Leo offers to sell his apartment to NAMA for Long-term Economic Value

Dannyboy83

Not sure if this link has been posted yet, but we could all do with a laugh:
http://www.leovaradkar.ie/?p=593

SineadLewis

Dannyboy83 wrote: »

Not sure if this link has been posted yet, but we could all do with a laugh:
http://www.leovaradkar.ie/?p=593

I don't think the will buy from the "little people".

The_Minister

Is it just me, or does Leo Varadkar, as a member of the Dail, show a scary lack of knowledge as to hoe NAMA works?

I know he's ****-stirring, but still, thats not how its meant to work.

Long Onion

The_Minister wrote: »

Is it just me, or does Leo Varadkar, as a member of the Dail, show a scary lack of knowledge as to hoe NAMA works?

I know he's ****-stirring, but still, thats not how its meant to work.

This is exactly what I was thinking, at least if he offered them his mortgage it would have made more sense. What a fool.

eoinbn

The_Minister wrote: »

Is it just me, or does Leo Varadkar, as a member of the Dail, show a scary lack of knowledge as to hoe NAMA works?

I know he's ****-stirring, but still, thats not how its meant to work.

It's not too far off. What he is trying to point out is that he wins(i.e the property devs), the banks win and the only people that are at risk of losing are NAMA- i.e the tax payer. It's not a perfect analogy but it gets the point across.

The_Minister

eoinbn wrote: »

It's not too far off. What he is trying to point out is that he wins(i.e the property devs), the banks win and the only people that are at risk of losing are NAMA- i.e the tax payer. It's not a perfect analogy but it gets the point across.

No.
The people whos loans are bought by NAMA still owe every penny.
They just owe it to NAMA instead of AIB, BOI etc.

If he wants to sell his mortgage to NAMA then fine, but all that means is that an organisation with even more powers to recoup the money owns his debt.

eoinbn

The_Minister wrote: »

No.
The people whos loans are bought by NAMA still owe every penny.
They just owe it to NAMA instead of AIB, BOI etc.

If he wants to sell his mortgage to NAMA then fine, but all that means is that an organisation with even more powers to recoup the money owns his debt.

He owes €350k. NAMA gives him €420k so he gives the bank the €350k and has €70k left over to buy a cheaper place. The bank gets it's money, he can go buy the same flat for €250k and the tax payer takes the risk.

P. Breathnach

If he is in negative equity, I'm prepared to buy his mortgage for the value of his home.

thebiglad

eoinbn wrote: »

He owes €350k. NAMA gives him €420k so he gives the bank the €350k and has €70k left over to buy a cheaper place. The bank gets it's money, he can go buy the same flat for €250k and the tax payer takes the risk.

NAMA does not 'give' him €420k - they loan it to him (or take over his debt with current lender to maintain the current analogy).

If NAMA took his mortgage at €420k he would then own them - there is no gain to him. Only gain could be to Nama if his property in 10 years is worth €500k (taking into account whatever inflation there has been of course).

The argument just does not make sense

Long Onion

eoinbn wrote: »

He owes €350k. NAMA gives him €420k so he gives the bank the €350k and has €70k left over to buy a cheaper place. The bank gets it's money, he can go buy the same flat for €250k and the tax payer takes the risk.

so you don't know how NAMA works either then.

The_Minister

eoinbn wrote: »

He owes €350k. NAMA gives him €420k so he gives the bank the €350k and has €70k left over to buy a cheaper place. The bank gets it's money, he can go buy the same flat for €250k and the tax payer takes the risk.

:eek: Please tell me you don't think that's how NAMA works!!

No wonder everyone is pissed off.

Firstly, by my calculation (in my head) the 420k is bollocks. The NAMA formula would get him around 365K I would have thought.

More importantly, the money goes to the bank, not the person owning the loan. The person owes the same amount, it just gets transferred to the NAMA. He still has to pay back the entire loan, he just pays it to NAMA.

Who told you that the person who took out the loan got the money?
What sense does that make?

kippy

The_Minister wrote: »

:eek: Please tell me you don't think that's how NAMA works!!

No wonder everyone is pissed off.

Firstly, by my calculation (in my head) the 420k is bollocks. The NAMA formula would get him around 365K I would have thought.

