Ask The Expert: Week 5 Show Notes - Best Bits

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Personal Insolvency Practitioner’s and MABS staff cover a variety of topics on week 5 of our Ask the Expert series. Listed below are questions taken from each interview. If you’d like to hear more of a specific interview, scroll to the bottom of the page where the full recordings are listed as information sources.

What happens to the person who had the mortgage loan that's now been sold on to a fund?

Maurice Lenihan (PIP) on Live 95:

“In the short to medium term, the new owners are going to start invoking the review clauses. They're going to start looking at what they've bought and looking at what legal entitlements they have around how these loans have been restructured the first place, and how they might want to deal with them going forward.

It's happening on a small scale because a lot of the transactions have only just really just closed over the last number of months. It takes time for them to get into the details. I don’t want to be alarmist by any means, but what people can expect is for the original restructure, the original warehouse amount to be a focus or a focal point for the fund.

They’ll want to look at how your circumstances might have changed since the restructure was put in place. For example, has the value of the property increased? Which I suppose in many cases, it's likely to have been the case. Has your income increased to any significant extent in the period? Has your family or household structure change? Maybe dependence that you would have had like kids in school, but have come out the other end of school and you now have more debt servicing capacity.”

Has a ‘fund’ recently bought your mortgage? Watch our video that contains information about funds and how Abhaile can help.

What stage do you need to be at before being assigned a Dedicated Mortgage Arrears (DMA) advsier?

Gwen Harris (MABS) on Q102:

“Generally, when the mortgage account is heading into the legal process. If the borrower has been given notice that their mortgage is what's called unsustainable, a very technical term in one sense, but it just means that the bank feels that you're no longer able to maintain the payments and that the mortgage or the home is at risk.

They will sometimes deem it as unsustainable, depending on the information that you've given them. At that point, you might be looking at seeing a DMA. If I just back-track there to the unsustainable part, sometimes being determined by the bank on the information that you have given them, the bank require a document called a Standard Financial Statement (SFS), which is quite complex and very daunting for anybody to complete on their own and particularly they’re already stressed, the mortgage is in arrears, everything’s going on for them, and then they get this massive document that’s to be filled in. That is the role MABS would do with anybody in the mortgage arrears situation. It must be completed correctly because it's this document that the bank will rely on to make a decision about your mortgage.”

mpu 7 steps to mortgage arrears resolution

Is there always something you can do for people? Or is there sometimes that you have to put your hands up in the air and say, I can't do something, but I presume you go and explore every, every option. Is there always a viable option, under these insolvency schemes?

Louise O’Brien (MABS) on WLR FM:

“There is! There is always an option. Now, it may not be an option that somebody wants to sacrifice, but sacrifices have to be made. There is always an option, straight from a Personal Insolvency Arrangement (PIA), right up to bankruptcy. For instance, you might lose ownership of your home through Mortgage to Rent (MTR). You remain in your house for the rest of your days, hopefully, and with your family, but you don't have ownership of the house, it goes to one of the housing agencies such as Respond, iCare or Home for Life. For some people, that's a fantastic deal, and then for other people, they might take a while to come around to the fact that they're no longer in ownership of the family home.”

What's a Protective Cert in Personal Insolvency?

Jeanne Stapleton (PIP) on GB FM:

“It is a Court issued certificate to protect you from your creditors. It gives the Personal Insolvency Practitioner (PIP) a 70 day period to negotiate on your behalf with all of your creditors to come to an arrangement in relation to your debt. During that time, no creditor can contact you, nor can they continue with any legal action. If you are in the repossession courts, all of that is paused.”

When the bank comes up with a solution, does the person have to accept it?

John O’Callaghan (PIP) on C103:

“No, and the banks don't often come up with the solution. The banks are saying you owe X, how are you going to repay it, and that's where the breakdown of communication seems to occur, it falls upon the person in trouble to propose a solution. That's why assistance is needed. That's why there’s an Abhaile scheme out there, that’s why there is MABS, and that’s why there are PIPs. Our job is to put the proposal to the bank.

As soon as somebody is starting to get these calls, and starting to feel stressed, we would strongly recommend that they will come to us. I heard it said on the streets, these things don't work, or it has a low percentage win rate? Well, I'd like to correct that immediately and say that in our office, we're at 89-90% win rate, meaning that 89 to 90% of people we meet, we get sorted, in the first attempt we make to sort. The other 10% might take two or three more attempts.”

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A question was sent in by a listener “I’ve heard a lot about Mortgage to Rent at the moment; I have missed five repayments on the mortgage, I’ve been let go from my job. I’m not able to make repayments at the minute, would you advise me to try this mortgage to rent?”

Eugene McDarby (PIP) on LM FM:

“I certainly would. I think what he probably needs to know a bit more about the scheme. It's relatively straightforward. If somebody can't afford a mortgage and they have a housing need, they need to be approved for that housing need in the local county council. So they'll go into Louth county council, and they'll get a mortgage to rent application.

They'll get approved potentially for the Mortgage to Rent scheme . Now that's only the start of it, Sinead. Separately at that point, you would then contact a housing agency, now they're separate from the Housing Department in the local county council. The housing agency would typically buy the house and rent the back to you. In simple terms, that's how the scheme works. There are stringent qualifying criteria about the person's income level, the value of the house, and the number of people that are in the house. That’s normally the three qualifying criteria to get approval for Mortgage to Rent.

If you're earning a certain amount, you'll qualify, if the house is typically a three-bedroom house and you've got children, you would qualify, and then the value of the house is crucial. You can't have to the €500,000 house out in Termonfeckin. It has to be under a certain value; the current value that is approved for the Louth area is typically around €365,000 - €385,000.”

Mortgage to Rent thresholds for Cork, Dublin, Galway, Kildare, Louth, Meath, Wicklow are: House €395,000 Apartment/Townhouse €310,000 Rest of Country: House €305,000 Apartment/Townhouse €220,000

Information Sources:

Limerick’s Live 95 FM - Limerick Today with Joe Nash Episode 4 (18th June 2019)

Dublin’s Q102 – Mornings with Liam and Venetia Episode 4 (19th June 2019)

Galway Bay FM - Galway Talks with Keith Finnegan Episode 4 (20th June 2019)

WLR FM - Déise Today with Damien Tiernan Episode 4 (26th June 2019)

LMFM - The 11 – 1 Show with Sinead Brassil Episode 4 (26th June 2019)

C103 - Cork Today with Patricia Messenger Episode 2 (26th June 2019)

If you or someone you know is affected by some of the topics raised in the above discussion, call the MABS dedicated Helpline on 0761 07 2000, or visit mabs.ie/contact to find your local office and to learn more about how Abhaile may help.