Morgan Kelly - Pump a few billion into the middle class coffers?

iPlop · 22-08-2011 1:44pm

Tigger wrote: »

nope i've paid over 2k in solicitors fees etc to have re-posessed and troubled property examined and still feel that the value is yet to come.

i have left my details with loads of people, banks and agents etc and i've been offered some nice stuff but not quite perfect.

examples would include 5 bed house on 1/4 acre fully finished for 165 or 4 bed on 1/2 acre for 98.

i'm not afraid i'm well able to aford i just want the best deal i can like when i buy a car or a tv

Good stuff, I have a friend that just snapped up a fabulous property for 1/3 of what it was valued at during the boom.

And you're right we haven't reached the bottom yet, lack of permenant positions will ensure this, so long as people are on rolling contracts the banks won't lend to them.

People used to call me a tight arse for not buying a second home or re-mortgaging to buy a car, I'm glad I didn't now and my house is still worth more than what I paid for it, during the boom it was worth €440k over twice what I paid.

Absolutely mad! ,In hindsight I should have sold it in 2007 for €440k and rented for 2 years which would cost 24K and then bought it back now at €200k and made €176k profit:pac:

Wish I had a crystal ball then.

Frank Black · 22-08-2011 2:12pm

Monty Burnz wrote: »

You should really read the links you post:

That has nothing to do with debt forgiveness at all. It's just a value they are putting on an 'asset'.

They may not be calling it 'debt forgiveness' but that is what is amounts to - unless you really believe that NAMA will recover all of the loans it's currently 'working through'.

They won't.

Monty Burnz · 22-08-2011 2:13pm

black francis wrote: »

They may not be calling it 'debt forgiveness' but that is what is amounts to - unless you really believe that NAMA will recover all of the loans it's currently 'working through'.

They won't.

You are failing to distinguish between bankruptcy and debt forgiveness. The 'owners' of the assets the NAMA loans belong to do not keep the assets if they can't pay the loans. If someone has to go bankrupt, that's fair enough, but you don't keep the house.

Frank Black · 22-08-2011 2:30pm

Monty Burnz wrote: »

You are failing to distinguish between bankruptcy and debt forgiveness. The 'owners' of the assets the NAMA loans belong to do not keep the assets if they can't pay the loans. If someone has to go bankrupt, that's fair enough, but you don't keep the house.

I actually think it's you that has a problem understanding what the term 'debt forgivenes' will mean in principle.
For property owners 'debt forgiveness' will most likely mean that if the house on which the morgage is secured is sold below the amount of outstanding mortgage - then they will not currently be pursued by the lending institution for that outstanding amount. i.e. the outstanding debt is forgiven. There is evidence that this approach has already been applied by some lending institutions - recently media reports highlighted a particular case of this.

It will basically allow homeowners the chance to walk away from an unservicable mortgage on thier property and rent instead.

Scanlas The 2nd · 22-08-2011 2:45pm

black francis wrote: »

I actually think it's you that has a problem understanding what the term 'debt forgivenes' will mean in principle.
For property owners 'debt forgiveness' will most likely mean that if the house on which the morgage is secured is sold below the amount of outstanding mortgage - then they will not currently be pursued by the lending institution for that outstanding amount. i.e. the outstanding debt is forgiven. There is evidence that this approach has already been applied by some lending institutions - recently media reports highlighted a particular case of this.

It will basically allow homeowners the chance to walk away from an unservicable mortgage on thier property and rent instead.

Monty Burnz is usually right about these matters. I'd listen to him if I were you.

Frank Black · 22-08-2011 2:54pm

Scanlas The 2nd wrote: »

Monty Burnz is usually right about these matters. I'd listen to him if I were you.

Given an official policy is yet to be adopted, there is no 'right' in this instance - meerly supposition as to what if any form 'debt forgiveness' will take for people with unsustainable mortages.

But if you like others to do the thinking for you - fair enough.

BostonB · 22-08-2011 3:07pm

black francis wrote: »

....
It will basically allow homeowners the chance to walk away from an unservicable mortgage on thier property and rent instead.

Won't everyone in negative equity who hasn't paid off more than the negative equity and costs, want to do this. Walk away from the loss and wait and buy again much cheaper?

I don't see where the incentive to stop people and banks, developers, getting into trouble all over again. They'll be free of debts, to spend, borrow their way back into trouble again.

