Getting Joe Punters mortgages into the Bad Loans Bank: Reduce the Monthly payment.

Carlow52

All the talk thus far has been to set up such a Bad Loan bank to help the [FF] developers.
I have read in recent weeks about how Carroll and Dunne and Kelly et al have recruited advisors to help write down asset values and are offering 20-30 cents in the euro to their creditors.

However this ignores the 1000's of ordinary Joe's who are saddled with hugh mortgages and who risk eviction if the mortgage payments stop.

No advisors allowed here:mad:

Therefore I am suggesting that all mortgage holders reduce their mortgage payments by say 40% this will crystalize the required losses in the banks balance sheets and have them transferred over to the Bad bank.

This will then allow for wage flatness/reductions in the economy and help restore competitiveness.

jimmmy

Carlow52 wrote: »

Therefore I am suggesting that all mortgage holders reduce their mortgage payments by say 40%

All mortgage payments on variable mortgages have reduced over the past year.

To restore competiveness in the economy productivity and wages need to be looked at. Market forces have done that already in the private sector, as many have found to their cost.

El Stuntman

jimmmy wrote: »

All mortgage payments on variable mortgages have reduced over the past year.

what about fixed rate mortgages?

40% of mortgages are fixed rate, if the Government could 'persuade' (i.e. tell) the banks to allow these mortgage hodlers to switch to variable, this would put a hell of a lot of extra cash into people's pockets which would then boost the economy (and the State's coffers, through indirect taxes)

now there's something worth lobbying the Government for!

techdiver

El Stuntman wrote: »

what about fixed rate mortgages?

40% of mortgages are fixed rate, if the Government could 'persuade' (i.e. tell) the banks to allow these mortgage hodlers to switch to variable, this would put a hell of a lot of extra cash into people's pockets which would then boost the economy (and the State's coffers, through indirect taxes)

now there's something worth lobbying the Government for!

The problem is where do we stop? The problem with us Irish is we want to always blame some one else for our own mistakes. If we bail out every mortgage holder it does not teach personal responsibility. Ever person signed into the agreement for the type of mortgage and amount they wanted. Like it or not no one forced anyone to take a mortgage out.

El Stuntman

techdiver wrote: »

The problem is where do we stop? The problem with us Irish is we want to always blame some one else for our own mistakes. If we bail out every mortgage holder it does not teach personal responsibility. Ever person signed into the agreement for the type of mortgage and amount they wanted. Like it or not no one forced anyone to take a mortgage out.

I'm only semi-serious in my proposal

However, we do now effectively own the banks so this would be quite a nice stroke to pull by the Government, in fatc from their point of view it would be a political masterstroke ('help hard-pressed citizens, bash the greedy banks' - would play well with Joe and Jacinta Sixbellies)

jimmmy

techdiver wrote: »

The problem is where do we stop? The problem with us Irish is we want to always blame some one else for our own mistakes. If we bail out every mortgage holder it does not teach personal responsibility. Ever person signed into the agreement for the type of mortgage and amount they wanted. Like it or not no one forced anyone to take a mortgage out.

+1


Those on fixed rate mortgages were not complaining when rates were increasing.

gurramok

And our international reputation will go down the swanney if our financial system allows 'write-off' of a portion of the mortgages.

Plus the state will have to foot the bill.

What about everyone else who didn't borrow? Lets help car loans and personal loans too.

I want the balance on my credit card written off as well.

El Stuntman

gurramok wrote: »

What about everyone else who didn't borrow? Lets help car loans and personal loans too.

I want the balance on my credit card written off as well.

hey I want my gambling losses refunded!

SkepticOne

It depends on what you have gambled on.

If you have gambled on land banks at inflated prices in Kildare, then it is only fair that you should have your debts written off. If, however, you gambled on horses or shares, then the State would be sending everyone completely the wrong message rewarding your utter irresponsibility.

Carlow52

jimmmy wrote: »

All mortgage payments on variable mortgages have reduced over the past year.

To restore competiveness in the economy productivity and wages need to be looked at. Market forces have done that already in the private sector, as many have found to their cost.

Jimmmy,
Thanks for the comment.

The point I am trying to make is that the tax payer is being asked to foot the bill for the developers loans.
The issue is that if u owe the bank enough they blink.

What I am proposing is that for people who overpaid for owner-occupied properties, that they reduce the payments to reflect the overpaid capital amount as opposed to the interest amount which will be a function of euro interest rates.

Then the written off capital can be transferred into the toxic bank and when and if the property is sold the profit over the written down amount is shared just like in the affordable housing schemes.

I dont see for a moment why the taxpayer should bail out the developers who have transferred tens of millions of euro in profits abroad, beyond the the reaches of the Irish banks and Revenue.

The pain must be shared and if people overpaid for property why should their negative equity be not footed by the taxpayer if the taxpayer is footing the same for the developers.

Only by reducing the capital element of the payment will competitiveness and reduced costs ever be achieved.

