FATHER WHO LOST HOME IN TRACKER SCANDAL WANTS TO MEET AIB BOSS
When his mortgage doubled after a tracker error, the stress caused Raymond O’Reilly’s marriage to break up, he lost his home and he couldn’t even afford the petrol to visit his children. Now he has one simple request...
A FATHER-OF-TWO who lost his family home over the tracker mortgage scandal has asked for a face-to-face meeting with the man in charge of AIB bank.
Raymond O’Reilly, 49, from Bailieborough, Co. Cavan, fell into arrears when he lost his AIB tracker mortgage and says the financial strain of the fallout cost him his marriage.
He also contemplated taking his own life after years of ‘incessant’ calls and letters demanding payment of the loan.
‘I went back to smoking. I started drinking brandy in the morning when I came home from work.
‘Everything was just coming down around me.’
Mr O’Reilly is one of 23 homeowners who the Central Bank said lost their homes as a result of being improperly moved from their low-rate tracker to a higher rate loan. A further 79 buy-to-let customers affected have also had properties repossessed.
The Central Bank said it expects both of these figures to rise.
After falling into arrears, Mr O’Reilly’s ‘dream home’ was sold in 2015 at the direction of the bank.
In 2013, Mr O’Reilly wrote to AIB requesting all the paperwork connected to his mortgages with the bank and filed a complaint over losing his tracker.
In a written reply, AIB told him that there had been no ‘indication or guarantee’ that a tracker rate would be available on expiry of the fixed-rate period.
In June this year, the bank said: ‘It may not have been necessary for your property to have been sold had our failure not occurred.’
The couple were issued with an initial compensatory payment of €84,000.
‘The word “compensation” is a very simple word,’ said Mr O’Reilly.
‘But how do you put a figure on ten years of misery?
‘I would love a one-to-one with AIB CEO Bernard Byrne. I would love to ask him how it feels to ruin someone’s life, but I know he would never meet me,’ he said.
RAYMOND O’REILLY is sitting in the Bailie Hotel, sipping a cup of coffee and talking quietly in an almost empty room. As the conversation turns to his former life, he points out the window, to a grey, soul-less building across the road.
‘That’s the old AIB bank,’ he says. ‘That’s the place I walked into in 2008 and signed my name on a piece of paper to fix our tracker mortgage for three years. I had no idea what was about to happen. I had no idea that that bank would ruin my life.’
The bank, one that once served the busy town of Bailieborough, Co Cavan, has long since closed. However, the shell that remains, with boarded-up windows and cracked, mottled plaster, still stands like an untended gravestone on Main Street. Outside this one-time Celtic Tiger bank, there’s no one lining up to cut the weeds.
‘It’s gone,’ says Raymond. ‘The bank is gone, the tracker is gone and the house is gone.’
The house, the one he no longer has, was Raymond’s dream home. Back in the late 1990s he was living in the US, working in the Hilton Hotel in New York and quietly storing away his earnings so he had enough money to build it. It was a time when there was money to be made across the water and as the 1990s rolled into the 2000s, his savings continued to grow.
‘I was sending home money as often as I could,’ says Raymond, 49. ‘I was sending home cheques for €8,000, €9,000. I did all my banking with AIB and the plan was to save as much as we could and then come home and build a house. I had met my wife in America and the plan was always to settle in Baileborough. It was where I was born and reared and I wanted to raise my own family there. I had it all mapped out.’
After returning home following 12 years in the US, Raymond moved into premises on Main Street that were once run as a pub by his parents. The property had living quarters above and Raymond let the downstairs section out as a shop.
‘We were happy enough,’ he says. ‘But my wife wanted a garden because we were starting a family. Everything was booming and I knew that no matter what mortgage I got, the shop was paying for half of it. Between that and me working it seemed like the smart thing to do. It wasn’t a crazy move. I wouldn’t say that was me being reckless. It was me being smart.’
With the savings from the US, Raymond bought a site in the rural outskirts of his home town. He met an architect and drew up the plans for his four-bed, two reception room dream home and applied to AIB for a mortgage.
