Negative Equity question

tryu

My daughter and her partner are in negative equity of EUR100K approximately.
1. Is it true that if their bank (foreign owned - Bank of Scotland) pulls out of Ireland, they won't be able to find another institution to take this mortgage on because of the negative equity?
2. Is the ombudsman doing anything about the lock in/large penalty charges on changing from fixed rate mortgages to variable?
3. As NAMA are taking on the bad loan books of banks, should they not also take on the negative equity on personal mortgages?

Any other ideas?

Toots

1. I could be wrong on this, but if BOS do pull out of Ireland I don't think it would be the case that each homeowner who has their mortgage with them would have to go out and independently find another lender to take the mortgage on. I'd imagine if the situation were to arise that BOS move out, all their loans etc would be taken on by another institution.

2. I'm not sure, although the banks are perfectly entitled to charge these, to offset the loss they'll make if you pull out of a higher fixed rate and switch to a lower fixed or variable rate. Fixing your rate is a gamble, as is being on a variable. It just so happens that those who took the gamble to go variable are benefiting at the moment, but this time last year when rates were shooting up, this wasn't the case.

3. I doubt it. NAMA is taking on the toxic loans, ie ones that are going to be write offs, and that was done to basically stabilise the banking system. Negative equity is a different kettle of fish altogether, and considering that the majority of people who bought property during the boom are likely to be in some sort of negative equity, it'd cost the state an absolute fortune.

uberwolf

1. If BoS pulled out, then they would in all likelihood continue to manage their book down from the UK.

2. if the rates had gone the other direction, would you be satisfied with the banks charging an increased rate?

tryu

Thanks to both of you.

I am worried for them that they will be tied in until who knows when to this house/mortgage. They bought this house in the country as a stepping stone hoping to eventually move back to Dublin.

As far as I know the ombudsman is looking at the level of charges the banks are charging for changing from fixed to variable and I will look into getting more information on this.

Someone on the panel of the Vincent Browne nightly news mentioned something about NAMA taking on negative equity. Maybe whoever it was was taking a moral view only.

ferga_com

tryu wrote: »

As far as I know the ombudsman is looking at the level of charges the banks are charging for changing from fixed to variable and I will look into getting more information on this.

What is being investigated is whether or not the banks are actually profiting from the penalties charged. If they are found not to be, that will be the end of that particular investigation.

tryu

That sounds fair.

Carlow52

Toots85 wrote: »

3. I doubt it. NAMA is taking on the toxic loans, ie ones that are going to be write offs, and that was done to basically stabilise the banking system.
Negative equity is a different kettle of fish altogether, and considering that the majority of people who bought property during the boom are likely to be in some sort of negative equity, it'd cost the state an absolute fortune.

I beg to differ here as it is only a matter of scale

1 developer with NE of 1 billion is the same as 10,000 homeowners with 100,000 NE each.

The problem with the 1 developer is that it threatens the bank, where as the bank can threaten the 10,000 home owners with eviction.

This is why we must stop making our mortgage payments to force the nationalization of the banks, where all defaulters will be equal.

The extra spending power in the economy will be a big stimulus

Toots

Carlow52, encouraging users to stop making mortgage repayments is against the Charter.

*Dishonest dealings

Don't ask how to get around repaying debts/defaulting/giving false information for loans etc - basically if it's not above board, and legal, it's not allowed.

Any continued suggestion/encouragement to do so will result in your being banned from this forum. Please ensure you read the charter and abide by it when posting in this forum.

ferga_com

Carlow52 wrote: »

I beg to differ here as it is only a matter of scale

1 developer with NE of 1 billion is the same as 10,000 homeowners with 100,000 NE each.

The problem with the 1 developer is that it threatens the bank, where as the bank can threaten the 10,000 home owners with eviction.

This is why we must stop making our mortgage payments to force the nationalization of the banks, where all defaulters will be equal.

The extra spending power in the economy will be a big stimulus

I think you're missing the point. Homeowners in negative equity aren't toxic loans. The majority of them will simply continue repaying their loan on schedule until such time as they are out of negative equity.

A toxic loan is one where the borrower has little or no likelihood of repaying.

Drumpot

My understanding is that a Bank moving out of Ireland like in this case will not affect the Mortgage in anyway.

If you are in negative equity it doesnt really matter what you want to do or where you bank is going, another bank will not take up a mortgage thats offering a negative equity ration.

BOS will simply let their loan book sort itself out, not selling mortgages, until they have no money lent to Irish Homeowners.

tryu

That's the problem with negative equity - you can't
!) change to a new business provider
2) sell up to move
3) do anything for the foreseeable future except keep paying your mortgage and wait until you are in a non negative equity situation which may not happen until the end of your mortgage, at which stage you have overpaid EUR100K plus interest because of property developers.

