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Problems in Poland - Swiss mortgage, bankruptcy, jail, mental health etc


InForAPenny 1 | 4
23 Apr 2015 #1
Hi,

Sorry if this should have been separate threads!

I am trying to help a family on Poland who are in a state of serious crisis. One aspect of their problems is that they have a mortgage in swiss francs, which has recently become unaffordable, and of course is part of a big banking scandal where the government may or may not decide to assist, to be announced in May.

I am hoping to find someone who can give advice on their best course of action. They have found a class action, but it seems to be asking for money up front, money when they win, and also a deposit. And then once the class action is won they have to go to court themselves to sue?! Seems over-complex when in the UK it would just be a letter to the ombudsman and/or a no-win-no-fee case.

Also, they have been holding off selling the house because of the uncertainty. Since the house sale would probably take too long to save them, would they be better to just lose the house and/or go bankrupt, and then claim compensation from the bank? I will try to go back through our communications to see how much capital they would have left if they get their asking price.

The police have been involved re: unpaid gas bills but I have seen elsewhere in this forum that the threat of jail might be an empty one?

There's also mental and physical health issues, but no substance dependency that I am aware of.

Thanks for any assistance, or pointers towards relevant advice or experts.

Cheers

InForAPenny
jon357 63 | 14,137
23 Apr 2015 #2
One issue is that nobody was forced into taking these mortgages. Normal ones were available, terms and conditions were well advertised. People chose them because they liked the idea of a lower percentage and didn't consider any of the obvious risks in taking large amounts of credit in a currency they don't have.

No banking scandal (unless it can be proven that banks lied, which they didn't). The sad thing is that ordinary people were taking on complex financial instruments rather than exercising caution. No grounds for a "letter to the Ombudsman". This is a big issue throughout Poland and Central Europe at the moment.

No bankruptcy as such in Poland, and no reason for banks to compensate borrowers who took credit in a foreign currency only to find that the exchange rate changed, as they do.

By the way, you can't be jailed for unpaid gas bills (they just cut you off), this police thing sounds fishy - they do not usually get involved in unpaid bills or disconnection (unless someone is threatening or impeding the gas man) and as far as I know the banks are not yet repossessing houses (huge numbers of people are affected by the way and repossession is extremely rare in Poland). It looks like there's more to this story that they are perhaps not telling you or are dramatising.
terri 1 | 1,627
23 Apr 2015 #3
Re mortgages in Swiss franc - NO chance whatsoever that you will get any compensation.
The usual: buyer beware - they knew what they were getting into having a mortgage in Swiss francs. There is no point whatsoever in having a class action as they will not win. EVER.

If they leave the house now - the bank will sell it and they will not get any money they have already paid. Best action is to go to the bank and explain their case - the bank MAY be able to extend the duration of the mortgage for smaller payments. This should have been the FIRST course of action that they should have taken.

They may end up in prison for unpaid bills - better to seek legal advice here.
Harry
23 Apr 2015 #4
a family on Poland who are in a state of serious crisis.

How old are the kids? It is very very difficult to evict a family with kids under the age of 16.

I am hoping to find someone who can give advice on their best course of action.

Speak to the bank as soon as possible (i.e. today) and arrange a meeting. Be very honest about what is coming in and what they need to go out. Present a budget to the bank showing what they can afford to give the bank every month. The banks really do not want to take possession of the house; they want to get their money in an easy way.

would they be better to just lose the house and/or go bankrupt

Not really any such thing in Poland in the way you understand it.

The police have been involved re: unpaid gas bills

Unless people have been stealing gas or threatening gas company staff, the police don't care and will not get involved.

the threat of jail might be an empty one?

You can't be jailed in Poland for non-payment of debt. But you can be jailed for contempt of court and very probably will be if you continue to be in contempt of court.
OP InForAPenny 1 | 4
24 Apr 2015 #5
Thank you for so many helpful responses. If I had of realised I would have replied last night but I guess the email subscription did not work.

jon357:
Thank you for your opinion about the swiss mortgage situation, one shared by many in Poland! I have seen one or two news stories expressing surprise at how few mortgage defaults there have been so far. It is good to hear that repossessions are rare in Poland.