‘I was working evenings in my first factory job,’ he says. ‘I finished every night at midnight or 1am. Then when I knew I was going to be taking out a mortgage I worked until about 4 or 5 in the morning to build up my gross. Back then you were getting three times your gross. We got the mortgage with relative ease. The original mortgage was €140,000, then we took another one. The money came in stage payments as the house went up because it was a self-build.’
As the 3,500 sq ft house, complete with conservatory and playroom, began to take shape, Raymond threw himself into the build.
‘I built the house with friends and family,’ he says with a look of pride. ‘I kept a tight eye on everything. The only thing in that house that wasn’t put up by somebody in this town was the front door. Once the roof and windows were done everything inside was done by me. I was there after work, any spare time I had. Then as each room was completed, my wife would move in and do her decorating. She loved painting and decorating it. This was our home for life. It was a happy time. There was a small national school only 500m away so when our two boys came along they weren’t going to the big school in the town. We had privacy and space and everything was right. We thought we had it made.’
Towards the end of 2007, after almost a year and a half, the O’Reilly homestead was complete. Around the same time, the tracker mortgage was being marketed by most lenders as the most costeffective way of borrowing money.
In October 2007, Raymond and his wife had a tracker rate applied to their mortgage account. A year later, however, they opted to ‘fix’ their mortgage for three years.
‘We took advice at the time,’ says Raymond. ‘We were advised to get off the tracker for the time being so we did. We had no idea we would never get it back.’
On March 17, 2008, the ‘St Patrick’s Day Massacre’ saw shares in Anglo Irish Bank lose a fifth of their value. Every government’s worst nightmare — a banking crisis — was under way. On top of that, there was also a public finance crisis. The scale and speed of that was, if anything, even more shocking than the banking crisis.
By July, the budget balance had imploded from a small surplus to a deficit of more than 7% of annual economic output (GDP), as the construction industry and property market came to a dead stop.
As the credit crunch crisis deepened, a huge gap opened between the official ECB interest rates and the interest rates charged on the money markets, where the Irish banks actually buy the money which they lend to their customers, including homeowners. Tracker customers with wafer-thin margins had acquired pariah status for all lenders.
The number of people affected was staggering. The tracker went from 0% of all Irish mortgages in 2001 to 15% in 2004 and over 50% by 2008. If rates increased or the economy contracted rapidly, defaults on trackers would increase significantly and the banks would end up with more bad debts.
IT WAS against this background that trackers were taken off the table for new customers, but that still left them with the large quantities of unprofitable loans they already had on the books. Suddenly, thousands of customers, including Raymond and his wife, were no longer entitled to their tracker.
‘By the time the three years were up, AIB were saying they weren’t giving out trackers any more,’ says Raymond. ‘In my mind, we had already been given one, we just wanted it back. But it was no good. Things got very bad. The mortgage went from €625 to about €1,250 per month. The financial pressure was immense. It became unbearable. My wife and I separated and she moved to Castlebar with the two children. There I was, stuck in a 3,500 sq ft house that I had built myself. On top of that, the bubble had burst in Ireland. The shop on the Main Street went empty. There was the child support and all the money for the court cases that I had to go through and it just became unbearable.’
As the pressure mounted, Raymond fell into arrears.
‘I just couldn’t keep going,’ he says, becoming visibly upset. ‘I had battled away for so long and paid the mortgage but I just couldn’t afford it any more. I would have to go and pick up the kids in Mayo at the weekends and I had no money. I would go to the hole in the wall in Tesco to buy diesel and I would have €25 to my name so I would be filling my car on my credit card.
‘One day my son found a fiver on the self check-out and we went back and bought the cheapest sausages and eggs you could buy in a multipack, it was €4.99. The letters were coming every week. It was constant. I was sitting staring out the window with all these letters coming in on top of me. Then there were the phone calls. It was like being illegal. You’re walking down the street waiting for your phone to go off. I even jump now
when my phone rings. There was a stage when I did not sleep, it was just relentless.’
As one year turned to the next, Raymond remained living alone in his home, trying to keep it from the clutches of the banks.
‘I was at rock bottom,’ he says. ‘I was working that hard in shift work and doing extra hours. Then on a Friday I would go to Tesco and put the card in the wall and it would say “insufficent funds” and me with a week to live until I got the next cheque. They would be taking the money out and there would be nothing left.
