Almost 15 years ago my parents took out a 15 year €220,000 mortgage to renovate my fathers old family home after my grandfather passed away. They used the proceeds of the sale of our family home to buy out the shares in the house of my fathers siblings inheritance.
During the recession they ran into arrears. 5 and a half years ago the EBS did a deal where my father paid X amount per month, it the mortgage would finish a year early but with an estimated outstanding balance of €99,000. In the interim dad managed to over pay now and again and the EBS sold our mortgage account to Mars Capital. So it was under Mars Capitals watch that the 5 year deal ended about 6 months ago but the outstanding balance at the end date turned put to be €88,000. Dad has continued to pay the same amount per month after the deal officially ended while he negotiated some kind of new repayment schedule. I think the balance right now 6 months after the deal ended is €85,000.
Mars new repayment offer was a 7 year term with an APR of 6.9% where he would end up paying €121,000 including interest.
While initially there was relief when he told us that Mars weren’t demanding the outstanding balance straightaway in one lump sum, ironically we quickly decided that we should actually help dad to do just that. He’ll be in his 80’s in 7 years! After all the interest he’s paid on this mortgage and the arrears over the years, it sticks in our craw to think of him having to pay another €36,000 in interest!
So one of my brothers made the very generous offer of loaning dad €45,000 interest free for 3 years and the max I can borrow is €33,000 over 5 years at 6.9% APR from An Post Money. Dad will have paid my brother back in 3 years with the same monthly instalments Mars were looking for. Dad then starts paying me those instalments. Now I’ll be able to make 3 monthly payments every month and clear the 60 month term load early by about month 43 and also save a grand or so of interest. Dad continues to pay me those instalments for another 21 months till I am paid back in full too.
So basically doing it this way means we get the house deeds back within weeks (ironically a few months earlier than if the mortgage had run its normal 15 year course.), dads finished paying everyone in just over 5 years and finally and most importantly he’ll have paid about €5,000 in interest on my An Post loan instead of €36,000 in interest to Mars Capital. Even if dad decided to then pay my brother a few more months of instalments at the end as interest for his €45,000 loan, we’d still have saved him €25,000 in interest.
The elephant in the room of course is that myself and my brother can only come up with a max of €78,000 but the current balance is €85,000.
So the question is do Vulture Funds like Mars want to close accounts they bought at huge discounts ASAP to get them off their books just like the originating banks did, in which case the might be amenable to some write off of part of the debt if the account holder can pay them a large lump sum quickly. Or would that not be an incentive to them and they’d actually prefer if we took the 7 year deal that earns them another €36,000 in interest over the full term?
If you think they would prefer it to be cleared straight away and are likely to be prepared to write off a portion of the debt, can you suggest any negotiation tactics to help us maximise the write off.
For example considering they probably bought the account from the EBS for 50c on the Euro and are already probably in profit, whats a realistic starting point for us? Tell them we can source €65,000, they counter offer a write off of €5000 to €80,000, we say we can maybe push it to €70,000, they say no but counter offer €75,000, we say….’DEAL!’ LOL
Is hoping for a €10,000 write off realistic or are we dreaming?
[EDIT 1] Thanks for all the advice yesterday folks. Now maybe the following is almost exactly what some suggested and I just misunderstood it yesterday, but the seeds were definitely planted by what many of you suggested. The idea I had today, was if they say NO to any significant writedown despite us leveraging a significant available lumpsum and immediate payment of same, is to then ask them to change the 7 Year Term to a 3 year Term where the total interest would be about E9,300. Dad pays them what he was going to pay them, I pay dad what I was going to be paying on an An Post loan anyway and my brother pays the same amount as me. He doesn't hand over any of his savings at all and I haven't taken out a new loan in my name. Combined those three amounts are the full monthly repayment of a 3 year E85,000 loan at 6.9% APR.
Mars fully paid back in 3 years instead of 7. Mars get to hold onto the deeds for another 3 years though. At the end of the Loan Dad owes both me and my brother about E23,000 each. He starts paying us back 650 each per month which takes him another 3 years. He's totally done and dusted in 6 years.
Compared to yesterdays plan/idea, we still saved about (36000-9300) E27,000 in interest as opposed to yesterdays plan which saved (36000-5000) E31000 in interest, , get the deeds back in 3 years instead of within weeks. However, didn't have to hand over savings or take out more loans and knocked 1 year off the amount of time dad would be paying back that monthly amount from 7 to 6 years. The only way I see that not being a goer is if Mars won't take me and my brothers monthly contribution to the repayment of the proposed 3 year loan into account because its not official income of dads and not guaranteed. What do you folks think of that alternate idea??