Seems to give people who didn't get into trouble, no incentive not to take risks.

Frank Black · 22-08-2011 3:11pm

BostonB wrote: »

Won't everyone in negative equity who hasn't paid off more than the negative equity and costs, want to do this. Walk away from the loss and wait and buy again much cheaper?

I don't see where the incentive to stop people and banks, developers, getting into trouble all over again. They'll be free of debts, to spend, borrow their way back into trouble again.

Seems to give people who didn't get into trouble, no incentive not to take risks.

Not necessarily - you will find it hard to convince a lending institute to advance you another mortgage in the medium term if you have walked away from a previous mortgage.

By the time you have built up enough credit worthiness again you may be too old to ever take on a 25-30 year mortgage.

I still think people who borrowed sensibly and are servicing thier debts will be better off in the long run than the reckless - at least I hope so.

littlemac1980 · 22-08-2011 3:16pm

black francis wrote: »

Not necessarily - you will find it hard to convince a lending institute to advance you another mortgage in the medium term if you have walked away from a previous mortgage.

Not true, both sets of individuals will find it equally impossible to get a mortgage in the medium to long term. That's the reality of what we are all facing now for a number of generations, any other issue aside.

Frank Black · 22-08-2011 3:21pm

littlemac1980 wrote: »

Not true, both sets of individuals will find it equally impossible to get a mortgage in the medium to long term. That's the reality of what we are all facing now for a number of generations, any other issue aside.

I got approval for a mortgage from ICS 2 weeks ago - so obvioulsy not that impossible.

littlemac1980 · 22-08-2011 3:26pm

black francis wrote: »

I got approval for a mortgage from ICS 2 weeks ago - so obvioulsy not that impossible.

I'm sure you have a very well paid, permanent job, with good prospects in terms of your job security, or alternatively a steady high income, with likewise, good prospects in terms of its sustainability into the future.

KerranJast · 22-08-2011 3:35pm

Ronan Lyons from Daft.ie was on Lunchtime on Newstalk and he made two very good points:
- Two wrong decisions don't make a right one. Just because we foolishly bailed out the banks doesn't mean we should also blindly bail out distressed mortgages in some vain attempt at equality.
- NAMA and the banking bailout resulted in huge chunks of equity being taken by the Govt. Any debt forgiveness would have to result in a partial or full loss of equity in the property by the mortgage holder.

Any mortgage restructuring program would have to make it more difficult for the applicant to get another mortgage in the short to medium term to discourage the "jingle mail" phenomenon.

Frank Black · 22-08-2011 3:40pm

littlemac1980 wrote: »

I'm sure you have a very well paid, permanent job, with good prospects in terms of your job security, or alternatively a steady high income, with likewise, good prospects in terms of its sustainability into the future.

I wish!

Was actually suprised considering the stories of the tight lending policies seemingly adopted by the banks. I'm sure for some people it is very hard to get credit from a lending institution but I think it's wrong to say it's impossible - at least from my experience.

littlemac1980 · 22-08-2011 4:03pm

black francis wrote: »

I wish!

Was actually suprised considering the stories of the tight lending policies seemingly adopted by the banks. I'm sure for some people it is very hard to get credit from a lending institution but I think it's wrong to say it's impossible - at least from my experience.

Ok, well I'm happy for you. Now let me ask you this:

If for instance, I work in an Estate Agents, which had managed to survive the initial property crash, but was far from booming, and whose future in business was still very uncertain, and I am making a moderate income of about €35,000 a year, and had never had a mortgage. I go to a bank to look for one because I have just got married and would like to start a family.

Or alternatively, I am a solicitor by profession, who through whatever circumstances, had availed of debt forgiveness and am now debt free. I have just recently gotten a job in the public sector, (forget the moritorium - this is an example), and it pays me €60,000 + a year and is as secure as a job can be.

In spite of the fact that in the first example that I had not defaulted on a mortgage (or gotten debt forgiveness, there would be a distinction one would expect), and in the second example, I clearly would have, I would find it difficult to see, from an objective point of view (bearing in mind I have not banking experience), why the person in the first example would be considered a better potential mortgagor than the second.

In fact, I would argue that it is likely that the bank would be more willing to lend a substantial amount of money to the person in the second example than they would to the first, simply on the basis that they would be assessing risk in the future and the Secure Job, and high income would be a very significant factor, as too would the lack of personal debt - which had been forgiven, that's true, but since it no longer has any real legal effect, is of little significance.

