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11 September 2016

Time to Extinguish Negative Equity!

The Negative Equity Problem

As we move out of recession there are still a significant number of people suffering from the after effects of the pre recession property boom. Negative Equity is having a significant impact on businesses, family life and on the wider local economy in general.

Negative Equity does not discriminate and effects all types of people from Directors of large companies, professionals and the self-employed.

FPM believe there is a full and final settlement solution for all borrowers from the individual with Negative Equity on their family home to the property investor with the portfolio of property investments. We have negotiated final resolutions to many Negative Equity situations and believe the time is now right for all the stakeholders involved to deal with Negative Equity problem.

FPM Solution to Negative Equity

We have developed a comprehensive team of experts to deliver a holistic one stop approach to Negative Equity to achieve a full and final debt solution utilising the available formal insolvency procedures and/or informal solutions

The process can be applied to all levels of Negative Equity and property investment from the home owner caught with a late purchase in 2007, the self-employed individual with a small portfolio of buy to lets, right through to the local businessman who had acquired an investment portfolio of 150 properties

No one solution is the same, but all solutions can provide the borrower with a full and final settlement and our team will deal with the entire process by:

  1. Engaging the borrower
  2. Engaging the lenders
  3. Agreeing a structured realisation of the properties in conjunction with the lenders
  4. Agreeing a Full and Final Settlement of the Debt

In order to achieve full and final settlement, on occasion the perspective client may have to consider bankruptcy. However in the main this is due to lack of funds to strike a settlement. This does involve a structured approach to the bankruptcy, as opposed to a rushed self-adjudication, which can have ramifications for the borrower if not executed correctly.

Who Benefits

Both the borrower and the lender benefit from the FPM Solution to Negative Equity.

Benefits to the Individual
  • Relief from the stress associated with Negative Equity
  • Can move on with life
  • Achieve a full and final settlement solution
  • Can refocus on their core business, work and/or family life
Benefits to the Bank / Lender
  • The bank obtain full engagement from the borrower from the outset
  • The bank get a clear and concise picture of the borrower’s financial affairs and have the knowledge that this is presented by a leading firm of accountants and insolvency practitioners
  • Solution is a structured, consensual, advisor led process which will achieve the maximum return possible for the financial institution and will reduce costs associated with recoveries
  • No need for formal repossessions
  • Specific timeframe and deadline for the realisation of the assets
  • Can include contribution from unencumbered assets, income and/or third parties towards the shortfall on these assets
Benefits to Local Economy

FPM believe that resolution of the Negative Equity problem is key to helping the local economy get moving again. It enables people to focus on what they do best. Entrepreneurs and business leaders can get back to growing the local economy and creating jobs. Banks can focus on lending to businesses.

Take the first steps to achieving a Final Resolution to Negative Equity

We do not believe that people should continue to suffer the stress and strains associated with Negative Equity. We believe it is possible to formulate a FULL & FINAL SETTLEMENT SOLUTION to NEGATIVE EQUITY. If you wish to resolve a Negative Equity scenario, please feel free to contact Seamas Keating or Gary Digney for an initial consultation on your options.

Facts about Negative Equity

In 2007 house prices in Northern Ireland were surpassed only by London, the South East and the East regions of the United Kingdom. From a position at the higher echelons of UK house prices, Northern Ireland is now the least expensive region of the UK and house prices remain 50% below their 2007 peak (source Nationwide, 2014).

41% of borrowers with mortgages advanced since 2005 are in Negative Equity in Northern Ireland (Source: research completed by HML on behalf of the BBC).

Negative Equity within Northern Ireland is concentrated on a particular profile of borrowers. Single people, couples with no children, borrowers with one or two bedroom properties, those who purchased after 2005, borrowers who re-mortgaged and those in intermediate or professional occupations have found to be the most affected (Wallis, 2014).

Soaring prices in Northern Ireland excluded many first time buyers from entering the housing market. The subsequent increase in demand in the private rental sector spurred the markets appetite for buy to let loans. Northern Ireland now has the highest rate of buy to let arrears in the UK (Source Wallis & Rug cited in Wallis, 2014).

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