4 Steps in the Mortgage Arrears Resolution Process (MARP)

Being in Mortgage Arrears is a difficult position. But there is help at hand.  The MARP system is in place to help you negotiate your arrears with your lender. Crucially, during the MARP process a lender cannot institute legal proceedings against a borrower.

MARP stands for the Mortgage Arrears Resolution Process. It’s a system devised by the Central Bank of Ireland which requires all lenders (banks and funds) to adhere to a process for borrowers who fall into arrears with their mortgage.

There are 4 steps in the Mortgage Arrears Resolution Process. If you’re in mortgage arrears you’ll want to know what each of these steps are and what they mean for you.

 

4 Steps in the Mortgage Arrears Resolution Process

MARP STEP 1: All About Co-Operation

In order to be protected by MARP you must be a Co-Operating borrower. This means that you must supply the lender with a Standard Financial Statement (SFS) and supporting documentation. This form is available online or from your lender and care should be taken in filling it out.

Once you have supplied a SFS form you are protected.

 

MARP STEP 2: Lender Carries Out an Assessment

The lender will consider your SFS. Based on that consideration they will propose a resolution if that is possible.

To begin with the lender will propose a short-term solution, which is usually for 3/6 months. There are a variety of short term solutions, but commonly they require the borrower to pay as much as they can pay.

 

MARP STEP 3: Offer of Resolution

You will receive an offer of resolution. Offers of resolution may include:

  • Paying interest only, or interest and part of the capital, for a period
  • Permanently or temporarily reducing the interest rate
  • Deferring repayments (or part) for a period
  • Extending your mortgage term
  • Changing the type of mortgage that you have
  • Adding arrears and interest to the principal
  • Warehousing part of the mortgage (including through a split mortgage)
  • Reducing the principal
  • A "deferred interest" or other voluntary scheme

Where the lender determines the debt to be unsustainable they may commence enforcement proceedings.

 

MARP STEP 4: Appeal

There is a right to appeal any decision made by the lender to an appeals system within the lender. Following this you can also make an appeal to the Financial Services Ombudsman.

 

 

Being in mortgage arrears is a very difficult time in your life.  It's important to make sure you're informed about your borrower rights and debt negotiation protocol in Ireland.  You can find more information about debt negotiation, insolvency and mortgage arrears here on the New Beginning website - and if there is a specific question you have please feel free to send me an email on info@newbeginning.ie.  

Why is everyone talking about pensions?

Perhaps you started to wonder, or perhaps you had far better things to be thinking about instead, but you might have noticed recently that there is an awful lot of attention being given to pensions.  Newspapers are highlighting stories; the pensions authority is running ads on Newstalk about employer’s responsibilities when it comes to providing pension access for staff and each and every pension provider is advertising through every medium they can find to highlight the value in paying into a pension product.

So why all the noise?

Well, 2 reasons really. The first is that this is what’s known in the industry as pension season. The time of the year where employed individuals and self-employed workers can write a cheque to their pension and write it off against 2015’s tax bill. An excellent and simple method of making a sensible financial planning decision that saves a good slice of tax while you are at it. For those who would like to do this, assuming you complete your returns online, you have about 10 more days to get this submitted so if you want to understand the tax benefits and are still considering putting a lump sum away for your retirement please get in touch with us asap. We can assist in getting this done for you in time.

The second reason and probably the more logical reason is that this deadline tends to bring the discussion about pensions back into the spotlight and with good reason. Allow me highlight a few simple points.

In Ireland today there are 5 people working for every 1 that is retired. In 25 years’ from now there will be 2 people working in Ireland for every 1 that is retired. A massive increase in retirees.

The social welfare pension is amongst the highest in the EU and couldn’t be maintained at its current levels in years to come considering point 1 above.

Our debt levels per head of population are amongst the highest in the EU.

Life expectancy is continuing to rise.

State pension age is continuing to rise.

Costs of living are continuing to rise.

The cost of health care continues to rise.

Pensions are optional.

The simple reality is that we all must start to believe that pensions, complicated as they can be, are a now an absolute must. Like any savings habit, just get started. Take the plunge. I have never met anyone ever, who was upset they had arrived close to retirement with a pot of cash. The only regret I ever hear from clients is that they wish they had more, and they wish they had started earlier.

Please take note when I say that the tax relief available is generous, the state can only be responsible for providing so much for you in your years to come and you won’t regret it. In fact, once you start saving you’ll probably quite enjoy it.

And please always remember it’s never too late and please don’t put this decision on the long finger. Having money when you go on the longest holiday of your life is surely something that has to be considered a necessity.