More importantly, the money goes to the bank, not the person owning the loan. The person owes the same amount, it just gets transferred to the NAMA. He still has to pay back the entire loan, he just pays it to NAMA.

Who told you that the person who took out the loan got the money?
What sense does that make?

Totally agree,
Just heard him on Newstalk there. Its a great piece of publicity but scarely incorrect in its concepts.
He made out that NAMA would "pay" him 420K for the property, with which he pays off his "mortage" to the bank and his car loan.
I am not sure whether or not he IS that stupid or whether this is a purely intention scare mongering tactic but theres no doubt a large number of the population that will believe what he is saying is true.

I hadnt calculated his figures but obviously there a whole lot of things built into the NAMA figures (including a semi insurance policy in the form of certain bonds that only have a low interest rate) that completely blows Leos figures and concepts out of the water.

The scary thing, no one corrected Leo while on Newstalk and so far there dont seem to be any people calling in to correct him. Disgrace.

Diarmuid

The_Minister wrote: »

No.
The people whos loans are bought by NAMA still owe every penny.
They just owe it to NAMA instead of AIB, BOI etc

Makes no difference to the tax payer because those guys will never be able to repay those debts. This idea that just because someone still owes the money, then everything will work out, is crazy

murfie

The_Minister wrote: »

No.
The people whos loans are bought by NAMA still owe every penny.
They just owe it to NAMA instead of AIB, BOI etc.

Sure but do you really believe they are going to chase that money, in fact they are even going to invest more money into developments to finish them instead of seizing and selling them, to basically bail out these builder tycoons.

Please don't fool yourself, NAMA is seriously flawed and I can only hope the greens vote to not support it.

eoinbn

thebiglad wrote: »

NAMA does not 'give' him €420k - they loan it to him (or take over his debt with current lender to maintain the current analogy).

If NAMA took his mortgage at €420k he would then own them - there is no gain to him. Only gain could be to Nama if his property in 10 years is worth €500k (taking into account whatever inflation there has been of course).

The argument just does not make sense

Yawn. This isn't hard to work out.

What Varadkar is proposing isn't exactly how NAMA works, it's his own twist on NAMA, where everyone appears to win, just like the government is saying with NAMA.

Leo gets the €420k, NAMA gets his flat which according to NAMA will be worth €420k in a X number of years, and the bank gets it's money- nobody loses out.
NAMA works like this: NAMA take over the loan, the bank get's it money(the same as now), and the property devs that are effectively bust atm get X number of years more to start paying back the loan.

So in both scenario's the bank wins, the devs/Varadkar (or at least get a 2nd chance to not go broken) yet in both cases NAMA(i.e everyone else) takes the risk. That's the point.

listermint

murfie wrote: »

Sure but do you really believe they are going to chase that money, in fact they are even going to invest more money into developments to finish them instead of seizing and selling them, to basically bail out these builder tycoons.

Please don't fool yourself, NAMA is seriously flawed and I can only hope the greens vote to not support it.

Link Please

Diarmuid

listermint wrote: »

Link Please

http://www.rte.ie/business/2009/0731/nama.html
"NAMA will have the ability to borrow up to €10 billion to finish uncompleted developments which it acquires."

And for future reference http://lmgtfy.com/?q=bank+nama+finish+developments

Joey the lips

The_Minister wrote: »

Is it just me, or does Leo Varadkar, as a member of the Dail, show a scary lack of knowledge as to hoe NAMA works?

I know he's ****-stirring, but still, thats not how its meant to work.

+1


I agree but i think what leo is doing is showing the irony.... That the builders are being helped but we are not.

ascanbe

Diarmuid wrote: »

Makes no difference to the tax payer because those guys will never be able to repay those debts. This idea that just because someone still owes the money, then everything will work out, is crazy

Exactly.
These people haven't got a prayer of repaying these debts; in rare cases they may be able to pay a small percentage of them but they will be making every effort to avoid doing so.
So we have relieved the banks of this black hole of debt and taken it upon ourselves; but hey, we now own a bunch of, soon to be derelict, housing estates and apartment blocks as well as some, practically worthless, land.

SkepticOne

The_Minister wrote: »

Is it just me, or does Leo Varadkar, as a member of the Dail, show a scary lack of knowledge as to hoe NAMA works?