Where are all these property developers now who have creamed all these profits?

Are they benefitting from NAMA claiming their loans are toxic?

DES440

Carlow52 wrote: »

I beg to differ here as it is only a matter of scale

1 developer with NE of 1 billion is the same as 10,000 homeowners with 100,000 NE each.

The problem with the 1 developer is that it threatens the bank, where as the bank can threaten the 10,000 home owners with eviction.

This is why we must stop making our mortgage payments to force the nationalization of the banks, where all defaulters will be equal.

The extra spending power in the economy will be a big stimulus

`

This is the kind of dangerous idea that people who have a very limited knowledge of finance come out with.If this happened, Ireland would effectively be unable to borrow on the international bond markets.Thereby leading the Ireland Inc defaulting on its debt and the ugly spectre of the IMF rearing it head.

In addition the prospect of international institutions investing in Irish equities in future would be greatly diminished.

ollyk1

tryu wrote: »

3) do anything for the foreseeable future except keep paying your mortgage and wait until you are in a non negative equity situation which may not happen until the end of your mortgage, at which stage you have overpaid EUR100K plus interest because of property developers.

They only overpaid because they agreed to pay 100k more then the market currently says the house is worth. If the house had gone up in value by 100k would you be on here complaining that she underpaid?

I'm sorry for your daughter's situation but provided that she can pay her mortgage that she signed up to then why should others bail her out? Nobody put a gun to her head to buy right?

stepbar

My daughter and her partner are in negative equity of EUR100K approximately.
1. Is it true that if their bank (foreign owned - Bank of Scotland) pulls out of Ireland, they won't be able to find another institution to take this mortgage on because of the negative equity?
2. Is the ombudsman doing anything about the lock in/large penalty charges on changing from fixed rate mortgages to variable?
3. As NAMA are taking on the bad loan books of banks, should they not also take on the negative equity on personal mortgages?

Any other ideas?

To answer your questions I'll start by saying that NAMA will not be taking on your daughters loan. She will be still responcible for same. As for breaking out of the fixed rate she is on at the mo, that's a matter between her and the bank in question. I highly doubt that the bank in question will want to make a profit out of same. TBH the break cost would prob be so prohibitive that it would not be worth her while paying the break cost. If BOS decide to leave Ireland then the loan book in question will be eventually run down from the UK. They will end up not accepting any further new mortgages. Their mortgage will remain as is unless another bank is prepared to take on same. I'm afraid your daughter has been stung big time, how in ever she made the decision to buy at the time she did and as such must be prepared to face the responcibility of same.

IsThatSo?

tryu wrote: »

My daughter and her partner are in negative equity of EUR100K approximately.
1. Is it true that if their bank (foreign owned - Bank of Scotland) pulls out of Ireland, they won't be able to find another institution to take this mortgage on because of the negative equity?
2. Is the ombudsman doing anything about the lock in/large penalty charges on changing from fixed rate mortgages to variable?
3. As NAMA are taking on the bad loan books of banks, should they not also take on the negative equity on personal mortgages?

Any other ideas?

Why

This is life, its a cycle, your daughter will get out of negative equity at some point and its highly likely that she will have equity to either release or move up the property ladder...................in time.

Besides, equity is only important if you want to sell..............its only a loss on paper otherwise and people are too hung up on property value, its not real wealth like some seem to think.

A lot of people formed an entitlement attitude during the boom and this has them thinking that they will be rescued now that its a recession..................:mad::eek: Its time for them to grow up!!

Caoimhín

Carlow52 wrote: »

I beg to differ here as it is only a matter of scale
This is why we must stop making our mortgage payments to force the nationalization of the banks, where all defaulters will be equal.

The extra spending power in the economy will be a big stimulus

That is the most astonishing piece of nonsense I have read in years.

Why on Earth do you think everybody else should pay for your mistakes? Anyone with an ounce of intelligence realised that the property market was over-heated and that it would crash. The developer didnt put a gun to your head and make you buy the property.

You didnt do your research, you listened to the auctioneer propaganda, you bought something that you cant afford, why should my taxes pay for your mistake?

Drumpot

Caoimhín wrote: »

That is the most astonishing piece of nonsense I have read in years.

Why on Earth do you think everybody else should pay for your mistakes? Anyone with an ounce of intelligence realised that the property market was over-heated and that it would crash. The developer didnt put a gun to your head and make you buy the property.

You didnt do your research, you listened to the auctioneer propaganda, you bought something that you cant afford, why should my taxes pay for your mistake?

this is why I fear so much for our country. Public servants, Taximen, teachers . . . The list is endless. Nobody thinks they deserve to be hit by the recession. Sure it wasnt their fault . . .

Until people start wising up and accepting that theres going to be serious hardship before we get back on track, this country will be in serious trouble of spiralling even further out of control.