Apparently there is some kind of personal bankruptcy protection available now but we need to know more about it:
millercanfield.com/resources-41.html

Unfortunately the husband did not let the gas meter reader into the house many times. Hence theft of gas.

terri:
Thanks for your clear opinion about the mortgage. I think there is some kind of potential mis-selling/duty of care/consumer protection issue here but I see no point arguing as I don't know the details.

I don't know the full history of the mortgage, but I know that they have recently asked for a payment holiday but they were unable to show that they would be able to pay it back. Apparently they get daily phone calls about missed payments. Probably exaggerated but clearly the bank know they are in trouble. I might double check to see if they have asked to renegotiate. I know they tried to remortgage, probably at least last year or even earlier, because the house is technically worth more than the mortgage, but again they were turned down due to income.

Yes, the trick is finding the legal advice and also communication between them and the wider family including myself. Know any English speaking advisors on Polish consumer law? I think the company linked to above specialises in more commercial matters.

Harry:
There's a boy under 16, so the difficulty in eviction is good news, although they cannot afford to run such a big house!

The meeting with the bank with a budget is a good idea. The wife is working flat out on low wages to put food on the table, the husband is effectively mentally incapacitated unless he snaps out of it and stays clear headed for a decent period, which is unlikely. So, convincing her to find the time to draw up a budget and take time off for the meeting could be a challenge. Managed to get a mostly complete list of debts and upcoming bills out of them a few months ago but that very soon drifted.

Other points have been answered above. The gas bill was dealt with via a short term loan so no immediate threat of court unless the mortgage, other debts and bills reach that stage.

Thanks again everyone! :-)
jon357 63 | 14,137
24 Apr 2015 #6
Thank you for your opinion about the swiss mortgage situation, one shared by many in Poland! I have seen one or two news stories expressing surprise at how few mortgage defaults there have been so far. It is good to hear that repossessions are rare in Poland.

Repossessions are extremely rare fortunately.

Unfortunately the husband did not let the gas meter reader into the house many times. Hence theft of gas

A difficult one. Maybe the courts will be more sympathetic due to him being a 'Frankowicz' and his current psychological state (they do have a psychologist present in courts if there's any issue however unfortunately they almost invariably support the prosecutor), however Polish courts are notoriously unpredictable and vindictive. If he's fortunate it will be dealt with by one of the new 'electronic courts' so he won't have to go and the penalty will be low.

One issue that may help is that the Franc mortgages thing affects the middle classes more than most Polish financial injustices so it's getting plenty of attention and not just being swept under the carpet. One of my closest friends (a tax inspector) is in this situation himself and barely coping.

The renegotiation thing is tricky. It makes good sense but sense is the one thing that this Franc mortgage affair has lacked from start to finish.

I wish your friends well - they are lucky to have somebody like you supporting them.
teargas - | 71
25 Apr 2015 #7
Also, they have been holding off selling the house because of the uncertainty.

It's been explained above well, but there is no chance of compensation. The banks never hid the nature of CHF/EUR mortgages, and from what you say, they probably bought as much as they could afford on their income. For that reason, it's highly unlikely that the bank would owe anything.

I don't know the full history of the mortgage, but I know that they have recently asked for a payment holiday but they were unable to show that they would be able to pay it back.

In this case, the best thing to do is to meet with the bank and see what they would be willing to do.

Do you know if the property is located in a desirable area, or is it an expensive property in a rural area? If it's the former, the bank might well be willing to come to some agreement. If it's the latter, the bank will want their money because such properties are nearly impossible to sell, especially if it's a new property.
OP InForAPenny 1 | 4
26 Apr 2015 #8
Thanks Jon357. Another positive point for the franc mortgages is that the financial system apparently cannot handle so many people defaulting on their mortgage. So much money potentially being converted from Francs to Zloty in a short period of time would possibly cause havoc too.

The opinion on this forum does seem to be categorically going against the class action. I am not saying that this is incorrect, but I have found a few claims in news articles that deserve discussion.