You cannot expect people to buy into reduces wages etc when their main expense is paying for negative equity and at the same time see the developers screw the taxpayer.

gurramok wrote: »

And our international reputation will go down the swanney if our financial system allows 'write-off' of a portion of the mortgages.

Plus the state will have to foot the bill.

What about everyone else who didn't borrow? Lets help car loans and personal loans too.

I want the balance on my credit card written off as well.

Our international reputation is gone anyway, jobs are being lost that add a net 20k each per annum to the Govt bill so why not reduce the capital amount of the payment and then this will allow wages to be reduced.

techdiver

Carlow52 wrote: »

Jimmmy,
Thanks for the comment.

The point I am trying to make is that the tax payer is being asked to foot the bill for the developers loans.
The issue is that if u owe the bank enough they blink.

What I am proposing is that for people who overpaid for owner-occupied properties, that they reduce the payments to reflect the overpaid capital amount as opposed to the interest amount which will be a function of euro interest rates.

Then the written off capital can be transferred into the toxic bank and when and if the property is sold the profit over the written down amount is shared just like in the affordable housing schemes.

I dont see for a moment why the taxpayer should bail out the developers who have transferred tens of millions of euro in profits abroad, beyond the the reaches of the Irish banks and Revenue.

The pain must be shared and if people overpaid for property why should their negative equity be not footed by the taxpayer if the taxpayer is footing the same for the developers.

Only by reducing the capital element of the payment will competitiveness and reduced costs ever be achieved.

You cannot expect people to buy into reduces wages etc when their main expense is paying for negative equity and at the same time see the developers screw the taxpayer.

I understand your point, however I think it is misplaced. The bail out is not for the developers (for the record, I would like to see them strung up!), it is for the Banks and in turn the SME's that are being starved of credit because the banks have turned off the tap of credit in a large way due to the amount of toxic loans on their books.

I am frustrated too that we, the tax payer have to fit the bill, but we really have no choice at this stage. If the business sector cannot gain access to credit, more jobs will be lost.

Darragh29

I think the OP got the thread title seriously wrong. It isn't Joe Punter defaulting on his mortgage that is the problem here, it's Paddy the Developer who owes the banks hundreds of millions and he can't even meet the interest payments due now, never kind capital repayments.

silverharp

Carlow52 wrote: »

All the talk thus far has been to set up such a Bad Loan bank to help the [FF] developers.
I have read in recent weeks about how Carroll and Dunne and Kelly et al have recruited advisors to help write down asset values and are offering 20-30 cents in the euro to their creditors.

what is happening on the ground with these people ,the creditors are in most cases going to be the banks. are the banks foreclosing ? or are they being bailed out in anyway?

Carlow52

silverharp wrote: »

what is happening on the ground with these people ,the creditors are in most cases going to be the banks. are the banks foreclosing ? or are they being bailed out in anyway?

because the numbers are so big the banks are not foreclosing on Carroll/Dunne/Kelly et al. They are foreclosing on Joe Punter

Carlow52

Darragh29 wrote: »

I think the OP got the thread title seriously wrong. It isn't Joe Punter defaulting on his mortgage that is the problem here, it's Paddy the Developer who owes the banks hundreds of millions and he can't even meet the interest payments due now, never kind capital repayments.

The issue is about Joe Punter being asked to fund negative equity and at the same time being asked to:
1 take a cut in pay or worse lose his job
2 help restore confidence by spending in this economy
3 fund the developers losses through the toxic bank which will be announced this evening.

Paddy the Developer

is being looked after via the toxic bank

jimmmy

Carlow52 wrote: »

The issue is about Joe Punter being asked to fund negative equity and at the same time being asked to:
1 take a cut in pay or worse lose his job
2 help restore confidence by spending in this economy
3 fund the developers losses through the toxic bank which will be announced this evening.
is being looked after via the toxic bank

you are totally wrong there carlow. You have the wrong end of the stick.

If a developer takes , for example, an 80% loan to buy land worth ( say in 2006 ) 5 million, that means paddy the developer put up 1 million + borrowed 4 million . If the land is worth 2 million now, and the banks loan of 4 million is worth half, and a toxic bank seizes the land , then far from Paddy the developer being a winner ....he just lost 1 million.

silverharp

Carlow52 wrote: »

because the numbers are so big the banks are not foreclosing on Carroll/Dunne/Kelly et al. They are foreclosing on Joe Punter

and people keep asking if bank stocks are a good buy:eek:

The problems wont be over until the banks fess up. I doubt if you could sell sites like Jurys for agricultural value.

Carlow52

techdiver wrote: »

I understand your point, however I think it is misplaced. The bail out is not for the developers (for the record, I would like to see them strung up!), it is for the Banks and in turn the SME's that are being starved of credit because the banks have turned off the tap of credit in a large way due to the amount of toxic loans on their books.