I think this may be an overly literal interpretation of what he is saying.

murfie

listermint wrote: »

Link Please

Chapter 6
POWERS IN RELATION TO DEVELOPMENT OF LAND

Development of land.
148.—(1) Where this Chapter applies, NAMA may enter into an agreement (including an
agreement with the person who was the debtor in relation to the bank asset concerned) for the
purpose of developing the land.

http://www.nama.ie/Publications/2009/DraftNamaBill2009.pdf

Darsad

Varadkar is great at stirring things he would be better placed writing to the Minister for Finance requesting ways be implemented to stop the unvouched expenses claimed by TDs of which he will claim over 100K this year nice cushion to help with his negative equity !!

The_Minister

Diarmuid wrote: »

Makes no difference to the tax payer because those guys will never be able to repay those debts. This idea that just because someone still owes the money, then everything will work out, is crazy

They are taking every loan over 5,000,000 regardless of whether or not they can pay.
Many of those loans will not default.

murfie wrote: »

Sure but do you really believe they are going to chase that money, in fact they are even going to invest more money into developments to finish them instead of seizing and selling them, to basically bail out these builder tycoons.

Of course they are.

Finished properties sell for more then unfinished ones, allowing NAMA to recoup more of the loans.

By paying developers to owe it money to do it, it can take that money to pay back some of its loans, as opposed to paying it to a builder who owes it nothing and will walk off with the money.

it makes sense to pay the builders to finish the properties.

murfie

The_Minister wrote: »

it makes sense to pay the builders to finish the properties.

So we can have more overpriced empty developments on the market to go along with everything else? Makes sense to who? Developers?

The_Minister

murfie wrote: »

So we can have more overpriced empty developments on the market to go along with everything else? Makes sense to who? Developers?

Ok.
1. We have half-finished developments
2. We can get more money if those developments are finished.
3. We have builders who owe us money.

Our options are:
We can pay those builders to finish those projects, and then get them to pay us the money we paid them, to pay off some of their loans. *Smart option*
Or
We leave the buildings unfinished and sell them for less money. *Not-so-smart option*
Or
We get pissy with the builders and to punish them, hire companies who don't owe us money. Those companies finish the building, then walk off with that money, as opposed to paying most of it back to us. *Thick option*

Diarmuid

The_Minister wrote: »

Ok.
1. We have half-finished developments
2. We can get more money if those developments are finished.

Not necessarily true. Plenty of developments around where phase 1 is finished and not sold and phase 2 not finished. If you can't sell phase 1 why would you think you'd sell phase 2?

SkepticOne

I think the question is fairly simple. Is there a business case for putting yet more billions into finishing off buildings?

If there was a business case, it would be no problem attracting private investors to put money into it. It is precisely because private investors don't see a business case (because there isn't one, imo) that the taxpayer is being forced to step in.

The question people who support NAMA need to ask themselves is this: would you put your own hard earned money into these schemes as opposed to other people's?

donkey balls

Two weeks ago I wrote to NAMA to offer my apartment to them for long-term economic value. Like hundreds of thousands of young people, I am now in negative equity and am facing the spectre of debt deflation – a falling income with rising debt repayments. See my letter and the NAMA response below.

and this is the same pr**k that claimed over 73,000 euro in expenses and judging by the coment above he must be one of the four TD,S who took a 10% pay cut.

the guy is a plank what does he know about trade&enterprise he is a doctor the same goes for those in power and the goobeens that want to have there turn to ruin the country.

eoinbn

SkepticOne wrote: »

I think the question is fairly simple. Is there a business case for putting yet more billions into finishing off buildings?

If there was a business case, it would be no problem attracting private investors to put money into it. It is precisely because private investors don't see a business case (because there isn't one, imo) that the taxpayer is being forced to step in.

The question people who support NAMA need to ask themselves is this: would you put your own hard earned money into these schemes as opposed to other people's?

At very best NAMA will break even, and I don't believe that for one second. However just because it will lose money doesn't make it a failure- it's not about making money, it's about getting the banks up and running again. If it does that, and at the cost of ~€10b i think that's a pretty small price tbh(Currently the government spends that every ~2 months).

murfie

donkey balls wrote: »

the guy is a plank what does he know about trade&enterprise he is a doctor the same goes for those in power and the goobeens that want to have there turn to ruin the country.