Is this an entirely false statement?
"If somebody is giving loans which are so vulnerable to accidental and external factors, it is speculation which is forbidden by law"
euobserver.com/beyond-brussels/127284

And apparently:
"a consumer court has already confirmed anomalies in the bank's foreign currency loan payment calculations."
thenews.pl/1/12/Artykul/198093,Swissfranc-loan-holders-take-bank-to-court

I've tried and failed to find the result of this from the same article: "The court is to rule on the validity of the class action in its Tuesday hearing."

teargas: Oh dear: pretty large detached house with a big garden, rural location, under 10 years old. It was built rather than purchased, with family assistance, hence the mortgage being less than the theoretical value. The figures I have are vague and I lost track of which currency they were talking about, but the mortgage being 2/3 of the value could be realistic, with 20% paid off. I think it would probably clear their other debts, but maybe not much left over. They said a while ago that the house would be difficult to sell or rent out. They cannot sell the land because it is linked to the mortgage, but have begun to rent it out for grazing. I have also suggested having a lodger or two.
teargas - | 71
26 Apr 2015 #9
The problem is that the banks tomorrow could exchange all CHF mortgages for PLN mortgages at current exchange rates. It's not an issue for the bank, but for the consumer. They would be converting at 3.89zl/1CHF and suddenly facing a rise in interest rates from somewhere around 1% to around 3-3.5%. They would be in even more pain as a result, and furthermore, they'd be subject to the PLN interest rate rising, which it will at some point. The CHF on the other hand will not see positive interest rates for years to come due to the sheer strength of the Franc. As far as I know, banks are quite willing to offer a conversion into PLN.

As for people defaulting, I think it's rather that the banks know that there's little to no chance of them finding buyers for repossessed properties. It's rather better to keep people paying something, particularly as people are unlikely to trash houses that they still have a prospect of owning in the future.

Unfortunately, with what you say, it's a common scenario in Poland. People were building huge houses way beyond their means, often taking CHF mortgages to get even more from the bank. These people were not poor people, but rather middle class people who had grown up under communism/hardships of the 90's and who wanted it all now.

The problem is that these houses are often very...hmm, tailored to their own specific taste. If it was built with the help of family, then it's quite possible that the construction is also not exactly top quality, which means that potential buyers will be few and far between. Most buyers would run a mile as soon as they discover that Uncle Pawel was actually doing the plumbing and Cousin Piotr that did the electricity, as it's likely that vodka and a good time was enjoyed.

I understand that you're pinning your hopes on the mortgages being annulled, but if anything, the only realistic prospect is for the mortgage to be compulsory revalued into PLN, or possibly the banks will be forced to peg the mortgage to the CHF at today's exchange rate. There's no way that mortgage holders will see the banks forced to peg it at 2.2 or whatever the rate was when they signed the contract, as it would put the banks in trouble.

If you don't mind me asking, in which part of Poland is the property?
DominicB - | 2,678
26 Apr 2015 #10
Thanks for any assistance, or pointers towards relevant advice or experts.

I won't even try to be delicate about this. Why and did you become involved in this matter? How do you know these people, and how well? Why should you trust them or believe what they say? What makes you think that they are not trying to defraud or deceive you?

Why this particular family, and not any of the other tens of thousands in the same position?

What makes you think that you can help? Per your own admission, you lack expertise and knowledge in this area.

Also, in what capacity are you acting, and with whose funds? If it is not your personal money at stake, and you are representing some organization, then clearly you are in way over your head and likely to do more harm than good. Better back off and let someone competent deal with it, or not.

There is nothing about the family you have described or about their situation that tugs at my heartstrings more than hundreds of thousands of other families in Poland. In fact, there are plenty of families in much worse shape.To top it off, this is a situation solely of their own making. They are responsible for getting into it, and it should be their responsibility for getting out of it. I don't see how you think you are helping, or can help, for that matter.

You really need to step back, take a better look at the whole situation, get the facts you need and think real hard about whether you should be involving yourself in this problem.

Sorry, but there are way to many red flags in your posts to ignore.
teargas - | 71
26 Apr 2015 #11
Dominic, it's family, he says so above.

My feeling on the matter is that it's probably genuine enough. Rural Poland, middle class and did the stereotypical thing of getting an astronomical mortgage and then relied on other family members to build a house way beyond reasonable. The breadwinner no longer earns the bread and has gone into a huge depression as a result. Nothing unusual or ordinary, the only strange thing is that he hasn't started drinking too.