I am frustrated too that we, the tax payer have to fit the bill, but we really have no choice at this stage. If the business sector cannot gain access to credit, more jobs will be lost.

We have a choice in the way that grey power got the medical cards issue resolved in November.

I agree with your comments re freeing up money for business but if nobody can buy what goods services are produced...

Just for context consider the following
in 2006 200,000 mtgs approved with a value of 40 bill
in 2007 160,000 ..........................................38 bill

Assume that 13% of that value was an overpayment then the excess is 10 billion which is an enormous amount to saddle Joe Punter with over say 25-40 years.

If anyone has 2008 and earlier numbers....

Carlow52

jimmmy wrote: »

you are totally wrong there carlow. You have the wrong end of the stick.

If a developer takes , for example, an 80% loan to buy land worth ( say in 2006 ) 5 million, that means paddy the developer put up 1 million + borrowed 4 million . If the land is worth 2 million now, and the banks loan of 4 million is worth half, and a toxic bank seizes the land , then far from Paddy the developer being a winner ....he just lost 1 million.

and the taxpayer is paying the 2 million

This is not about development land that is still not built on: it is about the 400,000 odd Joe Punters who are saddled with billions of negative equity and being evicted/foreclosed on by the banks while the taxpayer bails out the developer because the numbers are so big.

Liam Byrne

SkepticOne wrote: »

It depends on what you have gambled on.

If you have gambled on land banks at inflated prices in Kildare, then it is only fair that you should have your debts written off.

Why, exactly ?

Those "investors" (who weren't really, because proper investors are in it for more than a quick buck) gambled and lost, and there's ABSOLUTELY NO WAY that they should be exempt from paying back their loans and dragging the banks down with them.

Yes, the banks were dopey in the extreme for funding this crap, but the same could be said for some of the mortgages.....while I agree that people should be responsible for their own decisions, why not treat everyone the same ? Why screw the "little people" while letting the Galway Tent scumbags off the hook with us picking up the tab ? :mad:

El Stuntman

El Stuntman wrote: »

what about fixed rate mortgages?

40% of mortgages are fixed rate, if the Government could 'persuade' (i.e. tell) the banks to allow these mortgage hodlers to switch to variable, this would put a hell of a lot of extra cash into people's pockets which would then boost the economy (and the State's coffers, through indirect taxes)

now there's something worth lobbying the Government for!

I heard Willie O'Dea on Newstalk this morning talking about this issue and promising that the Government would be taking action with the banks

watch this space I suppose...

Daithinski

jimmmy wrote: »

you are totally wrong there carlow. You have the wrong end of the stick.

If the land is worth 2 million now, and the banks loan of 4 million is worth half, and a toxic bank seizes the land , then far from Paddy the developer being a winner ....he just lost 1 million.

Actually relatively speaking Paddy is the winner. Some other developer Paddy made 5 million on the land (the guy who sold the land for 5 million).

The original Paddy lost 20%. The banks lost the other 80%.

The banks in turn get a bail out from the Government (even though it they shouldn't have been flinging so much cash at Paddy the developer and his mates).

So the taxpayer ends up footing the bill for paddys gambling and the banks sloppy business sense.

And we take a hit on wages / jobs and are supposed to pay back our loans.

In 10 years these muppet developers and banks will be back where they were (ripping us off) and us poor saps will still be paying off our negative equity.

Boggle

If a developer takes , for example, an 80% loan to buy land worth ( say in 2006 ) 5 million, that means paddy the developer put up 1 million + borrowed 4 million . If the land is worth 2 million now, and the banks loan of 4 million is worth half, and a toxic bank seizes the land , then far from Paddy the developer being a winner ....he just lost 1 million.

If your house is reposssed and sold, you still owe the bank the balance. Do these devvelopers get away scot free on the balance? How will the subsequent sale be handled transparently??

Also, where do effective sub prime domestic mortgages fit in here? Will we have a situation where the state is turfing people out of their homes or will this bank only deal with commercial loans??

Carlow52

Boggle wrote: »

If your house is reposssed and sold, you still owe the bank the balance. Do these developers get away scot free on the balance? How will the subsequent sale be handled transparently??

If the numbers are big enough the bank will write it off and the developer walks free.

The new game in town is to move your commercial operations to the North and go bankrupt up there: back in action in 12 months, as opposed to 12 years here.

The other item seen in the market today is the foreign banks moving loads of crap to their Irish subs.....

cyclopath2001

Boggle wrote: »

If your house is reposssed and sold, you still owe the bank the balance. Do these devvelopers get away scot free on the balance? How will the subsequent sale be handled transparently??

Developers usually use limited companies to isolate the risk from their other assets. So, other than the property itself, the bank won't be able to get any more satisfaction.

Simple enough to set up another company to buy the property back and what with government embargos on staffing & cuts in pay and conditions, there may not be much in the way of resources to investigate the new purchasers to see if they're connected to the original transaction & possibly fight legal challenges.