessing a property highly unnatractive for
a lender so it is still in their interst to work with you
rather than go straight to repossession.
COMMUNICATION IS KEY! At all times we advise
that you stay in close contact with your lender
and don’t ignore or disregard any emails, letters,
phonecalls or house calls you may receive.
Get ready to talk to your Lender
Here are some basic steps that we suggest you take
in order to keep yourself organised in the coming
months
1.get a ring binder or lever arch file and label it
with your loan account number on the front,
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Before Making the first call....
Now there are several other things that you will
need to have ready before making the first call..
1.Financial Analysis: Available at the end of the
document, take some time out to fill it in before
calling.
2. Documents on the Document Checklist: The
information and documentation you need to
have ready is on the checklist, gather it up and
put it in the folder you have prepared.
3. Know what you want: Do you want to keep
your home? This may seem like a rhetorical
question but you really need to decide if you
want to keep your home or not. If you could live
in the same area and rent for much less would
it make sense to move out, sell your house
(whether you profit/break even/lose) and get
on with your life? If the answer is ‘no’ then you
will need to be willing to meet your lenders
requirements in a responsible and timely
manner.
What about not keeping your home? This
doesn’t mean are a failure, it may ultimately
be the more responsible decision in your
circumstances. It is up to you to decide if you
want to take this path and if you do then embark
on it with no regrets but be aware that it will still
be frought with some difficulty especially if you
are in negative equity.
4. Explaining your situation: There is a sample
hardship letter included in this guide. Write one
out and be ready to send it after your first call.
5. Work it out: There are two sides to the coming
negotiations, your side and the lenders. They
want to be paid back, and if you want to pay
them and keep your home then it is useful to
have done your financial analysis, give them the
amount you can afford to pay and try to work
it out from that point rather than not doing
your homework and letting all the planning fall
instantly to the banks side of the negotiations.
– create a package – you can make suggestions
too! it doesn’t have to be totally one sided.
Pick up the phone.
The contact numbers for every major bank are
at end of this guide, when you call you may get
through to an automated system (write down the
order of numbers you have to press to save time on
future calls).
Always keep track on the ‘Arrears Log’ of the full
name, date, extension number, time, and topic of
any conversation you have with people at the bank.
The first person you speak to will likely not be a
decision maker and may refer you to somebody
else, eventually however, you should be assigned a
representative with your lenders collections team.
Make sure to ask your representative for their full
name, direct line number, mailing address, email
address and fax number. Document everything.
Normally you will receive a ‘workout’ package from
a lender once you inform them of your impending
arrears or if you are already in arrears. This will have
forms that you will need to fill in as well as budget
sheets and contact details for your credit control
adviser. It is likely that you already have most of this
ready in your folder.
It is vital that you complete these forms and send
requests for information back in a timely manner.
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Under the recent Mortgage Arrears Code of
Conduct (Feb 2009) one thing that really stands
against a borrower is avoidance of communicaiton,
you are only protected under the new code if you
communicate with the bank.
Ask for a Redemption Statement to be sent with
your workout pack. This will give daily rates of
interest, ask the lender if any charges or penalties
are reflected in the redemption statement and if not
have them send you a seperate one documenting
this. Keep this on file, because when it comes time
to work out your mortgage you will ask to have all
of these charges removed as a part of the work out
solution.
Ask your collections representative to read the
notes they have put on their system back to you,
this may sound exhaustive but it is important that
you know what they are putting on their system,
and that they are not relying on memory to put
notes on later in the day. Don’t leave anything to
chance.
You have taken the first major step, now you will
need to await your ‘Workout pack’ but in the interim
we will look at organising your financial analysis
Completing your Financial Analysis
Your financial analysis should be able to tell you
a lot about your position and help you decide
whether you will be able to keep your home or not.
Your lender will likely have their own financial
analysis included in the workout pack but instead
of waiting on that you can do the one enclosed
and it will help you to interpret your situation
immediately, giving you a snapshot of your
financial position.
Generally a financial analysis will include a few
sections.
Borrower information
Assets
debts
expenses
By completing the Analysis (the link for this is near
the end of the document) will help you to take
some of the emotion of decisions you may have to
make. If the numbers tell you that there is no way
to keep your home then you may need to accept
that eventuality, if they tell you that you should be
o.k. then take confidence in that.