I dont have a problem with Labour and FG's popularity increasing (Im not a party man for the record). What I have a problem with is people supporting them simply because they are pissed off with FF and are jumping on the bandwagon of popular opinion (ala Gilemore spouting out whatever he thinks the general population wants to hear).

These attitudes are all connected to the "why should i pay for x" arguements . . .

LouOB

Negative equity is just another 'new' phrase of our times
Its only going to be an issue if your daughter cannot pay her mortgage or wanting to move house in the next 5 years. I bet your mother didnt worry about negative equity when you purchased your house.

As for government issue brought in by Drumpot
The government were riding the wave along with everyone else during the 'good times' i.e. when construction workers were raking it in from us fools. The people who are complaining are the ones who stuck to their safe jobs. Using your examples
The lowly civil service workers didnt. They never got big bonuses or large pay rises 10% up - fact.
The taximen did to extent by way of business but that job is a gamble and they dont get pension or increase in wages every year in par with inflation etc. Those who sold their plates when times were good benefited. Those who didnt are stuck now - fact
Teachers have it good (modestly well paid jobs, security, pension, holidays in summer etc) but are government workers at the end of the day. Most dont earn high wages and depend upon their jobs that are very stressful. Would you teach a classroom of 40 boyss in this day in age - I dont think so. Most of them are saints and some of them just need to retire.

The people who should be paying are the senior bankers, the policy makers, the construction workers who profiterred - the joe soap who over extended for bling lifestyle is suffering. Other people are again caught up, though this is the 'bad times'.

Drumpot

LouOB wrote: »

Negative equity is just another 'new' phrase of our times
Its only going to be an issue if your daughter cannot pay her mortgage or wanting to move house in the next 5 years. I bet your mother didnt worry about negative equity when you purchased your house.

As for government issue brought in by Drumpot
The government were riding the wave along with everyone else during the 'good times' i.e. when construction workers were raking it in from us fools. The people who are complaining are the ones who stuck to their safe jobs. Using your examples
The lowly civil service workers didnt. They never got big bonuses or large pay rises 10% up - fact.
The taximen did to extent by way of business but that job is a gamble and they dont get pension or increase in wages every year in par with inflation etc. Those who sold their plates when times were good benefited. Those who didnt are stuck now - fact
Teachers have it good (modestly well paid jobs, security, pension, holidays in summer etc) but are government workers at the end of the day. Most dont earn high wages and depend upon their jobs that are very stressful. Would you teach a classroom of 40 boyss in this day in age - I dont think so. Most of them are saints and some of them just need to retire.

The people who should be paying are the senior bankers, the policy makers, the construction workers who profiterred - the joe soap who over extended for bling lifestyle is suffering. Other people are again caught up, though this is the 'bad times'.

I think you missed my point. It was basically that we will all pay for the mistakes we made voting in these guys and we will all pay for knee jerk votes for opposition party candidates.

With all due respect (without letting this turn into a private v public sector arguement) I have to address some of the myth arguements put out there in favour of our much handicapped public servants. A majority of private sector employees did no better in the celtic tiger then the supposedly low paid civil servants. Thats was perhaps relevant at one time but to suggest that everybody in the private sector got the money when public servants were scraping the barrell during the celtic years is simply ignorant. I never made more then 28k in the private sector and I had a degree, over 5 years experience and plenty of qualifications in my industry. I know many in the same area.

I tried to get a job in public service for over a year back in 2002 and couldnt get one because of the competition for places (dispelling another myth that private sector employees didnt want to take these jobs during boomtime!). There were over 300 of us doing tests in Croke Park for 10 spots at the time.

Like you said, the bigwigs sucked the marrow from any profits most companies made. Anybody working from 2000 in the private sector (that started around then) didnt do much better (if that) then the public service.

I agree about the people who should pay the biggest price, but unfortunatley life isnt that simple & we subscribe to capitalistic rules where being fair is well down the list of priorities to society. But I believe that I am responsible for any loans or debts I have accrued (and there are many) over the years. Its nobody elses fault that I am in negative equity. Nobody forced me to buy a house, it was a desire, not a requirement for me to buy a property. Until people stop moaning and face up to their own responsibilities they will make the wrong decisions (blaming everybody else, voting in people out of spite of others) and will struggle to get things moving for themselves quickly.

BuffyBot

Can we put the politics and economics discussions aside (or at least take them to their appropriate forums) as they're a) bringing this thread off topic and b) outside the remit of this forum.

Thanks

LouOB

BuffyBot wrote: »

Can we put the politics and economics discussions aside (or at least take them to their appropriate forums) as they're a) bringing this thread off topic and b) outside the remit of this forum.

Thanks

I answered the op though:o

tryu

True

Toots

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