SINGLE PARENTSorcha Donohoe bought her two-bedroom house in Bray, Co Wicklow, in 2007 for €400,000 with a mortgage of €310,000 on a 37-year term from First Active, which is now part of Ulster Bank.

Sorcha is 38 and in a stable job, but her income has fallen with pay cuts. She also now has a child to care for, increasing her outgoings.

She has been unable to rent out the second bedroom as she had done for four years, so she does not receive the €500 in rent that had previously gone towards her mortgage.

She approached Ulster Bank and they agreed to reduce her monthly mortgage repayments from €1,640 to €600 a month, making interest-only payments, given her financial situation.

She had managed to reduce her mortgage to €304,000 before her financial difficulties, but it has risen to €314,000 in a year due to the reduced monthly repayments.

The house has fallen in value and is “probably worth about €170,000 at a push”, she says – she is in negative equity of €140,000.

She rang the Government’s mortgage advice hotline which advised her to ring the Money Advice and Budgeting Service (Mabs).

They suggested that she sell the property to a housing association on a mortgage-to-rent plan under which she would become a tenant but get to stay in the house.

“I just wouldn’t do it. I purchased a house and I want to keep my house. I don’t think mortgage-to-rent is a solution because people invested a lot of money in their house and to hand their house over to anyone is not viable for anybody,” says Sorcha.

“I talked to Ulster Bank about their negative equity mortgages because I want to move on to something bigger and they don’t offer that product to people in arrears.

“What worries me is that my mortgage is increasing and I dont know how it could be resolved by the banks because that is not a long-term solution for anybody.

“Banks are happy to see you pay reduced amounts and for your mortgage to go up. I think there are so many people in my situation.”

MARRIED COUPLE

Mary, who works as an administrator, and her accountant husband, Brian, bought a four-bed house in Dublin 15 in 2005 with a mortgage of €399,000.

The house has halved in value since then; it’s now worth €220,000. Brian lost his job a few years ago and is working for himself. Their income has fallen as a result, so they can’t make full mortgage repayments to AIB-owned EBS. Mary says all the houses in their estate must be in negative equity because they were purchased at the height of the boom. They have two teenagers doing exams this year, so they can’t move abroad – they would leave if they could, said Mary.

“I would be on the ferry in the morning to the UK, but we have the mortgage and we would not be of the view that we could just pop the keys in the letter box and leave – we are not irresponsible.”

Arrears of €23,000 have built up on the mortgage from missed payments and they owe about the same amount they borrowed to buy the house in 2005.

Brian owes €15,000 on an AIB credit card and €8,000 to the Revenue Commissioners in tax.

Mary says that over 18 months 15 people have dealt with them at their bank and they have submitted seven standard financial statements, but they await a resolution plan from the bank that would help them deal with their debts.

“We don’t see why we can’t get a split mortgage. We are paying 65 per cent of our mortgage and we are asking EBS and AIB to put a plan in place where we could put the credit card payment and mortgage in one,” said Mary, who did not want to be identified in case it caused problems with her bank.

“There is just nothing forthcoming and every month the mortgage goes up and up and up.”

BUSINESS OWNER

Adrian Conlon, from Athy in Co Kildare, owes €380,000 to AIB on his mortgage and a further €1.7 million in loans for the shop he runs, property investments and an oil company that he owns.

Conlon’s business is not earning the profits it used to make in the boom. He told The Irish Times last April that he was not looking for a soft option and was willing to work with his lender to repay his debts.

Since then, AIB has shown a level of forbearance on the business loans, which allows him to pay both capital and interest payments on the mortgage on his home.

He submits quarterly management accounts to AIB on his business and speaks to them every day. He says he is working constructively with the bank on his debts.

“I firmly believe that, for a person who is in business and is under loan stress, it is all about communication, communication, communication. It is about building a relationship with someone in the bank and communicating with them on a daily basis,” he said earlier this week.

“I don’t know what the future is going to hold for us, but the plan I set out for the company and for the bank has worked – they didn’t exercise rights on the loans that they could have and they have erred on the side of caution.

“The constant communication has helped them with their bosses in Dublin.”