I personally think that the above illustration casts a weight of doubt on your point that the poor credit rating of those people who avail of debt forgiveness would be a significant enough deterrent to prevent Joe Soap deciding that 'I can pay my mortgage, but feck it, why bother, when if I stop, I'll save a lot a hell of a lot of money, and stress.'

iPlop · 22-08-2011 4:23pm

Looks like the scheme isn't going to see the light of day, it's on the journal.ie, I can't copy and paste the link I'm on mobile ATM

Frank Black · 22-08-2011 4:28pm

littlemac1980 wrote: »

Ok, well I'm happy for you. Now let me ask you this:

If for instance, I work in an Estate Agents, which had managed to survive the initial property crash, but was far from booming, and whose future in business was still very uncertain, and I am making a moderate income of about €35,000 a year, and had never had a mortgage. I go to a bank to look for one because I have just got married and would like to start a family.

Or alternatively, I am a solicitor by profession, who through whatever circumstances, had availed of debt forgiveness and am now debt free. I have just recently gotten a job in the public sector, (forget the moritorium - this is an example), and it pays me €60,000 + a year and is as secure as a job can be.

In spite of the fact that in the first example that I had not defaulted on a mortgage (or gotten debt forgiveness, there would be a distinction one would expect), and in the second example, I clearly would have, I would find it difficult to see, from an objective point of view (bearing in mind I have not banking experience), why the person in the first example would be considered a better potential mortgagor than the second.

In fact, I would argue that it is likely that the bank would be more willing to lend a substantial amount of money to the person in the second example than they would to the first, simply on the basis that they would be assessing risk in the future and the Secure Job, and high income would be a very significant factor, as too would the lack of personal debt - which had been forgiven, that's true, but since it no longer has any real legal effect, is of little significance.

I personally think that the above illustration casts a weight of doubt on your point that the poor credit rating of those people who avail of debt forgiveness would be a significant enough deterrent to prevent Joe Soap deciding that 'I can pay my mortgage, but feck it, why bother, when if I stop, I'll save a lot a hell of a lot of money, and stress.'

I've no idea is the simple answer. I don't work in banking and don't know the criteria that would apply in the circumstances you outline.
However, I'd imagine there are many factors which apply other than the gross income of the applicant.
For the example you give, how much of a mortgage is the estate agent looking for? What type of property is he planning to purchase?
I know these were key criteria the bank were interested in in our case.
If you're on a salary of 35K, you probably shouldn't be looking for a mortgage of 400K for example. If your future income is 'still very uncertain', then why take out a mortgage at all? - it's only a pity that the banks weren't as careful when assessing mortage applications for the last 10 years - we mightn't be in this mess now if they had been.

foxyboxer · 22-08-2011 4:32pm

THE PROPOSAL TO offer mortgage relief to struggling homeowners has been played down by the government after a weekend of discussion about the idea.

The proposal by the UCD economist Morgan Kelly gained traction over the weekend with a number of other economists and one government minister appearing to come out in support of offering relief to mortgage holders unable to pay back their loans but it has been played down this morning.

The Irish Examiner reports that sources indicate the scheme, which Kelly estimates would cost between €5 billion and €6 billion, is not feasible.

One source told the paper it was “mad, because the taxpayer will have to pick up the bill for that.”

Department of Finance minister Brian Hayes has told the Irish Times that debt forgiveness created two problems, one for those paying 100 per cent of their mortgages who see others getting a write down and another for the banks:

“To introduce debt forgiveness totalling €6 billion at a time when the Government is bringing those banks out of the A&E wards would be very difficult to justify.”

Over the weekend the idea was welcomed as one the government should discuss according to the Housing Minister Willie Penrose and by the leading economist Dr Constantin Gurdgiev.

A review headed by KPMG accountant Declan Keane is already examining measures to help distressed mortgage holders as promised in the programme for government.

Its report is due in late September but the Irish Times reports that it is unlikely that it will recommend debt forgiveness.

A poll carried out by TheJournal.ie this weekend found that 44 per cent of voters were in favour of mortgage debt relief but that there should be a percentage write-off on all mortgages.

BostonB · 22-08-2011 5:10pm

black francis wrote: »

Not necessarily - you will find it hard to convince a lending institute to advance you another mortgage in the medium term if you have walked away from a previous mortgage.