Try to come up with some plans and ideas based
upon your financial analysis.
Remember, the collections team are not there to
be creative, or to exhaust every option you may
think of, they are there to collect a debt, the more
work you put into being prepared the easier it is
for them to agree to your proposals and come to a
conclusion that is to your satisfaction.
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Example of proposed solutions where you keep
your home:
‘Having done a financial analysis (attached)
considering our present situation, we can afford to
pay €950 per month, while we are aware this is not
the payment in full, our situation should improve
soon as I have taken a second job part time which
will make up the difference’
‘I am due a tax refund next month of €1,800 our
current arrears are €2,000. I am asking that you take
the €1,800 in settlement of the present arrears and
waive any additional costs’
Where you don’t keep your home:
’Having done a financial analysis we feel that
keeping our home is not possible. We are willing
to sell the property if you will grant a stay of
continuance for 6 months, we will provide proof
from a local estate agent that the house is on the
market and priced to sell fast.’
’I have done a financial analysis and believe it
will be impossible for me to meet my mortgage
obligations, I am also in negative equity, for that
reason I am suggesting you accept a short sale, I
have had two offers both of which are €50,000 less
than my current mortgage balance. I am asking for
a three month stay of continuance and we split the
difference on the shortfall’
Remember: Under Irish Law a bank and borrower
can basically come to any conclusion that both
parties agree to.
Come up with a plan A, then a plan B and a plan
C. Ranking them in the order that you most desire.
‘Plan A’ may be to have your arrears are added to
your mortgage and the loan repaid on an ‘interest
only’ basis for the next year, it really depends on
what you feel is best for you.
Negotiating
If ‘Plan A’ isn’t acceptable to the lender, then try
plan B then C etc.
Waive all additional fees/solicitor fees
Approve your repayment plan
Freeze payments
Grant a continuance while your home is sold
Loan modification etc.
Voluntary repossession with shortfall waived.
In negotiations ask for as much as you can, the
best case scenario is that a lender may agree to
all or most of it. If you don’t ask for something you
certainly won’t be offered it. Ask for the following
You can ask or suggest anything you want, naturally
a lender may refuse every request made, but if you
are making a reasonable effort and not trying to
make all the downside totally one sided they may
agree to certain aspects of your whish list. Don’t
give anything without getting something in return
and the golden rule applies GET ALL AGREEMENTS
IN WRITING!
If the lender does agree to any suggestions then
work with them, if they grant continuance while
your property is for sale then make sure the house
is kept clean when sellers come to view it.
along faster and the Judges decisions are final, but
a pro because if you are inevitably going to get
your property repossessed then the costs awarded
in a quick case are much less than those that will
arise out of a protracted one.
2: Letter before action
All actions must be preceded with a letter of
demand. In the event that they do not do this and
issue proceedings without a letter of demand this
may affect their claim for costs.
3: Issue of proceedings
The Repossession Process (Legal Proceedings)
The institution of legal proceedings is usually the
last resort for all financial institutions. However,
in the few occasions where they have no option
but to issue legal proceedings the procedure is
generally as follows:
This is in the form a civil bill in the Circuit Court and
an Equity Summons in the High Court.
The proceedings must then be served upon you, in
the Circuit Court this is done by pre-paid registered
post and in the High Court by personal service.
4: Enter Appearance
1: Court Choice
The bank or Building Society will have two courts
to choose from, either the High Court or the
Circuit Court. The choice of Court depends on the
rateable valuation of the property. If the property
has a rateable valuation in excess of €254 the High
Court has jurisdiction and if not the Circuit Court
has jurisdiction.
However, some banks or building societies may
opt to issue in the High Court as the process can
be quicker. However, if the rateable valuation is less
then they are only entitled to Circuit Court costs.
This is something to be mindful of and in all cases
if you are unlucky enough to have a re-possession
order against you, you are entitled to have the
costs taxed (i.e. measured and reviewed by a
costs expert). Although you are entitled to agree a
settlement on costs.
Remember, if your home sells for €300,000 and
you only owe the bank €250,000 that €50,000 is
yours and therefore negotiating costs will mean
more for you in the end.