Have you read the FG alternative to NAMA it appears to be a good alternative.

http://www.finegael.org/upload/FG_Banking_Policy_Sept_21.doc

Set up a good bank, promote lending through the banks to the people that really need it. let the banks and their investors keep the risk they decided to take on, with the bad developer loans.

P. Breathnach

SkepticOne wrote: »

I think the question is fairly simple. Is there a business case for putting yet more billions into finishing off buildings?

I think the answer is that there is in some cases, and not in others.

If there was a business case, it would be no problem attracting private investors to put money into it. It is precisely because private investors don't see a business case (because there isn't one, imo) that the taxpayer is being forced to step in.

I don't think it is as straightforward as that. Private investors need funds, and the banks aren't lending. I expect that there are currently bankable projects that have been stalled because of this, and I am hopeful that in the short to medium term economic recovery will start and projects that are not immediately viable will become better propositions.

But that low-lying field two miles outside town will probably never be worth what some over-optimisitic developer paid for it, and we we will never need that hotel in the middle of nowhere, and the office block being built speculatively to house a decentralised unit of the civil service will probably remain empty. And as for those urban housing estates in rural parts of Cavan...

The_Minister

murfie wrote: »

Have you read the FG alternative to NAMA it appears to be a good alternative.

http://www.finegael.org/upload/FG_Banking_Policy_Sept_21.doc

Set up a good bank, promote lending through the banks to the people that really need it. let the banks and their investors keep the risk they decided to take on, with the bad developer loans.

Except that two Fine Gael former Ministers for Finance have come out and said it is a bad idea.
As well as most people who understand economics.

It's much better than Labour's suggestion, but NAMA has a better chance of actually working.

Also, how the hell to Fine Gael say assets have fallen by up to 95%?
Where have they fallen by 95%?
That would mean a house costing €1,000,000 would now cost €50,000.

P. Breathnach

The_Minister wrote: »

... Also, how the hell to Fine Gael say assets have fallen by up to 95%?
Where have they fallen by 95%?
That would mean a house costing €1,000,000 would now cost €50,000.

I imagine that a few assets (just a few) might have fallen by that much. The sort of thing I would think of is the scrubby farmland 60 miles from Dublin which some optimist bought at development prices with a view to sticking 150 densely-packed houses on it to service Dublin commuters. Now it can revert to the lower end of the agricultural land price range.

In general, however, the fall in asset values would not be nearly so severe. My opening guess would be an average fall of the order of 50%, of which 10% might be borne by builders/developers and 40% borne by banks.

Diarmuid

The_Minister wrote: »

It's much better than Labour's suggestion, but NAMA has a better chance of actually working.

Most agree that it will work. The problem is at what cost to the taxpayer.

Kidchameleon

look at the end of the day, the banks are gettin out of the **** at the expense of the tax payer, while the average joe is not being given a helping hand at all, thats the whole point of the letter imho.

Call Me Jimmy

murfie wrote: »

I can only hope the greens vote to not support it.

You mean vote... against it?

SkepticOne

P. Breathnach wrote: »

I think the answer is that there is in some cases, and not in others.

I don't think it is as straightforward as that. Private investors need funds, and the banks aren't lending. I expect that there are currently bankable projects that have been stalled because of this, and I am hopeful that in the short to medium term economic recovery will start and projects that are not immediately viable will become better propositions.

But that low-lying field two miles outside town will probably never be worth what some over-optimistic developer paid for it, and we we will never need that hotel in the middle of nowhere, and the office block being built speculatively to house a decentralised unit of the civil service will probably remain empty. And as for those urban housing estates in rural parts of Cavan...

It is fairly easy to see why all of what you are saying is wrong. First of all, there is money out there. If there was not then the NAMA developer bailout could not proceed in the first place. Money is being raised by the government through the issue of bonds. But these bonds are not being issued by NAMA but by the State.

It would be far better if NAMA itself were able to issue bonds so that if NAMA failed only investors who thought it was a good deal would take a hit. The tax payer would not be forced to take the risk.

But who would invest in NAMA? Would you? I certainly wouldn't. That is why the bonds are being issued by the State. If NAMA fails, it is the taxpayer who picks up the bill, not NAMA or its bondholders.

So the money is there, just no one wants to invest in the NAMA proposition and I don't blame them!

