Mortgage debt forgiveness is here, Dublin nurse gets €152k debt write-down

And of course she doesn't have a house, nor the likelihood to buy one for the next who knows how long.

I am so sick of the government interfering in the property market. With the transfer of tracker mortgages to Anglo now and NAMA controlling the market and now debt forgiveness.

Wait and see that the only people that can grantee future income and get a right down will be public sector workers. Same situation as getting a mortgage at the moment.

Lets see how the private sector and self employed get on.

Are we ever going to know the true value of property in Ireland and will a home ever be an obtainable purchase for the private sector tax payer?

If houses where allowed to hit their true value then we it might be an incentive for low to middle earners to take a job and build a decent credit rating.

I am sick to death of listening to this rubbish about keeping people in their homes when its really about keeping the debt with them and off the governments books.

What about people who have no hope of getting a job or home due to the crap economy caused by reckless lending AND BORROWING?

bobbysands81 wrote: »

Just remember that banks will turn profitable again one day and all the losses of the last few years can be written off against future profits so they'll make back everything they've lost.

Not really. Work out the net present value of the future (risky, uncertain) profits of the banks and set it against the recapitalisation cost - I think you'll find the state ends up as a loser. And if you are thinking of tax write-offs - where do you think that tax would be going were it not written off?

Solair wrote: »

The problem as I see it is that the banks actively sold and missold these mortgages to people who anyone with a basic maths ability should have been able to see could not pay them back.

How were they mis-sold exactly? You hear this a lot, but I've never heard anyone actually back it up.

Perhaps in future people should have to do a simple exam on personal finance and compound interest before they are entitled to borrow?

Thedogsgone wrote: »

If I could get a 90% write down and the only punishment is a ban on borrowing for 6 years I would bite the banks hand off...

I'm struggling but have always managed the mortgage but I am giving serious consideration to stopping payments altogether after this precedent.

But the government want to help you stay in your home :rolleyes:

Monty Burnz wrote: »

How were they mis-sold exactly? You here this a lot, but I've never heard anyone actually back it up.

Perhaps in future people should have to do a simple exam on personal finance and compound interest before they are entitled to borrow?

Well, assuming that the person coming into a bank did not lie and inflate their income, and the bank then lent them a mortgage which was too big for them to reasonably pay back, then the bank missold the mortgage.

In any transaction like that, you have to assume that a normal person is absolutely not a financial expert. The bank however is supposed to be!

If the bank was not doing its job, i.e. making sure that the mortgage they were selling was sustainable, then the majority of the fault rests with the bank, not the consumer.

Business lending to property developers is another story entirely, as you would expect a property developer, particularly the larger ones, to have some business sense and understanding of the market.

The problem,as I see it, is that there was a close relationship in Ireland between the banks, the major developers and the policy makers.

So, the whole thing turned into a pyramid scheme where by the banks were financing the developments based on notional and unrealistic bubble selling prices which they were creating themselves by relaxing lending rules to consumers.

Meanwhile, the state was turning a blind eye to all this as it was getting huge tax revenues on property transactions - all of which was borrowed money!

So basically everything comes back to the banks being utterly reckless with what they were doing and creating a totally unsustainable property market based on cheap money borrowed on the international financial markets.

Even the IMF agrees that a hell of a lot of this will have to be written off, both at the consumer end of the market and also the development loans. They were bad loans, end of story.

The problem is that the ECB & EU seem to be determined to ensure that the banks that idiotically lent to our idiotic banks don't have to write anything off even if it means driving the Irish state into poverty.

Also, the Fiscal Compact Treaty will have zero impact on the Irish situation (and probably not on the Spanish situation either) as the problems there were not the same as Greece, i.e. not created by lavish state spending. They were created by completely out of control bank lending to the property sector which has now landed in the lap of the the Irish and Spanish tax payers.

Austerity budgets are just basically just diverting more and more resources into paying down bad loans made by idiotic, now nationalised, banks.

We absolutely need a huge write down of debt at the banks, and that has to be passed onto the consumers who were missold mortgages and more importantly to the tax payer.

Crippling the state and crippling mortgage holders who were basically conned into biting off more than they can chew, might satisfy some kind of Victorian / German fetish for moral rectitude and moral hazard prevention, but it will drive this economy back to the 19th century, never mind the 1950s.

They need to let the markets take their course. As it stands we are just propping up a totally unsustainable model by state interference.

Banks would normally have to write-off debts like this and they would probably fold and go bankrupt too themselves.

We are in a situation where the ECB/EU and Irish Government are driving forward on this model that is fixing absolutely nothing and is just pouring vast amounts of tax payers money into rescuing banks that are so broken that they shouldn't be rescued.

The system needs to take its losses!

