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Judge rules against bank in mortgage battle

News

Castlebar businessman George Gannon.

Edwin McGreal

A judge has refused Bank of Ireland’s application for a court order against a Castlebar man for repayments on a mortgage for a house already sold by the bank.
Bank of Ireland took the application against George Gannon, c/o George Gannon and Co, Fibrepulse Building, Moneen, Castlebar, before last Wednesday’s sitting of Castlebar District Court, seeking repayment of €152,614.92, the debt left after the bank sold the property in question.
However, after hearing from Mr Gannon, Judge Mary Devins ruled against the bank and made no order.
The application by Bank of Ireland relates to 12 Racecourse Hill, Clifden, Co Galway, which the court heard Mr Gannon bought for €200,000 in November 2008.
The property was sold by the bank for approximately €55,000 over two years ago. The €152,614.92 figure that Bank of Ireland was seeking from Mr Gannon is comprised of  €132,401 of outstanding debt in February 2015, when the bank obtained a High Court order, plus interest accrued in the intervening period up to last Wednesday’s court. That translates as interest of €20,213.92 accumulated since February 2015.
At last Wednesday’s court, Bank of Ireland sought repayments from Mr Gannon in installments of €350 per month.
Mr Gannon, who was represented by Tracy Murray, was called to give evidence about the case’s background and his financial circumstances. He said that in 2014 he had verbally agreed with the bank to cover the interest on the mortgage for 12 months in the hope his circumstances would improve. However, he said, the bank deviated from the arrangement after just six months and ‘called in’ the mortgage, giving Mr Gannon seven days to pay all of the then outstanding debt: €132,401.
Mr Gannon said he was ‘shocked’ the bank had done this and that he was not in a position to meet its demand. He added that ‘without any further communication’ Bank of Ireland sold the property.

‘Good price’
Speaking after court on Wednesday last, Mr Gannon told The Mayo News he does not know who bought the property. He believes that it was sold for around €55,000, as €54,432.61 was lodged to his mortgage account, and he reckons that this amount is ‘less fees’, which would bring the sale figure to ‘in or around €55,000’. He added that the sudden appearance of the €54,432.61 was how he discovered the sale had been completed.  
Mr Gannon went on to explain that houses in the development were initially sold for €235,000 in 2007/’08 and that he had purchased his ‘for a good price’ (€200,000) at the end of 2008. He argued there was no justification for the bank selling his house for €55,000, considering the original value of the houses in the estate was almost five times that.
“While the price of property had fallen, it is my opinion that the house was sold for substantially less than what it now would fetch, as houses out there are difficult to buy now and are going for in the region of €150,000 plus, so if the bank had waited and accepted the interest on an ongoing basis the situation would be that they would not be out of funds, as there would not be a residue left on the mortgage,” he told The Mayo News.
He criticised Bank of Ireland for not entering negotiations. “If Bank of Ireland entered discussions with me, my plan was to continue to use the rent income of the property to service the interest on the mortgage and then wait for the property market to pick up and then sell the property to hopefully pay off the balance,” he said.
Mr Gannon said he had a total of eight properties but that ‘most of them have been taken over by receivers or sold since’.
“I had no act in selling any of them,” he told the court. He currently owns an unoccupied house in need of repair on Achill, he said, together with the family home in Castlebar.

‘Destroyed my credit rating’
Mr Gannon, a self-employed accountant based in Castlebar, told the court that after he bought the house in 2008, his income was severely affected by the economic downturn, while a serious illness affecting one of his children took him away from his business for nine months.
He said the judgment of €132,401 against him has ‘destroyed’ his credit rating, to the extent he cannot seek any additional loans to fund repayments. His overdraft facility is now vital for making ends meet, he said.
“If I didn’t have that [overdraft] I could not pay my outgoings,” he said. “No financial institution wants to engage with any debtor who has a judgement registered against him,” he added.  
Mr Gannon said it was not possible for him to meet Bank of Ireland’s demand for €350 per month, as his current outgoings outweigh his income.
He told The Mayo News his income, currently €52,000 per annum, is offset by outgoings of €54,000, only met by his overdraft. The outgoings include repayments on four loans, a mortgage, a personal loan, a Credit Union loan and a car loan, as well as living expenses.
He argued that while people might think he ‘got off’ the repayments, ‘the reality is that I have lost an awful lot of money’.
“I pumped the guts of €80,000 into this house, between cash upfront of €24,000 with mortgage repayments of approximately €8,000 per annum for all years up to 2014, and I also furnished the house to a value of €6,500 from my own cash resources. I have nothing at all to show for any of that now,” he told The Mayo News.
‘Could not get to talk to anyone’
When going through Mr Gannon’s statement of means, Ms Augusta Tuohy, standing in as agent for Bank of Ireland in court last week, asked why he was paying back an AIB term loan and not the Bank of Ireland debt, thus ‘giving priority to other creditors’.
“They were amenable to sitting down and discussing it with me,” Mr Gannon replied. “No one [from Bank of Ireland] came and talked to me,” he added. When he tried to contact the bank, he explained, he ‘could not get to talk to anyone’ and had ‘to deal with them through their solicitors’.
He said he ‘did not take a penny of the rent of the property’, giving it all to service the mortgage, but that ‘Bank of Ireland decided that was not enough and basically appointed a receiver’.
He said he had been paying the rent of €500 a month into the mortgage, which was ‘just about servicing the interest on the mortgage’, but that when Bank of Ireland sought payments of capital and interest of €1,300 per month, he had no means to make up the balance.

Blood from a turnip
At the beginning of the court, Augusta Tuohy sought an adjournment on instruction from Bank of Ireland when the case came up but the case proceeded when Judge Devins said any adjournment would be a lengthy one.
After Mr Gannon’s evidence, Ms Tuohy said the bank was still seeking €350 a month from Mr Gannon.
Judge Devins replied, “Did you not hear anything that was just said?” Judge Devins referred to Mr Gannon’s statement of means and that the bank ‘did not attempt to negotiate’. Ms Tuohy said she had no instructions in that regard, and Judge Devins said she could not make any order for the bank.
Speaking to The Mayo News, Mr Gannon welcomed the court’s ruling.
“I would commend the judge for the overview she took of the financial situation here. She understood that I did not have the means to meet the shortfall.
“My main feeling after was one of relief that I got this off my chest, as this will hopefully show people that if you deal comprehensively with the banks and present your facts and figures, that a just solution can be obtained and, more importantly, prove that you cannot take blood from a turnip.
“In other words, it should be noted that the bank cannot have it all its own way, in that it takes your property and sells it without, in many instances, you agreeing to such a sale, and still tries to come after you for the balance of the monies, which I believe is grossly unfair.”

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