The second point is the issue of the field outside some midland town. As someone pointed out, it is not just this sort of thing that developers were over-optimistic about but also developments in prime locations. Dublin is full of developments that have ground to a halt and there are completed sites full of unsold units. We, the taxpayer, are going to be forced, via NAMA, to buy into these things by taking on the loans of these developers, that the banks, quite rightly want to be rid of.

It is pretty much a no-brainer if you just put yourself in the position of someone looking to invest his own money rather than forcing others to invest.

The main point here is that if it was a remotely good proposition you would not need to force people to invest in it.

P. Breathnach

SkepticOne wrote: »

It is fairly easy to see why all of what you are saying is wrong...

Nothing in your response shows how anything I said, let alone all of it, is wrong.

dublin.caucus

Darsad wrote: »

Varadkar is great at stirring things he would be better placed writing to the Minister for Finance requesting ways be implemented to stop the unvouched expenses claimed by TDs of which he will claim over 100K this year nice cushion to help with his negative equity !!

and

and this is the same pr**k that claimed over 73,000 euro in expenses

Not sure where the €100k or the €73k figures come from, but Leo is probably one of the most open TDs with regards to his expenses.

According to his website, he claimed €34k last year and provides a detailed breakdown of where it went. He claims to have been the first TD to publish their expenses.

You can check it out here:

http://www.leovaradkar.ie/?p=259

dublin.caucus

The_Minister wrote: »

Except that two Fine Gael former Ministers for Finance have come out and said it is a bad idea.

One Fine Gael former Ministers of Finance have come out and said it is a bad idea. The same guy who is legally required to represent the interests of Anglo-Irish Bank.

Garrett Fitzgerald was never a Minister of Finance, and made no comment that I am aware of as to the positives or negatives of FGs proposals.

Darsad

[quote=dublin.caucus;62340906

Not sure where the €100k or the €73k figures come from, but Leo is probably one of the most open TDs with regards to his expenses.]

Your right that should been since elected but still my sentiments remain the same

The_Minister

dublin.caucus wrote: »

One Fine Gael former Ministers of Finance have come out and said it is a bad idea. The same guy who is legally required to represent the interests of Anglo-Irish Bank.

Garrett Fitzgerald was never a Minister of Finance, and made no comment that I am aware of as to the positives or negatives of FGs proposals.

Actually Alan Dukes was not under any obligation to come out and rubbish the Fine Gael plan.
You are of course correct that Garratt Fitzgerald neve became Minister for Finance, although he did his best to get it during his first term as minister (got foreign affairs instead).
He has however backed NAMA and effectively rubbished FG's plan, calling for them to accept NAMA and amend it, rather than pursue their own plan.

dublin.caucus

The_Minister wrote: »

Actually Alan Dukes was not under any obligation to come out and rubbish the Fine Gael plan.
You are of course correct that Garratt Fitzgerald neve became Minister for Finance, although he did his best to get it during his first term as minister (got foreign affairs instead).
He has however backed NAMA and effectively rubbished FG's plan, calling for them to accept NAMA and amend it, rather than pursue their own plan.

Company Directors have obligations in terms of representing the best interests of the company on whose board they serve. NAMA is in the best interests of Anglo, not of tax-payers and citizens. Hence the differing views between Dukes and Fine Gael.

Fitzgerald said that we were too far down the road of NAMA to change it at this stage. He actually didn't endorse NAMA - just said that to change from it now would cause the country's international reputation to suffer. Which isn't exactly backing, but sure make stuff up why don't you.

kippy

dublin.caucus wrote: »

Company Directors have obligations in terms of representing the best interests of the company on whose board they serve. NAMA is in the best interests of Anglo, not of tax-payers and citizens. Hence the differing views between Dukes and Fine Gael.

Fitzgerald said that we were too far down the road of NAMA to change it at this stage. He actually didn't endorse NAMA - just said that to change from it now would cause the country's international reputation to suffer. Which isn't exactly backing, but sure make stuff up why don't you.

I think you are incorrect in relation to company directors and their obligations.
There are a number of state appointed directors to many companies, union reps etc etc, whos obligations differ from what you speak off.

dublin.caucus

kippy wrote: »

I think you are incorrect in relation to company directors and their obligations.
There are a number of state appointed directors to many companies, union reps etc etc, whos obligations differ from what you speak off.