Also, I think this is grossly unfair on banks that were prudent lenders. There are banks in the Eurozone and the EU which are quite well run and did not engage in this kind of nonsense. Why are they being denied market share ? If Bank of Ireland, AIB, Anglo, Dexia, RBS, Hypo Real Estate, Soc Gen, Credit Agricole or whoever made bad decisions, then they should suffer the consequences of those and banks that made correct decisions should prosper and take their market share.

What we are witnessing is absolutely VAST state aid to badly run companies.

We seem to be throwing away the whole idea of a single EU market when it comes to banking.

Also, this isn't capitalism and it isn't socialism either. I'm not quite sure what it is, but it's destroying not only Ireland but Europe too!

Gurgle wrote: »

'They' should be training at something that will give them a hope of getting a job.
There really isn't much benefit to spending their days on boards whinging about the public sector. It doesn't add anything to the CV.

My points are valid. I don't appreciate your response. Since when did contributing your opinion on a forum become whinging. And you a mod. tut tut.

Are you typing it from your civil service job in between a games of solitaire?

I have a diploma in IT, degree in Engineering, a Masters and 17 years experience. But you are right, its more training I need so I have applied to FAS for a saddle making internship as there is a growing market for private sector workers to be rode in Ireland at the moment.

Maybe I should go and train to be a nurse or teacher or guard? Wait a second, we cant afford to employ any more of those.

Solair wrote: »

If the debts are unsustainable what exactly do you propose to do ?
Starve people? Lock them up perhaps in stocks on O'Connell Street ?

All that not allowing the debts to be written off / written down is doing is preventing economic recovery as these people are left with no disposable income and no prospects or, worse case scenario they will flee the loans entirely and just disappear abroad.

If you can't pay the debt, you go bankrupt. It's pretty simple - you say goodbye to your assets, say goodbye to your debts, and start again. Bankruptcy right now is ridiculously tough, but hopefully in a few months the reforms will come through and this will be a good option for those who can't pay. Those who won't pay will find it unattractive.

Solair wrote: »

Also, the tax payer only bears the costs of writing off these debts because the ECB and Irish Government decided that the best way to approach this was market interference and nationalizing bankrupt banks...

The tax payer should absolutely not be absorbing this debt.

Right right right, there's no point in going on about 'shoulda woulda coulda' stuff - the banks largely belong to the taxpayer. That's the situation today so we need to deal with it.

Monty Burnz wrote: »

If you can't pay the debt, you go bankrupt. It's pretty simple - you say goodbye to your assets, say goodbye to your debts, and start again. Bankruptcy right now is ridiculously tough, but hopefully in a few months the reforms will come through and this will be a good option for those who can't pay. Those who won't pay will find it unattractive.

Right right right, there's no point in going on about 'shoulda woulda coulda' stuff - the banks largely belong to the taxpayer. That's the situation today so we need to deal with it.

Unfortunately, I don't think that we are capable of dealing with it as a nation, a community of European nations, as a banking system or as an economy. The European Commission and ECB are basically showing themselves to be utterly incompetent, incapable of reacting to the crisis as it develops, incapable of identifying what the problem actually is and totally out of touch with reality and the Irish Government is locked into a situation that is totally unsustainable thanks to the previous administration's knee-jerk approach to dealing with the crisis in the first place.

I would predict that the wheels will eventually fall off. I don't know how that will pan out, but we are currently lurching from one minor crisis to another and the whole thing is being held together with the financial equivalent of chewing gum, glue and sellotape.

Something very big has to change and it has to change soon. If it doesn't, it will be changed for us by outside forces of economic reality.

This is exactly the problem - people are incredibly naive about financial products and long term risk.

Most people just see the monthly payment at the interest rate they sign up to and hope they can make those payments and, especially at the top of the market, were just desperate to get onto the property ladder and accommodate themselves.

A lot of people are also vastly over-optimistic about their economic prospects. That's good in so far as it means people are generally ambitious, but it is not necessarily reflective of reality or prudent.

Human psychology does not do prudent decision-making very well. That is why strict financial regulation is in place to prevent markets from going crazy. Stock markets go nuts based on whims, housing markets, you name it.. once something becomes accepted practice, people all jump on the band wagon.

Also, never under-estimate the heard instinct in humans. We do make decisions by ourselves sometimes, but for a lot of issues in life, we group-think. That is what our brains are evolved to do because in a lot of situations it works well.

If a lot of people think something's correct, we tend to just accept the group's view. For a lot of things this works well, but for some things it's massively dangerous e.g. it can result in market bubbles, election of extremist organisations e.g. the Nazi party's electoral success in Germany before WWII being the most terrifying example, or the formation of cult-like views.

It is very hard to shift people's opinions when lots of people are telling them that something's correct.