Get in touch with Nick Lawlor today on 01 531 0571 or nick.lawlor@newbeginning.ie to start your retirement planning today.

Avoid Receivers at All Costs

Receivers are appointed in Ireland without the involvement of a Court.

When somebody enters into a mortgage type agreement with a lender, and where the secured property is not a family home, the borrower gives the lender a right to appoint a receiver when the borrower has defaulted on the loan.

The bank will first call in the loan which involves making a demand for full payment within a period of time. Often this can be a very short period – in some cases even hours. If payment is not made within the time allowed the lender will appoint a receiver. The receiver can then take over the property, change the locks, and any tenant will then be required to make any rental payments to the receiver.

The receiver will be responsible for the property and the borrower is effectively shut out. In cases where the borrower resists or impedes the receiver an application will be made to the High Court for an order restraining such conduct and if the borrower does not comply he will find himself in contempt of court and facing severe penalty.

In most cases the receiver will sell the property at a time of his choosing. The proceeds of sale will be used to pay the receiver’s costs and any other charges on the property such as property taxes or management changes and the balance will be remitted to the bank. Receiver’s costs can be substantial and often receivers will fire sell, meaning that the borrower loses out. This is because any remaining debt after the sale has been complete and all the costs have been paid will be borne by the borrower.

Borrowers often bitterly complain abut the conduct of receivers and while their complaint carries much moral weight, the legal position is very much set against the borrower.

In some cases receivers have been discharged by the Court for procedural or other irregularities but this is very much the exception. The best advice for borrowers is to avoid the appointment of a receiver at all costs.

 

Email us at  info@newbeginning.ie or call us on 01-5240000 to discuss options that might be of help to you.

Demand for Commercial Property Funding Remains High

New Beginning Funding’s ongoing market analysis shows the high demand for Commercial Property borrowing, not being matched by the available funding options. The trend of overseas funds continuing to seek liquidation or refinancing of distressed portfolios is continuing, however, we are also seeing a marked increase in the number of commercial borrowers seeking funding for, regular, commercial property acquisition.

These trends coupled with the continuing scarcity of pillar Bank funding options, in the Commercial property funding sector, means  commercial loans remain difficult to source, especially in the segment of the market below €3m, an area where, traditionally, banks would be the primary lender. The available non-bank funding options are still, mainly, targeting deals of €1m or higher and in larger urban locations.

At New Beginning Funding our Funding facilitation services offers all commercial borrowers a bespoke service which sources the best funding options, from across the market,  with transactions individually structured to offer most value to prospective borrowers.

New Beginning can source funding commitments, based on the specific needs of the borrower, in a matter of days. This means that clients avoid being forced to sell their properties, and with the assistance of New Beginning Funding, design individual loan structures which are sustainable over the longer term.

New Beginning Funding is looking to assist individuals and SMEs in sourcing a range of funding options, including refinancing, to enable settlement of stressed exposures. We can source a broad range of funding options, including Bridging and Mezzanine facilities, development financing and larger commercial facilities.

We encourage commercial clients with traditional or alternative commercial real estate funding requirements to contact us.

Our typical traditional funding transaction structure for income producing assets is based on:

  • 5 year term finance, with capital and interest payments calculated using a 20 year repayment profile
  • Up to 75% LTV, subject to rental income

The minimum loan size is €1,000,000- [we will look at deals below €1m but have found that the options available at this level are very scarce]

Many of our clients have agreed or are about to agree deals with funds who have acquired their loans.

Alternative funding transactions, by their nature, will be less formulaic and we encourage commercial clients to discuss their transactions with us to see if we can assist.

New Beginning Funding does not underwrite, but has partnered with providers of non-bank financing options, and we currently operate as an intermediary.

If you have a distressed loan and want to avoid the sale of the underlying property assets then refinance may be a perfect option for you. Often the refinance can be done through a new corporate entity or SPV meaning that the underlying property can be protected from any other exposure.

You can email me at  john.ryan@newbeginning.ie This email address is being protected from spambots. You need JavaScript enabled to view it.  or call me on 01-5240000 to discuss options that might be of help to you.

 

 

Our Funding Facilitation Service

New Beginning Funding is experiencing growing interest in our funding facilitation service from our expanding base of commercial borrowers.

The demand, at present, within the Irish market, from companies and individuals seeking re-finance facilities for commercial property transactions, is growing and the variety of these deals, in terms of timeframes, size and nature of funding being sought is very broad.

The trend of overseas funds seeking immediate liquidation or refinancing of distressed portfolios continues. We believe that this is where our funding option offers most value to prospective borrowers. We can source funding commitments in a matter of days based on the specific needs of the borrower. This means that clients avoid having to sell their properties and New Beginning Funding builds new loan structures which are sustainable over the longer term.