On the flip side, if it's family and they see someone in the UK, it's also quite possible that they see the OP as a cash cow. It might well be that there's actually nothing happening, but they're attempting to get some money for nothing, possibly to help them with the CHF mortgage.

To the OP: forget about a legal route, it's a terrible idea as you'll just pay up to 300zl an hour for nothing. Instead, you have to tell them that they need to go to the bank and meet with someone. If the husband is a mental and physical wreck, then he should sign the power of attorney for his wife and let her deal with it personally.
DominicB - | 2,678
26 Apr 2015 #12
Dominic, it's family, he says so above.

Not close family, for sure. He writes about them as if he barely knows them.
jon357 63 | 14,137
26 Apr 2015 #13
Dominic, chill out and stop attacking the guy - he can make his own mind up about whether he wants to help somebody or not. This is an important issue for the OP and the family Involved. It is not a time for trolling.

One issue is that this affects a lot of people now and is a hot political issue. As for mis-selling, there have been some very dodgy investments and loans in Poland. With the Franc scandal, there were warnings at the time and the issue is whether or not mis-selling can be proved. There was certainly a lot of naivety involved with people trusting the banks but there was also a lot of recklessness. This one is likely to be debated for some time.

@Inforapenny, the lodger suggestion is one that would work better in the UK than in Poland. Sitting pretty (not that this is a pretty situation) could be the best thing. There were huge mortgage default issues even before the Franc scandal and so many people are affected that there won't be mass evictions.

At the time people were getting those mortgages, friends said I was stupid for not getting one. I'm very glad I trusted my instinct however there's no sense in Schadenfreude especially for people whose credit is on their own home not buy to let etc.

The situation is so widespread that something will give eventually. Maybe the zloty will get stronger.
DominicB - | 2,678
26 Apr 2015 #14
Dominic, chill out and stop attacking the guy

Didn't attack him at all. It sounded to me like he was being taken advantage of. I missed the deeply buried reference to him being somehow related to them.

Actually, I'm still not sure that this isn't some type of scam.
terri 1 | 1,627
26 Apr 2015 #15
It's always difficult to help people at a distance, not knowing ALL the facts and dealing with a totally different system of mortgages and debts.

Generally, Polish people are not so eager to reveal all their financial income/outgoings to anyone - but that is exactly what is needed here.

One aspect tells me that this could be a scam to get money out of a rich Western relative, by putting the worst scenario to them - hoping that the rich relative stumps up few thousand to tie them over.

Best advice - go and get there - see all the facts for yourself. Ask all questions relating to the mortgage, finances - bank visits, correspondence and get to the bottom of what can be done. Burying your head in the sand is NOT the answer.

This needs to be sorted out quickly. If they actually need your help - which they evidently DO, as you have got somewhat involved, then they must allow you to help them. I feel that they do not want you to get involved in the 'house mortgage' problem, but just want money out of you.
OP InForAPenny 1 | 4
26 Apr 2015 #16
Trying to keep this anonymous so not sure I should provide their location.

From my original post, "or pointers towards relevant advice or experts."

Will push them towards meeting the bank the next time I manage to make contact with them.
teargas - | 71
26 Apr 2015 #17
Generally, Polish people are not so eager to reveal all their financial income/outgoings to anyone.

That was also one of my feelings. Communism did destroy a lot of people inside, and they might not feel any guilt whatsoever about cheating a "rich" foreign relative. It certainly wouldn't be the first time that it has happened.
DominicB - | 2,678
26 Apr 2015 #18
the next time I manage to make contact with them.

Statements like this indicate that said family is barely known to you. It might be best to keep it that way, rather then expose yourself to unknown and unknowable potentially dangerous self-imposed obligations and losses. You have never provided a good reason why you, in particular, should get involved, from which I conclude that you have none, If so, it would be wisest to keep a very healthy distance and let better qualified and more knowledgeable parties handle the matter.