By the time you have built up enough credit worthiness again you may be too old to ever take on a 25-30 year mortgage.

I still think people who borrowed sensibly and are servicing thier debts will be better off in the long run than the reckless - at least I hope so.

I hope so too. But banks (and people) have short memories.

ferretone · 22-08-2011 5:30pm

lol @ George Hook: "To compare Bertie Ahern to Maggie Thatcher is very unfair...

...to Maggie Thatcher!" :pac:

Monty Burnz · 22-08-2011 5:52pm

black francis wrote: »

I got approval for a mortgage from ICS 2 weeks ago - so obvioulsy not that impossible.

Francis, it will be interesting to hear if they let you draw down a mortgage. I've heard a lot of anecdotal accounts of banks okaying lots of mortgages in principle, but backing out on the most slender of excuses when you try to take them up on the offer. Keep us informed!

Monty Burnz · 22-08-2011 5:58pm

foxyboxer wrote: »

A poll carried out by TheJournal.ie this weekend found that 44 per cent of voters were in favour of mortgage debt relief but that there should be a percentage write-off on all mortgages.

This reminds me of the research carried out for The Front Line where they asked (and my memory is a little hazy here) whether mortgage forgiveness was a good idea. The majority thought it was. The next question was whether the money should come from increased taxes, cuts in services, or some other unpalatable option, and when you added up the numbers who voted for each of those three options, you didn't even get a majority of those who thought it was a good idea!

So even of those who think we should have mortgage forgiveness, a large part of their willingness to support it comes from ignorance of the fact that they will have to pay for it.

bnt · 22-08-2011 6:59pm

If I may get very "big picture" for a minute ... in socio-political theory going back to Aristotle, a healthy middle class is considered crucial to the survival of Democracy. In a stable society you want the majority of people to be comfortable: they can't all be rich, and you don't want a lot of poor people either. Rule by the rich is Oligarcy: rule by the poor would be Anarchy (i.e. no rule at all). Aristotle sez:

It is clear then both the best partnership in a state is the one which operates through the middle people, and also that those states in which the middle element is large, and stronger if possible than the other two together, or at any rate stronger than either of them alone, have every chance of having a well-run constitution.

If you look around the world, at the most stable and healthy democracies, they are the ones with strong middle classes. Now look at what's happening in the USA: the middle class prospered in the decades after WW2, but are now being squeezed while the rich are getting richer. So, while I haven't yet thought seriously about the issue of mortgage writeoffs, I do think we don't want a country made up of only the rich and the poor, with no stable middle class.

Frank Black · 22-08-2011 7:02pm

Monty Burnz wrote: »

Francis, it will be interesting to hear if they let you draw down a mortgage. I've heard a lot of anecdotal accounts of banks okaying lots of mortgages in principle, but backing out on the most slender of excuses when you try to take them up on the offer. Keep us informed!

I'll be well p;ssed off if that happens.

bnt · 22-08-2011 7:07pm

Monty Burnz wrote: »

So even of those who think we should have mortgage forgiveness, a large part of their willingness to support it comes from ignorance of the fact that they will have to pay for it.

Remind me again why the government (and therefore the people) would have to pay for it? The mortgages should be on the banks' balance sheets, where they belong: not fobbed off to the government in any form such as NAMA, or otherwise bailed out. No-one forced them to sell mortgages to people who couldn't repay them: they did it in the pursuit of extraordinary profit, neglecting their own historical best practices. If that means the banks become even more insolvent than they were before, so be it. Bad businesses should fail - that's how Capitalism works.

Sofa King Great · 22-08-2011 7:44pm

bnt wrote: »

Monty Burnz wrote: »

So even of those who think we should have mortgage forgiveness, a large part of their willingness to support it comes from ignorance of the fact that they will have to pay for it.

Remind me again why the government (and therefore the people) would have to pay for it? The mortgages should be on the banks' balance sheets, where they belong: not fobbed off to the government in any form such as NAMA, or otherwise bailed out. No-one forced them to sell mortgages to people who couldn't repay them: they did it in the pursuit of extraordinary profit, neglecting their own historical best practices. If that means the banks become even more insolvent than they were before, so be it. Bad businesses should fail - that's how Capitalism works.

Taxpayers own large portions of Ireland's main banks.

bnt · 22-08-2011 8:50pm

Sofa King Great wrote: »

Taxpayers own large portions of Ireland's main banks.