Theres Pro's and Cons to both plans. I've taken on board a lot of your concerns. Perhaps on balance it only makes sense to persue yesterdays plan where my brother is handing over a significant lump sum of savings and I borrow up to 33 grand to hand over, if we can use that significant combined lumpsum and immediate payment potential to leverage not just the shortfall from the 85000 we might have had but to leverage 15 or 20 grand of a write off......and most of you thought a 7 or 10 grand write-off was dreaming.
[EDIT 2] Unless Mars actually would prefer the likes of €65,000-€70,000 right now rather than €94,000 in 3 years earning them €9,000 interest or €121,000 in 7 years earning them €36,000 interest (unlikely I know), tbh they probably give an immediate definitive NO to a write off of anything knowing we have X amount to help dad out with over the next few years anyway. Upon further thought we’ve probably come full circle back to accepting the 7 year €85,000 loan and assuming there is no over or early payment fee, simply give dad €650 each per month which combined with his official payment would reduce the term to about 3 years and the interest paid to €9,000 anyway. Functionally the same as asking for an official 3 term but without them saying NO because our contribution wasn’t formal income of dads or guaranteed by us and it also gives us the freedom to skip a months payment to dad here or there if need be which wouldn’t be possible if we were to set the term as 3 years from the getgo.
[EDIT 3] The downside of talking to a 77 year old man with hearing issues. LOL. I arrived at a figure of E36,000 interest by multiplying the repayment amount dad said Mars wanted for the 7 year E85,000 loan of approx. E1,450 x 84 months = E121,800-E85,000=E36,800 in interest. However when I found a loan calculator that let me select more than the E75,000 limit most calcs had and also select my own interest rate figure (Turns out its 6.52% not 6.9% according to dad), for E85,000 loan it gave the following numbers, E1,263 per month, Total payable E106,094 and E21,094 interest. I validated the result of that calculator by running the same numbers through the An Post Money loan calculator too and the resulting repayment, total and interest figures where the same.
Probing dad further to try and reconcile this, I think whats happened is he said they told him according to their review of his financial statements given to them, they've worked out he can afford to pay them up to E1,450 per month (not that the repayments of E85,000 over 7 years at 6.52% would necessarily be that high.) He seems to have interpreted it as them telling him thats what the repayments would be. Anyway, this will be cleared up when they send him the 'loan offer' via post.
In the interest of not letting ourselves get too optimistic and trying to prepare in advance what to say when we ask for some write off, we've been running hypothetical scenarios, trying to put ourselves in their shoes. "If we say X and they say Y, we say A, however if they say Z we instead say B etc etc. After doing this running of scenarios, we had kind of convinced ourselves again that we didn't have a hope in hell of any write off at all.
EG. If we are coming out the gate asking for 20, 15 or 10 grand write-off by saying we have access to a 65- 75 grand lump sum, they might reason that they don't have to offer Dad any write off because his sons can just help him with repayments with that money instead and they still get their (corrected) E21,000 in interest over 7 years and considering Mars seem to be one of the Vulture funds in for the long haul, they might be happy to wait 7 years to get that full E106,000.
So we went to bed last night still planning to chance our arm (because it costs nothing to ask) and still ask for a write off of some of the balance owed, but with the expectation that there was a 95% chance they say No, and thus if we can't leverage a large lump sum for a write off, we definitely then proceed with the plan to just accept the E85,000 over 7 years loan offer and my brother and I don't hand over savings of and get loans for 10's of thousands to give to dad, instead we give him E500-E650 each a month to over pay the loan every month reducing its term to about 3 years and interest from E21,000 down to about E8,000.
....and this morning I woke up and my subconscious must have been still working on the problem while I was asleep, because my very first thought when I woke was the following: If dad at age 77 walked into any financial institution and asked for an E85,000 loan over 7 years he would get laughed at to his face. Frankly its amazing he even managed to secure a 15 year mortgage at an age of about 62 15 years ago!! So why 15 years later are Mars prepared to let him refinance that E85,000 outstanding balance owed to them over 7 years by the end of which if he lives that long he'll be 83 or 84 years old......because they think they have no other option to get their hands on the outstanding balance while he is still alive!! Their actuarial advisors/calculations are surely telling them that theres a reasonable chance dad will die before the loan is fully paid back. Surely they also know that dads kids can delay and stymie the sale of the house they are inheriting from dad in probate or court that this loan is secured on and where the loan to value ratio is by now probably, but definitely soon in single digits, for god knows how long. My point is, they may very well take all that into account and think to themselves that 1 in the hand is worth more than 2 in the bush so to speak. ie. Better to get E65,000-E75,000 within a couple of weeks and be done with this 77 year old 'Customer', than risk forcing him to take out the refinancing loan and risk have him go senile or die within the 7 year term and then suffer all the headaches and delays and potential legal costs in leveraging their 'Security' of the loan and trying to force the sale of the house to get the rest of the money back. (2 of us might actually want to get a mortgage on it to buy the other two siblings out of their inheritance and stay in the house ourselves (Kind of like dad did with his siblings when Grandad died)
During the recession they ran into arrears. 5 and a half years ago the EBS did a deal where my father paid X amount per month, it the mortgage would finish a year early but with an estimated outstanding balance of €99,000. In the interim dad managed to over pay now and again and the EBS sold our mortgage account to Mars Capital. So it was under Mars Capitals watch that the 5 year deal ended about 6 months ago but the outstanding balance at the end date turned put to be €88,000. Dad has continued to pay the same amount per month after the deal officially ended while he negotiated some kind of new repayment schedule. I think the balance right now 6 months after the deal ended is €85,000.