We currently has a pipeline of €21m in deals which will drawdown in the coming months.

We are looking to assist individuals and SMEs in sourcing a range of funding options, including refinancing, to enable settlement of stressed exposures.

Last month we announced, as part of our ongoing review of the commercial debt market trends and feedback from our commercial client base, the broadening of our range of funding options to include Bridging and Mezzanine facilities, development financing and larger commercial facilities. As part of this process we expect to see our first commercial bridging transaction close in the next week.

Our typical traditional funding transaction structure for income producing assets is based on:
5 year term finance, with capital and interest payments calculated using a 20 year repayment profile
Up to 75% LTV, subject to rental income

The minimum loan size is €500,000. Many of our clients have agreed or are about to agree deals with funds who have acquired their loans.

Alternative funding transactions, by their nature will be less formulaic and we encourage commercial clients to discuss their transactions with us to see if we can assist.

New Beginning Funding does not underwrite, but has partnered with providers of non-bank financing options to this market segment, and we currently operate as an intermediary.

If you have a distressed loan and want to avoid the sale of the underlying property assets then refinance may be a perfect option for you. Often the refinance can be done through a new corporate entity or SPV meaning that the underlying property can be protected from any other exposure.

You can email me at john.ryan@newbeginning.ie or call me on 01-5240000 to discuss options that might be of help to you.

New Personal Insolvency laws starting to work for home owners.

April has been an important month for the Personal Insolvency regime. In the first of the new Personal Insolvency appeals cases to come before the High Court, Ms Justice Baker approved an application which sought to overturn the rejection of a PIA proposal by Pepper as agent for a US fund.

The High Court held that the Personal Insolvency regime was a “unique” piece of legislation designed by the Oireachtas to limit the veto of creditors. The whole intent of the new law is to keep a family in their home by making the mortgage sustainable.

In this particular deal a borrower owed more than €2.8 million on his home and other investment properties. The proposal involved a write off of almost €1.4 million and meant the family of 5 held on to their home. The fund objected to the proposal but the borrower appealed. The High Court upheld the appeal and the family are now paying a secure and affordable mortgage.

This High Court decision will give guidance to over 50 cases now before the Circuit Court where homeowners will be secured in their homes with sustainable and affordable mortgages.

The general effect of this change in the law means that anybody who can afford a mortgage based on the current value of the home should be in a position to have their loan restructured on a long term sustainable basis. Deals that we could not have done last year are now being done and that is to everybody’s advantage.

Finally, the ISI released its quarter 1 2016 figures last week and as expected there is a surge in applications for Personal Insolvency. This is a very welcome fact and marks the beginning of a sustained process to deal with mortgage debt once and for all. At this stage over 1000 PIA’s are complete and we expect thousands more over the coming months.

If you would like more information regarding this please call us on 01-5240000 or emailinfo@newbeginning.ie today.  

Update on New Beginning

We have been very busy this month on the debt resolution side of New Beginning.

Through our regulated debt management firm we negotiate directly with creditors without going through a formal process. Our philosophy is never to kick the can down the road. Payments can continue over time – but there must always be an agreed final resolution.

Earlier in the month we had a client who had an unsustainable mortgage of €280,000 on a home valued at €100,000. A member of our client’s family had a sum of money which they were willing to make available. We offered €85,000 in settlement and finally agreed on a payment of €90,000 in full and final settlement of all liability. Our client is now debt free with the fund accepting a write down constituting over 68% of par value. What we really liked about this deal was the speed at which it could be done.

Another client was facing repossession but agreed to reduce their mortgage by €40,000 through a lump sum available to them after which we agreed a long term restructure on an affordable basis. After 5 years of being hounded our client went to a full resolution in a matter of 3 weeks.

We agreed the resolution of a commercial portfolio which included our client being permitted to refinance aspects of the portfolio with funds sourced by New Beginning. The properties critical to our client’s business have been protected and now are on a sustainable footing. Other properties were sold and a contribution was made in settlement of the shortfall.

We are delighted to welcome Noreen Kavanagh Solicitor on board who, along with Eugene Carley, provides the excellent legal back up we need to bring deals to speedy conclusion.

Finally our Personal Insolvency practice continues to grow. Time and again we see families getting restructured mortgages on their homes and resolution on all their other debts allowing them to have the New Beginning that they deserve. We expect this trend to continue as word finally begins to get out – there are great solutions out there – you just need to ask!

If you would like more information regarding our services please call us on

01-5240000 or email info@newbeginning.ie today.  