One other factor to remember is that because the
High Court is often quicker than the Circuit Court it
can be a pro and a con, a con as the process moves
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Once these are served upon you in both cases you
should always enter an appearance as failure to do
so may result in judgment in default and once the
bank has judgment they can proceed to re-possess
your home.
You then have the option to seek further information
from the bank by way of a Notice for Particulars
and this entails a list of detailed questions.
5: Enter a defence
Once you have entered an appearance you must
file a defence. This should always be drafted by a
suitably qualified person and legal advice should
be obtained.
Once your defence is filed it would be prudent
to obtain discovery of all documents from the
lending institution and perhaps an analysis of your
account should be undertaken to ensure that all
appropriate interest calculation are accurate, as in
some cases banks can add incorrect interest and
penalties to accounts. Also a full review of your
legal documents should be undertaken.
Once discovery is completed, the matter is usually
set down for hearing.
6: Court Date/Hearing
At the hearing should you be unsuccessful in your
defence of the action, an order for possession may
be granted. In these circumstances you should
always seek a stay on the order for a period of time
if you wish to attempt to still sell the property. If
you are in negative equity it may be better to just
consent and walk away.
People ask ‘what is the general timeframe of a
repossession’? As long as you comply with the
process and respect the actions being taken then
the time it takes to get repossessed will take
(generally) about a year.
Valuation Office
Discharge releases the bankrupt from his
financial obligations to his creditors. This happens
automatically after 12 years. To secure an earlier
discharge, preferential creditors must be paid
together with the Official Assignee’s costs, and
other creditors must receive 50 per cent of what
they are due.
Irish Life Centre,
Abbey Street Lower, Dublin 1
+353-1 817 1000
[email protected]
www.valoff.ie
It is therefore very difficult for a bankrupt to have
himself or herself discharged and made a fresh
start. One vital change that is required in Irish law
is to adapt a system more in line with a vibrant
market economy, the present one is penal and long
lasting.
Bankruptcy
The most recent legislation is the Bankruptcy Act
1988
This is relatively rare in Ireland because discharged
from bankruptcy is only achieved with considerable
difficulty.
The result is very few bankruptcies in Ireland [just
nine in 2006 for instance]. Contrast this with the
situation in the UK where during the three months
to the end of June 2007 over 16,000 people were
declared bankrupt. This is due to the different
systems in both countries and the highly penal
nature of bankruptcy in Ireland.
When an adjudication order is made, notice of
a statutory sitting is advertised. At the statutory
sitting, the bankrupt is required to make full
disclosure of his or her property in open court.
When a debtor is declared bankrupt he or she
suffers the following consequences:
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All assets vest in the Official Assignee
His salary or income is liable to be attached in
favour of the Official Assignee
3. He is not entitled to operate a bank account
4. He cannot act as a director or actively take part
in the management of a company
5. He cannot be a member of the Dáil or Seanad
or be elected county councilor or member of a
local authority
Filing for bankruptcy is not considered a good
option for dealing with a repossession, however,
if your mortgage, when factored in with all other
debts means you feel this is the only solution then
get professional advice first.
Official Assignee in Bankruptcy
2nd Floor, 15-24 Phoenix St.
North Smithfield, Dublin 7.
+353 1 888 6164
[email protected]
Sample hardship letter: First Notification to your lender
Lender Name
Lender address
County
Date:
Re: Repayment issue regarding account number (insert account number) In the name of (insert
your name) for the property at (insert your home address).
Dear Sirs,
I am writing to you to explain my/our circumstances and how it has lead to me/us being in financial
difficulty. I/We am/are doing everything we can to resolve the matter in a timely fashion and I/we hope
to work with you in coming to a suitable solution.
[Insert explanation: earlier in the guide there is a list of the most common causes of people going into
arrears and getting repossessed. Just tell them the truth in the most simple manner that you can, include
dates and times as well as any other details you feel may be relevant as well. For instance: On the 10th
of December 2008 I was made redundant from my job and received only the statuatory minimum
redundancy, my wife only works part time and therefore we don’t have the income that we used to
have to service our loan. We were able to make Decembers payment but since then we have not had the
money to make a complete payment etc.]
During this time I/we would ask that you suspend any interest or charges on my/our account until we
have had an opportunity to communicate with you and find a resolution.