Yes, I know - that's why I mentioned NAMA - but this thread is about possible new mortgage writedowns, not the existing situation.

Frank Black · 22-08-2011 8:56pm

bnt wrote: »

Remind me again why the government (and therefore the people) would have to pay for it? The mortgages should be on the banks' balance sheets, where they belong: not fobbed off to the government in any form such as NAMA, or otherwise bailed out. No-one forced them to sell mortgages to people who couldn't repay them: they did it in the pursuit of extraordinary profit, neglecting their own historical best practices. If that means the banks become even more insolvent than they were before, so be it. Bad businesses should fail - that's how Capitalism works.

I agree with the sentiments, but since the 29th of September 2009 the point has become moot.

Monty Burnz · 22-08-2011 9:19pm

bnt wrote: »

Remind me again why the government (and therefore the people) would have to pay for it?

Two words: Fianna Failure.

bnt wrote: »

The mortgages should be on the banks' balance sheets, where they belong: not fobbed off to the government in any form such as NAMA, or otherwise bailed out. No-one forced them to sell mortgages to people who couldn't repay them: they did it in the pursuit of extraordinary profit, neglecting their own historical best practices. If that means the banks become even more insolvent than they were before, so be it. Bad businesses should fail - that's how Capitalism works.

Listen, before Fianna Failure tied the dead banks around our necks like a millstone, I would have agreed with you. But the original owners of the banks have been wiped out (so capitalism punished them just fine), and they are now owned by the state. Every loss for the nationalised banks is a loss that will be made up out of our taxes.

hmmm · 22-08-2011 9:21pm

You can't take money off one group of people and give it to another group and somehow create free money. This is simply taking money off taxpayers, pensioners, the sick etc and handing it over to another group of people.

How many hospitals should we close so that people who paid gazillions for a 1 bed in the IFSC can get back to living the lifestyle they feel they are entitled to? If they got themselves into too much debt, pity about them - they'll have to suffer the "indignity" and "inconvenience" of renting.

Frank Black · 22-08-2011 10:01pm

hmmm wrote: »

You can't take money off one group of people and give it to another group and somehow create free money. This is simply taking money off taxpayers, pensioners, the sick etc and handing it over to another group of people.

How many hospitals should we close so that people who paid gazillions for a 1 bed in the IFSC can get back to living the lifestyle they feel they are entitled to? If they got themselves into too much debt, pity about them - they'll have to suffer the "indignity" and "inconvenience" of renting.

I'm totally against the idea of people having debts written off, but i've a couple of friends who bought in 2006 and are really struggling.
They wearn't trying to aspire to some sort of millionaire lifestyle, they just bought modest apartments at prices that now seem ridiculous.

It was bad luck and bad timing for a lot of people and I actually have a lot of sympathy for people in this position.

Sofa King Great · 22-08-2011 10:05pm

black francis wrote: »

It was bad luck and bad timing for a lot of people and I actually have a lot of sympathy for people in this position.

Why don't you start giving them money toward their mortgage?

Frank Black · 22-08-2011 10:07pm

Sofa King Great wrote: »

Why don't you start giving them money toward their mortgage?

Read first line of my post.

hmmm · 22-08-2011 10:13pm

black francis wrote: »

Read first line of my post.

You haven't really answered his question - if you care so much for your friends, you gave them money. I don't see why anyone else should have to suffer so that they can be bailed out of the debt they freely entered into.

If we go down the mortgage forgiveness route, the consequences will be with us for decades. People will pile into property the next time prices rise without caring for the consequences. Any time any large group of people lose money on anything, the taxpayer will be expected to bail them out. I can see a lot of people who are the prudent savers in this country leaving the country, why stay here and see your savings confiscated to bail out the reckless. People are going to put all their money into property in the future, a precedent that it is a one way bet will have been set.

iPlop · 22-08-2011 10:14pm

Sofa King Great wrote: »

Why don't you start giving them money toward their mortgage?

No way!! homelessness is the answer, can we form gangs and go around the country and round all the people in mortgage arrears and put them in some sort of internment camp? c'mon it's the classic AH keyboard warrior answer to the problem:rolleyes:

Sofa King Great · 22-08-2011 10:16pm

Sink The Banana wrote: »

No way!! homelessness is the answer, can we form gangs and go around the country and round all the people in mortgage arrears and put them in some sort of internment camp? c'mon it's the classic AH keyboard warrior answer to the problem:rolleyes:

Where have i said people should be evicted from their homes?