Mars new repayment offer was a 7 year term with an APR of 6.9% where he would end up paying €121,000 including interest.
While initially there was relief when he told us that Mars weren’t demanding the outstanding balance straightaway in one lump sum, ironically we quickly decided that we should actually help dad to do just that. He’ll be in his 80’s in 7 years! After all the interest he’s paid on this mortgage and the arrears over the years, it sticks in our craw to think of him having to pay another €36,000 in interest!
So one of my brothers made the very generous offer of loaning dad €45,000 interest free for 3 years and the max I can borrow is €33,000 over 5 years at 6.9% APR from An Post Money. Dad will have paid my brother back in 3 years with the same monthly instalments Mars were looking for. Dad then starts paying me those instalments. Now I’ll be able to make 3 monthly payments every month and clear the 60 month term load early by about month 43 and also save a grand or so of interest. Dad continues to pay me those instalments for another 21 months till I am paid back in full too.
So basically doing it this way means we get the house deeds back within weeks (ironically a few months earlier than if the mortgage had run its normal 15 year course.), dads finished paying everyone in just over 5 years and finally and most importantly he’ll have paid about €5,000 in interest on my An Post loan instead of €36,000 in interest to Mars Capital. Even if dad decided to then pay my brother a few more months of instalments at the end as interest for his €45,000 loan, we’d still have saved him €25,000 in interest.
The elephant in the room of course is that myself and my brother can only come up with a max of €78,000 but the current balance is €85,000.
So the question is do Vulture Funds like Mars want to close accounts they bought at huge discounts ASAP to get them off their books just like the originating banks did, in which case the might be amenable to some write off of part of the debt if the account holder can pay them a large lump sum quickly. Or would that not be an incentive to them and they’d actually prefer if we took the 7 year deal that earns them another €36,000 in interest over the full term?
If you think they would prefer it to be cleared straight away and are likely to be prepared to write off a portion of the debt, can you suggest any negotiation tactics to help us maximise the write off.
For example considering they probably bought the account from the EBS for 50c on the Euro and are already probably in profit, whats a realistic starting point for us? Tell them we can source €65,000, they counter offer a write off of €5000 to €80,000, we say we can maybe push it to €70,000, they say no but counter offer €75,000, we say….’DEAL!’ LOL
Is hoping for a €10,000 write off realistic or are we dreaming?
[EDIT 1] Thanks for all the advice yesterday folks. Now maybe the following is almost exactly what some suggested and I just misunderstood it yesterday, but the seeds were definitely planted by what many of you suggested. The idea I had today, was if they say NO to any significant writedown despite us leveraging a significant available lumpsum and immediate payment of same, is to then ask them to change the 7 Year Term to a 3 year Term where the total interest would be about E9,300. Dad pays them what he was going to pay them, I pay dad what I was going to be paying on an An Post loan anyway and my brother pays the same amount as me. He doesn't hand over any of his savings at all and I haven't taken out a new loan in my name. Combined those three amounts are the full monthly repayment of a 3 year E85,000 loan at 6.9% APR.
Mars fully paid back in 3 years instead of 7. Mars get to hold onto the deeds for another 3 years though. At the end of the Loan Dad owes both me and my brother about E23,000 each. He starts paying us back 650 each per month which takes him another 3 years. He's totally done and dusted in 6 years.
Compared to yesterdays plan/idea, we still saved about (36000-9300) E27,000 in interest as opposed to yesterdays plan which saved (36000-5000) E31000 in interest, , get the deeds back in 3 years instead of within weeks. However, didn't have to hand over savings or take out more loans and knocked 1 year off the amount of time dad would be paying back that monthly amount from 7 to 6 years. The only way I see that not being a goer is if Mars won't take me and my brothers monthly contribution to the repayment of the proposed 3 year loan into account because its not official income of dads and not guaranteed. What do you folks think of that alternate idea??
Theres Pro's and Cons to both plans. I've taken on board a lot of your concerns. Perhaps on balance it only makes sense to persue yesterdays plan where my brother is handing over a significant lump sum of savings and I borrow up to 33 grand to hand over, if we can use that significant combined lumpsum and immediate payment potential to leverage not just the shortfall from the 85000 we might have had but to leverage 15 or 20 grand of a write off......and most of you thought a 7 or 10 grand write-off was dreaming.