I/We want to ensure that you have the most current contact details for me/us.*
Telephone (home):
Telephone (work)
Telephone (mobile)
Email:
Other:
[if you don’t want to be contacted at work state this, and state the best hours to reach you] If possible I
would ask that you call me at (insert time in the morning/evening) as this is when I am best able to talk
and will have any necessary paperwork to hand.
Sincerely,
(insert name & signature)
(your home address)
*Note: A bank may have incorrect contact details for you, mobile numbers may have changed, you may
have changed job etc. So to ensure you can communicate effectively with them provide the contact
numbers where you can be reached, if you dont’ want to be called at your place of work then don’t
include that number. If you ask to only be contacted during certain times then make sure that you are
available during that time, if not then a lenders credit control team will have no choice but to contact you
at any time or place they can reach you.
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Documentation Checklist page
3 of your most recent payslips
____
3 months of your most recent bank
statements
(must be consecutive and current)
____
2 years P60’s ____
Termination/Redundancy letter from work____
Hardship letter
____
Completed Financial Analysis
____
Evidence of being on welfare
____
Recent Valuation (you can also look on the____
web and use houses for sale in your area
as a guide although eventually a qualified
Estate agent will have to do a valuation)
Financial Analysis
Download and print a personal financial analysis, if you need the help of MABS their contact details are
near the front of this guide. The links below are to documents from their online library.
This can be found on the MABS website
http://mabs.ie/publications/Self_Help/STANDARD_FINANCIAL_STATEMENT%20.pdf
Their personal budget sheet is also useful
http://mabs.ie/publications/Self_Help/Personal%20Budget%20sheet.pdf
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Arrears Log
Your personal details
Name:
Home Address
Date:
Email:
Telephone:
Mobile:
Collections team contact details:
My Account Number:
Contact person:
Address:
Phone:
Direct Line:
Email:
Fax:
Notes:
Date & Time
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Contact Name
Notes
Irish Banks contact details
Where possible the phone numbers are for the
collections department.
ACC Bank
Charlemont Place
Dublin 2
01 418 4000
AIB
Unit 3, Sandyford Business Centre
Sandyford
Dublin 18
[email protected]
1890 252 008
KBC Homeloans
Sandwith Street
Dublin 2
[email protected]
01 664 6446
Bank of Ireland
BOI Head office
Lower Baggot Street
Dublin 2
01 661 5933
National Irish Bank
3 Harbourmaster Place
IFSC, Dublin 1
01 484 0000
Bank of Scotland (Ireland) & Halifax
Chapel House
21-26 Parnell Street
Dublin 1
01 898 0013
PermanentTsb
56-59 Stephens Green
Dublin 2
[email protected]
1890 500 121
EBS
The EBS Building
2 Burlington Road
Dublin 2
1850 654 321
Springboard Mortgages
100 Lower Mount Street
Dublin 2
[email protected]
First Active
Central Park
Leopardstown
[email protected]
01 709 2094
Haven Mortgages
110 Amiens Street
Dublin 1
[email protected]
1850 565 500
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ICS
New Century House
IFSC
Dublin 1
01 611 3305
Irish Nationwide
Head Office Branch
Nationwide House
Grand Parade
Dublin 6
01 609 6000
Start Mortgages
Trimelstown House
Beech Hill Office Park
Clonskeagh
Dublin 4
01 209 6300
Ulsterbank
Unit 1, First Floor,
Block B, Central Park
Leopardstown D18
1890 587 587
Comments
Jack FitzPatrick – Chairman PIBA
“ I would like to compliment Karl Deeter on this
extremely useful and practical guide written in
plain English which should help people who
might be in danger of losing their homes due to a
downturn in their economic fortunes “
Ciaran Lynch - Labour Party TD, Cork South
Central
This is a very comprehensive and detailed guide
and very importantly is presented in plain simple
language. Given the economic climate its
publication is both timely and very relevant.
In the absence of any established mandatory
mediation service governing the area of mortgage
defaults, this guide acts as a very important
tool if (to quote the author) ‘you are reading it out
of necessity rather than curiosity’
Thanks to
Patrick Moran of Moran Solicitors.
www.lowcostlegal.ie
http://www.moransolicitors.ie/
Fergus O’Rourke [Barrister].
www.irish-lawyer.com
http://www.lawlibrary.ie/members/barrister.
asp?barID=143
Louise Hanafin of Legato Design
www.legatodesign.net
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