Sorry, but I read and reread your posts, and there is not one single detail that indicates that this isn't some type of scam or ruse. Even if it's not, I also can't see any way you would be able to actually help, considering your lack of detailed information about their situation, and the fact that the lines of communication are so poor that you will almost certainly never be in possession if sufficient factual information.
f stop 25 | 2,513
27 Apr 2015 #19
One of the way I observed many people dealt with their upside-down mortgage here in the US, they simply stopped paying their mortgage. It annoyed me to no end seeing few people I know live rent free for close to a year, because that's how long it took the banks to repossess their houses. All along convinced that it was entirely banks' fault.
terri 1 | 1,627
27 Apr 2015 #20
The thing in Poland with the Swiss franc mortgages is that the monthly payments were far cheaper than payments for a mortgage taken out in Polish zloty.

Now that the monthly payments for both types of mortgages have almost equaled, people having Swiss franc mortgages are up in arms about this. People who have taken out mortgages in Polish zloty have no sympathy for them, in the same way as those taking our Swiss franc mortgages had no sympathy for the Polish zloty mortgagees. In fact, the Swiss franc people laughed and mocked those taking out mortgages in Polish zloty - where payments at that time were almost double those of the Swiss franc payments.

You draw your own conclusion about this.
Generally, I don't see many British people nor Americans taking out mortgages in currencies other than their own, as everyone knows that the prices of foreign currencies fluctuate.
Harry
27 Apr 2015 #21
And it's not as if Polish people didn't know that. Before the fashion for CHF mortgages a fair few people took out USD denominated mortgages. The difference there is that some Polish people won big with those loans: I know one man who took out his loan in the early '00s when one dollar got you about four zloty and then repaid it in 2008 when you only needed two zloty to buy a dollar.
DominicB - | 2,678
27 Apr 2015 #22
All along convinced that it was entirely banks' fault.

Actually, it was entirely the banks' fault. They loaned money to people who couldn't pay them back on the speculation that something magical would happen. They were well aware of the fact that they were investing in a speculative bubble.
jon357 63 | 14,137
27 Apr 2015 #23
Some people certainly struck lucky in those days. In the Polish CHF mortgage craze (which the Financial Times called "an act of collective insanity" at the time), doubtless some were hoping to repeat the fast buck, doubtless others were naive, and many more assumed they'd be able to whine and winge their way to keeping the property if things went wrong, as may well happen.

The OP gives a very British impression. The reality is that very few will be turfed out on the streets.

Generally, I don't see many British people nor Americans taking out mortgages in currencies other than their own, as everyone knows that the prices of foreign currencies fluctuate.

It was illegal in the UK for a long time. In Poland, the habit of trading and saving in foreign currencies and the vagaries of the exchange rate (remember that fairly recently they had hyperinflation) mean that people very well knew that there can be dramatic changes.
terri 1 | 1,627
28 Apr 2015 #24
There was another demonstration in Warsaw by people with CHF (Swiss franc) mortgages.
Reading their reasoning for taking out CHF mortagegs:
1. The bank said that CHF is a guaranteed currencywhich will not go up by more than 20%. At the time CHF was 2.6PLN, now around 4PLN, was around 5PLN.

2. It is the banks fault, as I did not realize that the value of CHF currencies can go up and down.
3. I owe more now in Polish zloty than when I started....this takes the biscuit.
4. We need to have the mortgage changed into Polish zloty, but only at the rate of CHF 2.6, not at the current rate.
5. The fact that we have paid less than anyone else (i.e. Polish mortagees) has nothing to do with anything - we are now paying the same as them and we don't like it!.

6. It is the banks fault that I did not readall the documentation and it now turns out that there were things in there that I did not read and understand.

7. The bank should help us now - it is all their FAULT,they make too much profit, and we are now struggling.
Really?
OP InForAPenny 1 | 4
28 Apr 2015 #25
Thanks again to everyone who has commented. I think we have dealt with the issues regarding this particular family's situation as well as we are going to. There have been some excellent suggestions that have been passed on.

Looks like this thread is heading into a more general discussion, which I am sure will prove interesting and I might continue to monitor.
summerday
28 Apr 2015 #26
The Polish financial sector is going to have a rough 12 months as the SKOKS fall into bankruptcy or are taken over one by one. So the Polish financial authorities have more important issues than mortgage holders.


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