[EDIT 2] Unless Mars actually would prefer the likes of €65,000-€70,000 right now rather than €94,000 in 3 years earning them €9,000 interest or €121,000 in 7 years earning them €36,000 interest (unlikely I know), tbh they probably give an immediate definitive NO to a write off of anything knowing we have X amount to help dad out with over the next few years anyway. Upon further thought we’ve probably come full circle back to accepting the 7 year €85,000 loan and assuming there is no over or early payment fee, simply give dad €650 each per month which combined with his official payment would reduce the term to about 3 years and the interest paid to €9,000 anyway. Functionally the same as asking for an official 3 term but without them saying NO because our contribution wasn’t formal income of dads or guaranteed by us and it also gives us the freedom to skip a months payment to dad here or there if need be which wouldn’t be possible if we were to set the term as 3 years from the getgo.
[EDIT 3] The downside of talking to a 77 year old man with hearing issues. LOL. I arrived at a figure of E36,000 interest by multiplying the repayment amount dad said Mars wanted for the 7 year E85,000 loan of approx. E1,450 x 84 months = E121,800-E85,000=E36,800 in interest. However when I found a loan calculator that let me select more than the E75,000 limit most calcs had and also select my own interest rate figure (Turns out its 6.52% not 6.9% according to dad), for E85,000 loan it gave the following numbers, E1,263 per month, Total payable E106,094 and E21,094 interest. I validated the result of that calculator by running the same numbers through the An Post Money loan calculator too and the resulting repayment, total and interest figures where the same.
Probing dad further to try and reconcile this, I think whats happened is he said they told him according to their review of his financial statements given to them, they've worked out he can afford to pay them up to E1,450 per month (not that the repayments of E85,000 over 7 years at 6.52% would necessarily be that high.) He seems to have interpreted it as them telling him thats what the repayments would be. Anyway, this will be cleared up when they send him the 'loan offer' via post.
In the interest of not letting ourselves get too optimistic and trying to prepare in advance what to say when we ask for some write off, we've been running hypothetical scenarios, trying to put ourselves in their shoes. "If we say X and they say Y, we say A, however if they say Z we instead say B etc etc. After doing this running of scenarios, we had kind of convinced ourselves again that we didn't have a hope in hell of any write off at all.
EG. If we are coming out the gate asking for 20, 15 or 10 grand write-off by saying we have access to a 65- 75 grand lump sum, they might reason that they don't have to offer Dad any write off because his sons can just help him with repayments with that money instead and they still get their (corrected) E21,000 in interest over 7 years and considering Mars seem to be one of the Vulture funds in for the long haul, they might be happy to wait 7 years to get that full E106,000.
So we went to bed last night still planning to chance our arm (because it costs nothing to ask) and still ask for a write off of some of the balance owed, but with the expectation that there was a 95% chance they say No, and thus if we can't leverage a large lump sum for a write off, we definitely then proceed with the plan to just accept the E85,000 over 7 years loan offer and my brother and I don't hand over savings of and get loans for 10's of thousands to give to dad, instead we give him E500-E650 each a month to over pay the loan every month reducing its term to about 3 years and interest from E21,000 down to about E8,000.
....and this morning I woke up and my subconscious must have been still working on the problem while I was asleep, because my very first thought when I woke was the following: If dad at age 77 walked into any financial institution and asked for an E85,000 loan over 7 years he would get laughed at to his face. Frankly its amazing he even managed to secure a 15 year mortgage at an age of about 62 15 years ago!! So why 15 years later are Mars prepared to let him refinance that E85,000 outstanding balance owed to them over 7 years by the end of which if he lives that long he'll be 83 or 84 years old......because they think they have no other option to get their hands on the outstanding balance while he is still alive!! Their actuarial advisors/calculations are surely telling them that theres a reasonable chance dad will die before the loan is fully paid back. Surely they also know that dads kids can delay and stymie the sale of the house they are inheriting from dad in probate or court that this loan is secured on and where the loan to value ratio is by now probably, but definitely soon in single digits, for god knows how long. My point is, they may very well take all that into account and think to themselves that 1 in the hand is worth more than 2 in the bush so to speak. ie. Better to get E65,000-E75,000 within a couple of weeks and be done with this 77 year old 'Customer', than risk forcing him to take out the refinancing loan and risk have him go senile or die within the 7 year term and then suffer all the headaches and delays and potential legal costs in leveraging their 'Security' of the loan and trying to force the sale of the house to get the rest of the money back. (2 of us might actually want to get a mortgage on it to buy the other two siblings out of their inheritance and stay in the house ourselves (Kind of like dad did with his siblings when Grandad died)
/s