Post Retirement Options and Debt

post-retirement couple assessing their finances

When you approaches retirement there are serious decisions to make. The choices you make at retirement can have lasting effects on your pension savings and how you can access them into retirement.

The drawdown options available to you at retirement can be complicated even more by having a mortgage debt issue which needs to be resolved. So allow me explain where this can get complicated.

TAX FREE CASH VERSUS ANNUITY

If you are entering an insolvency or bankruptcy process you must fill out a Standard Financial Statement that lists your assets and your incomes.

Assets are typically at serious risk of being used to pay creditors before any deal is done or be lost to the Official Assignee if entering a bankruptcy process. Income however is allowable to a certain level.

So when you are deciding between having accessible cash or an income for life the decision of which to choose is likely to be very different should you be considering a debt process. You will need to seek advice if you are approaching this juncture.

AMRF VS ARF

An AMRF is a retirement pot which is locked away until a client reaches 75, unless they show they have a guaranteed income for life in excess of €12,700 (currently). The first €63,500 of a client retirement assets after the lump sum is taken must be invested in an AMRF if they do not have this guaranteed level of income. An ARF on the other hand is fully accessible to the clients and can be drawn down at short notice.

The rules surrounding AMRF’s have changed recently. Previously you could access any amount over the €63500 so any growth or interest earned could be taken subject to tax. Now a client can only take 4% per annum regardless of the AMRF’s value.

So how does this affect clients entering a debt process? Often clients would like access to their AMRF to help them pay down their debts but believe they can’t have access to it. This is true but an AMRF can be turned into an ARF if a client can satisfy one rule and that is if they can show a guaranteed income for life in excess of €12,700. Often a client will be in receipt of the Old Age pension from the state of circa €12000. So all a client needs to do to convert their AMRF into an accessible ARF is to buy a small annuity which will deliver income of €700 per annum. Crucially this will unlock the remaining AMRF allowing them access to their funds which can then be used to address short term needs.

CONCLUSION

These are just 2 of the many pension related situations we come across everyday so please just get in touch with me directly if you have any pension related questions that are concerning you.

Now for the disclaimer. Pensions are very complicated and each individual case should be assessed on its own merits. The rules are there to be applied and used for each of us so please take advice on your situation before making any lasting decisions. Finally if you are considering entering a debt negotiation or process please consider your pensions assets and what form they are in. Your pension assets could be at risk of being lost against your wishes or indeed could be used to help you address your debt but pension planning in advance is vital.

If you would like to discuss your own situation, please feel free to get in touch with me directly on email on nick.lawlor@newbeginning.ie or contact the office on 01-5240000 and I would be happy to look at your situation to find out.

Hold on to your Pension!

New Beginning have for years advised clients on their debt options and since we have added a regulated financial advisory service to our offering one particular issue comes up time and time again.  What will happen my pension if I go bankrupt or if I enter an insolvency process?

Well, bear in mind that all situations deserve their own individual attention, but I can give you some guidance on how pensions are generally treated.

Pension money is ring fenced insofar as it is not readily available. If you are about to retire or indeed could retire in the next 5 years it is very important that you consider what form your pension assets are in. Pensions come in various shapes and sizes and as such it is vitally important that your pension is structured in the most favourable way for you to retain control of your retirement savings.

Pension’s law in Ireland allows client’s access to their retirement assets from the age of 50 all the way up to 75 depending on the plan type you are in. Now if you happen to be in a pension arrangement that allows access to your money at 50 and you are approaching or over 50, then it might be advisable to move it to a different pension arrangement that doesn’t allow access until you reach 60 for example. Indeed you might simply be able to change the retirement age of your existing plan with the stroke of a pen. This could mean the difference between holding onto your retirement savings or not.

Also consider what form your pension is in? Is it a cash fund or is it income? Reasonable Living Expenses guidelines allow clients to have a certain amount of income but not cash assets. If you have €200k of a fund at retirement, this could be converted into an annuity which will deliver a client a regular income for life. Many would consider the annuity rates today to represent bad value for money, and I would absolutely agree with them. However if I faced a decision between losing all of my €200k or keeping an income of say €10k every year for the rest of my life, all of a sudden an annuity starts to look like a very attractive option.

There are many different scenarios and many different solutions. Far too many to cover here. But in summary if you are considering entering a debt process and have a pension fund built up, it is imperative you seek advice. It could be the difference between you holding on to your pension or losing it in its entirety.

If you would like to discuss your own pension situation, please feel free to get in touch with me directly on email on nick.lawlor@newbeginning.ie or contact the office on 01-5240000 and I would be happy to look at your situation to find out.