In Ireland, the accepted reality was that you HAD to get on the property ladder and that prices could only increase. That's how all bubbles operate and that is exactly why you need serious and prudent regulation to prevent them and why banks are supposed to be doing their job by managing people's ability to access crazy levels of financing.

Throwing money at consumers without any notion of how they are going to ever pay it back is totally unreasonable and financial suicide and I do think the banks (and ultimately by the looks of it the entire system) will just have to accept that that is what happened. Thus, these write-downs are going to have to happen.

riclad wrote: »

THIS is a nurse,she should be smart enough to know, i borrowed x amount,i have to pay x amount per month,can i afford it .I hear nurse,s wages are pretty good.
IF she work that out,i would,nt trust her to hand out medication.You need a good education and leaving cert to become a nurse.
I dont think the banks can afford to do this with everyone whos having trouble paying a mortgage.
I didn,t know 3 bed houses are going for 70k, so who would buy a 1bed apartment ,if i can buy a house for 70k?
IF a nurse cant pay a mortgage god help the people on lower wages who dont have strong unions to protect them.

She's a *nurse* - she makes medical decisions, looks after patients, knows about diseases, illnesses, is probably a very caring, nice person, very people-focused, and has all sorts of great positive things to contribute etc etc.

However, she is not a trained actuary, banker, economist or financial expert.

I would not go to a bank with a broken leg, or to get an injection! Nor, would I expect a nurse to be a financial expert.

Solair wrote: »

She's a *nurse* - she makes medical decisions, looks after patients, knows about diseases, illnesses, is probably a very caring, nice person, very people-focused, and has all sorts of great positive things to contribute etc etc.

However, she is not a trained actuary, banker, economist or financial expert.

I would not go to a bank with a broken leg, or to get an injection! Nor, would I expect a nurse to be a financial expert.

If she has the intelligence to take people's lives in her hands, she has the intelligence to ask herself 'is it feasible for me to pay €800 to €1200 per month for the next 30 years'. It's really not rocket science, is it?

Can you explain the difficulty in asking oneself that question?

Monty Burnz wrote: »

If she has the intelligence to take people's lives in her hands, she has the intelligence to ask herself 'is it feasible for me to pay €800 to €1200 per month for the next 30 years'. It's really not rocket science, is it?

Can you explain the difficulty in asking oneself that question?

Unfortunately, that is just not how people operate and I will say it for the 10th time, that is why banks are supposed to be prudent lenders and that is why states are supposed to have proper regulations in place to protect consumers from themselves in some cases.

When someone applies for a mortgage they give a vast amount of detail about their income, financial situation, assets, earning potential, insurance situation, even life expectancy to the bank. They ask for a LOT of information.

The bank is supposed to make an assessment of how much they will be able to lend you, based on the information that you supplied.

We have no idea what this nurse's circumstances are, perhaps they changed drastically, maybe her hours were cut, who knows?!

If the bank is grossly over-optimistic and grants you a huge loan that is too big for you to be able to pay back, and they are supposedly the financial experts, then the majority of the blame rests with the bank as they had a duty of care to carry out a proper assessment of your financial position and were provided with all the facts they asked for.

While it would be wonderful if we were all financially-astute and all made perfect decisions and were great at assessing financial risk, the reality is that most people are really REALLY bad at that kind of thing and tend to take an over-optimistic view of the markets (especially during a bubble).

The Irish banks failed and failed SPECTACULARLY ! This was quite simply because they were totally incapable of assessing risk and lent way too much money to almost everything they touched.

Monty Burnz wrote: »

Solair, you haven't answered the question - why do you need to be an actuary or accountant to ask yourself 'can I pay this sum every month'?

I can understand why you want to avoid this simple and obvious point, because you are trying to place the blame for bad borrowing on the banks.

The problem is that in most cases where mortgages have went horribly wrong the person was able to pay the mortgage when they took it out. However, people being optimists by nature, did not factor in what they might do should their income reduce. The boom looked totally sustainable to the average person who did not see behind the smoke and mirrors.

In many cases, Irish banks played to this optimistic view of the world and lent money to people based on their maximum possible income. I know of cases where banks and brokers encouraged people to include things like bonuses, commission, etc in their applications and while the banks were fully aware these were not steady income streams, calculated the loan amounts based on them anyway.

In other cases, people's partners may have lost jobs, a lot of people have had pretty serious hours / wage cuts too.

A normally regulated banking system factors these kind of things into a mortgage and does not lend to the level that people will be unable to pay should they face minor financial setbacks. However, in Ireland that was absolutely not the case in the latter years of the boom and the banks lent totally irresponsibly.

It is the banks' duty to point out the risks and to be aware of them. Our banks' did none of that during the boom.

They were out of line with their more prudent counterparts in other EU countries and way out of line with what had been their own normal lending practices only a few years earlier too. I mean, reality and human psychology did not change, only the banks lending policies did.