Company directors have a fiduciary duty towards the company on whose board they serve. As such, if Dukes was going to make any statement on NAMA it would have to reflect the best interests of Anglo-Irish.

Now, I have to no brief to support Dukes - he was responsible for prolonging FF role in the late 80s with the Tallaght strategy and deserves little praise for it, but it is worth placing his remarks in context. He spoke as a Director of Anglo Irish, not as a former Fine Gael leader.

dublin.caucus

Anyway, as the point was made elsewhere; why don't Daft have a long term economic value indiciator on their website?

It would mean that when you were looking at a house for €250k, you could easily quantify that the LEV was €320k (or whatever it would be) and as such you would be making a huge saving in buying now.

dresden8

dublin.caucus wrote: »

Anyway, as the point was made elsewhere; why don't Daft have a long term economic value indiciator on their website?

It would mean that when you were looking at a house for €250k, you could easily quantify that the LEV was €320k (or whatever it would be) and as such you would be making a huge saving in buying now.

Because it would be a lie and they would leave themselves open to being sued for publishing that blatant lie.

PJW

I think this thread deserves a bump.

The_Minister wrote: »

Ok.
1. We have half-finished developments
2. We can get more money if those developments are finished.
3. We have builders who owe us money.

Our options are:
We can pay those builders to finish those projects, and then get them to pay us the money we paid them, to pay off some of their loans. *Smart option*
Or
We leave the buildings unfinished and sell them for less money. *Not-so-smart option*
Or
We get pissy with the builders and to punish them, hire companies who don't owe us money. Those companies finish the building, then walk off with that money, as opposed to paying most of it back to us. *Thick option*

How about we get Nama backed construction companies to finish the semi constructed developments....i.e all the trade persons from Architects to Brickies that are sitting on the dole now (pay them 50% on top of their social welfare) and you'd have a skilled cheap labour force, people off the dole with a spendable income.



Unfortunetly the main problem will still remain in the current global and national recession NOBODY WANTS TO BUY A HOUSE.

Also NAMA should not bail out any developer loans on green field sites, pure greed lead to the high costs of "future protential development land" argi lands that did'nt even have planning permission, lol (50k per arce now selling at 5k on the outskirts of Athlone etc.) So will the banks lend to develop these site? answer no they wont, why? because NOBODY WANTS TO BUY A HOUSE.

How on earth will NAMA get their investment back on these sites, answer they wont, why? because NOBODY WANTS TO BUY A HOUSE.

The property bubble has well and truly burst (developers building homes for their migrant working staff to live in, crazy stuff) and a line should be drawn under it, the Goverment should forget about property as some super righter for the past wrongs, its not going to happen and the current banks and developers should be left to pasture in these green field site like cows waiting on the slauther house.

A good bank is a far better option (FG option) as linked to earlier in this thread.

meathstevie

Darsad wrote: »

Varadkar is great at stirring things he would be better placed writing to the Minister for Finance requesting ways be implemented to stop the unvouched expenses claimed by TDs of which he will claim over 100K this year nice cushion to help with his negative equity !!

I don't support FG nor Dr Varadkar but that's not at the higher end of the expenses claims in the Dail.

Sand

@The Minister

Ok.
1. We have half-finished developments
2. We can get more money if those developments are finished.
3. We have builders who owe us money.

No, *We* dont. The banks and the developers do. Last time I checked I was a citizen of Ireland, a democratic state, where I paid my taxes to support the public interest - that being an aggregation of all citizens interests.

Its news to me that all along I was a shareholder in a property speculator consortium. Or that I pay my taxes to support the AIB/BoI balance sheet.

Also, jesus the logic underlying 1, 2 and 3 is staggering.

If there was a demand for the developments, in any state, then the private sector would invest and finish and gain the profit on them, without any state incentives. There is no demand for the developments. The private sector has coped this. Hence collapse of the ponzi scheme.

Finished or unfinished theres no demand. "Investing" to make a loss is retarded.

Paying builders so they can pay us? To sell to a market that has collapsed? Where commerical court judges are citing falls in commerical property values of up to 80% as being common?

Wonderful. That is the sort of out of the box thinking we need to really return this country to the stone ages.

Oh and thanks to PJW for citing this. As noted, it was a truly remarkable post worthy of great attention.