Potentially something has to be done but debt forgiveness is not it.

Frank Black · 22-08-2011 10:20pm

hmmm wrote: »

You haven't really answered his question - if you care so much for your friends, you gave them money. I don't see why anyone else should have to suffer so that they can be bailed out of the debt they freely entered into.

If we go down the mortgage forgiveness route, the consequences will be with us for decades. People will pile into property the next time prices rise without caring for the consequences. Any time any large group of people lose money on anything, the taxpayer will be expected to bail them out. I can see a lot of people who are the prudent savers in this country leaving the country, why stay here and see your savings confiscated to bail out the reckless. People are going to put all their money into property in the future, a precedent that it is a one way bet will have been set.

When did I say in any of my posts that I'm in favour of debt forgiveness?

I just object to your portrayal of all people in this position to have been trying to live some sort of IFSC 'lifestyle'.

Flex · 22-08-2011 10:22pm

Sink The Banana wrote: »

No way!! homelessness is the answer, can we form gangs and go around the country and round all the people in mortgage arrears and put them in some sort of internment camp? c'mon it's the classic AH keyboard warrior answer to the problem:rolleyes:

His question is perfectly valid. If you believe so much in the cause then why not create a private charity that people can freely donate to to pay these peoples mortgages? If only as a temporary measure until some government policy is enacted?

iPlop · 22-08-2011 10:25pm

Sofa King Great wrote: »

Where have i said people should be evicted from their homes?

Potentially something has to be done but debt forgiveness is not it.

Then what is it? the main problem is the debt right?? kick them out and pay for their council houses and rent allowance?

The debt is the problem, I don't see any other option than reducing the size of the debt to what the property is worth now and the government chalking this one down to stupidity on their behalf, the banks, the borrower etc....

If the owner can't afford it at the reduced rate then throw them out on their ear, that or the borrower hands the keys back to the bank and the bank becomes the landlord and the occupier "rents" it from them at a reduced rate they can afford until the economy picks up.

There is really no point throwing people out of their homes tbh.

Mike 1972 · 22-08-2011 10:28pm

Sink The Banana wrote: »

You're forgetting this thread is full of posters who couldn't get on the property ladder, so they want to see families homeless and on the streets..

:rolleyes: The only people I want to see homeless are those who cant understand the difference between being "homeless" and living somewhere owned by someone other than a bank/building society.

For a country with such a high level of "Homelessness" the Germans dont seem to be doing too badly.

Sink The Banana wrote: »

Then what is it? the main problem is the debt right?? kick them out and pay for their council houses and rent allowance? .

Given that the taxpayers now own a majority stake in all the major banks arent they effectively living in public housing already ?

bnt wrote: »

that's how Capitalism works.

It does ?

hmmm · 22-08-2011 10:28pm

Sink The Banana wrote: »

There is really no point throwing people out of their homes tbh.

So I could have bought a million euro house, not paid my mortgage and waited until the poor gob****e renters and savers paid for my "forgiveness".

If FG come back with this plan they know the reception they'll get, think Eircom shares by 100.

hmmm · 22-08-2011 10:29pm

Mike 1972 wrote: »

The only people I want to see homeless are those who cant understand the difference between homelessness and living somewhere owned by someone other than a bank/building society.

But, surely you don't expect these people to rent? Have you seen the calibre of people who rent?

iPlop · 22-08-2011 10:32pm

Mike 1972 wrote: »

The only people I want to see homeless are those who cant understand the difference between homelessness and living somewhere owned by someone other than a bank/building society.

My point about renting the home from the bank instead of reducing the debt, then when the economy picks up ,you take full responsibility for the debt and continue where you left off, instead of getting thrown out.

Maybe in todays economy 4 years of an agreement with the bank, then pick up where you left off.

The Waltzing Consumer · 22-08-2011 10:34pm

I don't think debt relief is fair but as most people have said, something should be done.

My suggestion? If a person is living in a home they cannot afford, the state should take it back and provide a property they can afford, downsize them!

A couple buys a 500k house in 2007, now can't afford mortgage payments, well, repossess the house and set up couple in in house already owned by the state which they can afford to live in. Do this for the different income earners by downsizing them. The state can do this as it is has so much property in Nama and the banks and the idea is people will take "step downs" in values of homes with only the top layer remaining vacant, which will return to market and the top properties are good investments as the prices have come down so much.