‘I went to the attic three times with a rope and the only thing that stopped me each time was my kids. I took a lot of photos of them over the years and all the photos were all over the fireplace and in the windows so I would see them and pull myself back. I went back to smoking. I started drinking brandy in the morning when I came home from work. Everything was just coming down around me.’
As matters worsened, and the letters and calls kept coming, Raymond finally ‘gave in’ to the banks. ‘I was on interest-only for about three years,’ he says. ‘But I wasn’t even paying off €300 a month. The fourth year came and I got a phone call from someone from the Arrears Support Unit in Dundalk. He said that I had three options, the first being to pay the mortgage. I told him I couldn’t afford it. I told him that a judge had told me that child support to my children came before the banks. He said the second option was repossession and the third was voluntary sale.’
Faced with little or no option, Raymond sought the agreement of his ex-wife and put the house up for sale. ‘There is no way out when people start telling you to sell your house,’ he says. ‘I agreed straight away with the voluntary sale option because they told me I could appoint my own auctioneer and the house would be sold privately. It wouldn’t be sold on one of these auctioneers with a key stuck over your door letting people know that you were in financial difficulty.’
In a desperate bid to keep the house in the family, Raymond’s sister, who lives in Saudi Arabia, submitted an offer of €169,000 to buy the house.
‘The banks didn’t care who bought it,’ says Raymond. ‘They didn’t care if Mickey Mouse was buying it. They didn’t care that I would be living in it after it was sold. My sister put in an offer for €169,000, which the bank accepted, but not before they sent out a valuer to see if it was legit. They wanted to see if they could get a few pound more.
‘My sister let me stay on in the house for free, but the week before Christmas last year I moved my stuff out. The banks pushed me back into the shop on the Main Street that was falling apart. Last Christmas Eve the water was running down the stairs and running through the kitchen while we were cooking Christmas dinner. I could have stayed in the old house for Christmas but I didn’t want people thinking that my sister bought the house for me.’
YEARS before, in 2013, Raymond had written to AIB and asked them to look at his case. He requested all the paperwork connected to his mortgages with the bank and filed a complaint over losing his tracker.
In a written response, AIB told him that it would ‘not be acceding to his request to have a tracker rate applied to the loan account’ from the expiry of the fixed-term period. The bank added that there had been no ‘indication or guarantee’ that a tracker rate would be available on expiry of the fixed-rate period. In December 2016, however, in line with the Central Bank examination into the tracker scandal, AIB contacted Mr and Mrs O’Reilly to inform them that a review of their account was being processed.
In June 2017, the bank admitted that ‘it may not have been necessary for your property to have been sold had our failure not occurred’.
In a letter, an AIB representative added, ‘we regret that this failure happened and sincerely apologise’. They were issued with an initial compensatory payment of €84,000.
‘We split the money,’ says Raymond. ‘Between solicitors’ fees and money I owed my sister there isn’t much left. But I was able to take my two boys away on holiday for the first time. I do suspect that the bank wants us to say, “Oh thanks very much, you’ve been so kind”. But it’s not over yet. I want my house back. I’m not going to run and duck now. No way. I went through hell for ten years. What’s another year if I can take them to the High Court?’
Aside from losing his home, Raymond is now ‘financially blacklisted’ because of his mortgage debt and can’t get a car loan or buy a phone for his son.
‘The word compensation is a very simple word,’ he says. ‘But how do you properly compensate for ruining someone’s life? How do you put a figure on ten years of misery? How do you put a figure on the break-up of a marriage, on the separation of a father from his children? Someone at the top was sanctioning this and I want someone to be held accountable for what happened as a result.’
With the help of a solicitor and barrister, who are working on a ‘no win, no fee’ basis, Raymond is bringing a case against the bank.
‘Everybody in this town thought I had lost my house through separation until recently,’ he says. ‘My own son, who wanted a new phone was asking me where all the money was, that we had sold the house.
‘It angers me that if I go to the High Court I won’t get to see a single banker. It will be someone from KPMG with pointy shoes and a Merc outside who will be sent in. No one is man enough to face someone like me in person. I would love a one-to-one with AIB chief executive Bernard Byrne. I would love to ask him how it feels to ruin someone’s life.
‘But I know he would never meet me...’