Btl'ers Debt Written Off By

[Reck B]

http://www.independent.ie/business/personal-finance/property-mortgages/mortgage-holders-get-part-of-debt-written-off-2533407.html

By Charlie Weston Personal Finance Editor

Mortgage holders get part of debt written off

Thursday February 10 2011

A NUMBER of heavily indebted mortgage holders have managed to get some of their debt written off.

Bank of Scotland (Ireland), which shut down its operations here last year, last night admitted it was working with customers to "restructure their debt in exceptional circumstances".

It had previously denied it was doing any deals with people to allow them to write off some of their debt. The bank, which also had the Halifax brand here, is doing deals mostly with buy-to-let property investors.

However, brokers said a small number of residential mortgage holders had also managed to get some debts written off.

Brokers said the bank was cutting deals with people who were unable to repay the full amount. However, domestic lenders have so far shown a reluctance to restructure the debts of mortgage holders.

It is understood the bank is prepared to reduce the capital owed by people who are in negative equity and have defaulted on their mortgage repayments.

In a statement it said: "It is Bank of Scotland policy that mortgage customers are required to repay their debt in full. The bank will, of course, work with customers to restructure their debt on an exceptional basis and when the bona fides need arises. It is bank policy not to discuss individual cases in public forums."

Michael Dowling of the Independent Mortgage Advisers Federation said he had dealt with a number of instances where both buy-to-let investors and residential mortgage holders who were in trouble had managed to cut a deal, with the bank writing off part of the capital owed.

He said British banks tended to be far more flexible about debt write-offs than domestic lenders. But he stressed that did not mean they were a soft touch either.

Default

"They (Bank of Scotland) don't want people arriving at their door saying 'I owe €250,000. Here is €200,000 now'. But if you are in default, they will do a deal with you," Mr Dowling said.

He added that if the bank knew or suspected you had assets or cash, it would not cut a deal.

Mr Dowling recently helped a borrower who owed €1.8m on a home that was valued at €2.5m at the height of the boom. The house needed to be sold and went for €900,000.

The bank agreed to take the €900,000 and allowed the remaining €900,000 to be paid off over 25 years, interest-free. Repaying the capital only meant that up to €300,000 will be saved by the borrower in interest over 25 years.

"Bank of Scotland has written off Ireland as an entity. If a deal is to be done, they will do it and do it now rather than in 10 to 15 years' time," Mr Dowling said.

Dear Saver.

We have had to reduce the interest paid on your savings account down to 0.1%. I appreciate that this is a significant drop from the 5% you have averaged over the last 15 years and that, with inflation at over 3.5% this will mean that your savings, the fruits of your efforts, are being eroded away.

The reason for this is that the money we would normally be paying you in interest will be used to write off large chunks of debt owed by property speculators who have minimised your chances of buying a house to live in and brought chaos to the economy.

We must save the indebted at all costs!

Thanks for your understanding.

Yours,

The Bank of Scotland.

Ps Many thanks for your kind support in saving our industry a while back too, you're very kind indeed.

Edited February 10, 2011 by Reck B

[longtomsilver]

One could argue it's a smart move by the banks. it's a car crash and so they are salvaging all the bits and providing a loan on the car at 'book value' as if it were in good condition and not the Cat D that it is.

[eric pebble]

Dear Saver.

We have had to reduce the interest paid on your savings account down to 0.1%. I appreciate that this is a significant drop from the 5% you have averaged over the last 15 years and that, with inflation at over 3.5% this will mean that your savings, the fruits of your efforts, are being eroded away.

The reason for this is that the money we would normally be paying you in interest will be used to write off large chunks of debt owed by property speculators who have minimised your chances of buying a house to live in and brought chaos to the economy.

We must save the indebted at all costs!

Thanks for your understanding.

Yours,

The Bank of Scotland.

PS: D'ya wonna LIAR LOAN?

[Realistbear]

Dear Saver.

Thanks for your understanding.

Yours,

The Bank of Scotland.

PS: D'ya wonna LIAR LOAN?

Shows just how terrified the Banksters are of the coming crash.

This country wallows in deceit, corruption and lies. I am, possibly for the first time, really feeling a sense of shame in being British. I think the time to emigrate may be getting closer--at least in the US they are more open about their corruption because the lawyers punish it (Enron for example) and it seems to be more at the corporate-government levels than on the ground among the people.

Edited February 10, 2011 by Realistbear

[longtomsilver]

It'll be two liar loans.

I'm all probabilty they'll provide finance to the purchaser as well.

[tomandlu]

I assume that the debtor doesn't get to keep the property at the reduced price? Well, I say 'assume', but nothing seems sensible or fair any more, so who knows...

[GordonBrownSpentMyFuture]

You know I'm not even going to read that since the headline alone angers me so much.

[SomethingHasToGive]

You know I'm not even going to read that since the headline alone angers me so much.

The only way to get prices to come down is if people sell houses at realistic prices. The bubble has to be popped and Bank of Scotland seem to have decided that they have to accept that it has in Ireland. I'm guessing the reason that you are angry is that BoS is writing off our tax bailout money and profits from our savings to do it.

My main concern is that institutions crystalizing losses in Ireland will result in them delaying crystalizing losses in the UK as only so much loss can be absorbed per year without sparking a bank run and another set of bailouts.

[Democorruptcy]

The bank agreed to take the €900,000 and allowed the remaining €900,000 to be paid off over 25 years, interest-free. Repaying the capital only meant that up to €300,000 will be saved by the borrower in interest over 25 years.

That €900k might never get repaid.

Why has it only saved them €300k? Was it a 25 year fixed or are they expecting rates to be this low for 25 years? Surely it's saved them a lot more than that?