No point in government owning so many ghost estates and also having thousands of home owners not repaying mortgage, mix it up!

hmmm · 22-08-2011 10:35pm

The Waltzing Consumer wrote: »

My suggestion? If a person is living in a home they cannot afford, the state should take it back and provide a property they can afford, downsize them!

That's what rent allowance is for, if you can't afford a place the government will help you pay your rent.

What the government isn't about is handing out free houses (even if "downsized"). Unfortunately most of the ghost estates have been built in stupid-ville nowhere near D4 and the Sunday Independent journalists in negative equity.

bnt · 22-08-2011 10:39pm

Mike 1972 wrote: »

It does ?

Yes.

Not in Ireland, though. Or the USA since 2008. "Too Big To Fail" ... too stupid to live.

The Waltzing Consumer · 22-08-2011 10:41pm

hmmm wrote: »

That's what rent allowance is for, if you can't afford a place the government will help you pay your rent.

What the government isn't about is handing out free houses (even if "downsized"). Unfortunately most of the ghost estates have been built in stupid-ville nowhere near D4 and the Sunday Independent journalists in negative equity.

Na, it's not about rent allowance.

A couple live in a 500k house but can't afford mortgage.
Government own a range of ghost estates and vacant properties.
government tells couple, you can't afford current house, here are the ones you can afford.
Couple "buy" state owned house and pay that repayment.
State owns more expensive house but will either look for other people downsizing, or put back on market.

The idea is you are trying to shift empty units the state already owns and allowing home owners in trouble to downsize and live somewhere they can afford. It is not about giving them free, the couple will be buying the house the state is selling.

Mike 1972 · 22-08-2011 10:42pm

Sink The Banana wrote: »

renting the home from the bank instead of reducing the debt.

AKA "Interest only Mortgage"

Sink The Banana wrote: »

Maybe in todays economy 4 years of an agreement with the bank, then pick up where you left off.

You expect the economy to recover to 2007 levels within 4 years ????

Sink The Banana wrote: »

Lets start throwing them out of their homes now, on to council lists and start complaining about them getting a "free" house, or even better complain about them getting rent allowance.

Council houes are rarely "free" and If they still have a anyways halfway decent job why would they be entitled to rent allowance ?

hmmm · 22-08-2011 10:45pm

The Waltzing Consumer wrote: »

A couple live in a 500k house but can't afford mortgage.
Government own a range of ghost estates and vacant properties.
government tells couple, you can't afford current house, here are the ones you can afford.
Couple "buy" state owned house and pay that repayment.
State owns more expensive house but will either look for other people downsizing, or put back on market.

OK so let's say a couple bought a house for 1 million, that's now worth the 500k.

The Government says "here's a new house to live in", and the government then sells the first house for 500k.

The taxpayer now owes 500k (the bank loss) and the couple are living in a new house.

The Waltzing Consumer · 22-08-2011 10:52pm

hmmm wrote: »

OK so let's say a couple bought a house for 1 million, that's now worth the 500k.

The Government says "here's a new house to live in", and the government then sells the first house for 500k.

The taxpayer now owes 500k (the bank loss) and the couple are living in a new house.

Yes, but you are forgetting one thing. If someone cant afford a mortgage, they lose the house, so the state has lost one million euro. So if the state then sells it at the current value, it is 500k so the taxpayer STILL owes 500k.

But if the state owns the house and gets the couple to buy another state house which is valued less, you are repaying part of this debt that in other cirumstances may never be paid back. At least you are getting something back, you are filling the empty units, getting people living in these ghost estates and people will not be getting their debts completely wiped out, but rearranged to a debt they can afford.

Quite simply, someone will lose house, pay nothing back, state takes all the pain OR someone will lose house, pay for another house, state does not take all the pain and sells a housing unit it owns already.

iPlop · 22-08-2011 10:54pm

Mike 1972 wrote: »

AKA "Interest only Mortgage"

Depends on the mortgage Mike, fixed are usually 70-90% interest for the first 10 years, tracker are a lot less and varible are different again.If you got a fixed mortgage in the last 5 years and it's costing €1000 per month, the interest is probably €800 or more.

Mike 1972 wrote: »

You expect the economy to recover to 2007 levels within 4 years ????

Nope, just throwing it out there as a short term solution, see what happens in 4 years and all that.

Morgan Kelly - Pump a few billion into the middle class coffers?

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