NAMA & Domestic property

Seth Brundle

Following from the Leo offers to sell his apartment to NAMA for Long-term Economic Value thread - does the NAMA legislation explicitly state that they will not take over assets held by ordinary citizens and that they will only 'manage' assets belonging to developers?

P. Breathnach

kbannon wrote: »

Following from the Leo offers to sell his apartment to NAMA for Long-term Economic Value thread - does the NAMA legislation explicitly state that they will not take over assets held by ordinary citizens and that they will only 'manage' assets belonging to developers?

Varadkar's move is just a cheap political stunt.

NAMA will be taking over and managing assets belonging to banks. Most, if not all, of these are loans to developers secured on property. It's a bank rescue operation, not a developer rescue operation.

spadder

I thought only debts greater than €5 million come under the remit of Nama?

Seth Brundle

cheers

Hootanany

spadder wrote: »

I thought only debts greater than €5 million come under the remit of Nama?

Do you have a sauce please

Amhran Nua

P. Breathnach wrote: »

NAMA will be taking over and managing assets belonging to banks. Most, if not all, of these are loans to developers secured on property. It's a bank rescue operation, not a developer rescue operation.

Are there not provisions in the NAMA legislation to allow them to take over residential property loans as well, I recall seeing that lately.

P. Breathnach

Amhran Nua wrote: »

Are there not provisions in the NAMA legislation to allow them to take over residential property loans as well, I recall seeing that lately.

The point is that it loans that are being taken over, not properties. If you have a mortgage loan, it is a liability from your point of view and an asset from the lender's point of view. If NAMA takes the loan over from the bank, it probably changes nothing for you: you will still owe the same amount.

Varadkar cannot transfer his mortgage to NAMA. Possibly the bank could, but he would still owe the same amount.

SkepticOne

What Varadkar is ridiculing here is the dubious concept of Long-term Economic Value, the idea that the State should base it's valuations of loans, not on the current market value but some future value that is higher than the market value.

If there were any validity to the concept, then buying Varadkar's flat would be a good deal, whereas clearly it is not.

I think only the very literal-minded would think that he is seriously expecting the State through NAMA to actually buy his flat.

NewDubliner

P. Breathnach wrote: »

Varadkar cannot transfer his mortgage to NAMA. Possibly the bank could, but he would still owe the same amount.

But a property speculator uses limited companies to insulate himself from the debt and can walk away and form another company and start with a clean slate.

An ordinary worker could be bankrupted and will owe the money forever.

NAMA is about protecting the banks if/when a developer walks away.

At this time, the game is to cut pay for ordinary workers and give more money to the banks.

The_Minister

SkepticOne wrote: »

What Varadkar is ridiculing here is the dubious concept of Long-term Economic Value, the idea that the State should base it's valuations of loans, not on the current market value but some future value that is higher than the market value.

If there were any validity to the concept, then buying Varadkar's flat would be a good deal, whereas clearly it is not.

I think only the very literal-minded would think that he is seriously expecting the State through NAMA to actually buy his flat.

I think what everyone finds funny is how bad his metaphor actually is.
Either he hasn't a clue as to how NAMA works, or is trying to make people think that developers are getting paid for their assets.

dresden8

P. Breathnach wrote: »

It's a bank rescue operation, not a developer rescue operation.

If you think NAMA is going to hound developers to get our money back you are incredibly naive.

Bankrupting developers will not be in the "national interest".

Leaving empty apartment blocks to rot will not be in the "national interest".

It will be in the "national interest" to pay somebody to maintain them. Developers maybe?

Lenihan has said he wants to set aside 10 billion to finish developments. Who will get that? Why, the developers of course.

We've seen what will happen already, with a bankrupt bank loaning 68 million of taxpayers money to a bankrupt developer who is already on an interest and principal holiday in the hopes of seeing him over the finish line into NAMA.

The working saps, as usual, will pick up the tab.

Slutmonkey57b

SkepticOne wrote: »

What Varadkar is ridiculing here is the dubious concept of Long-term Economic Value, the idea that the State should base it's valuations of loans, not on the current market value but some future value that is higher than the market value.

Sounds very similar to the logic the bankers and enconomists used to get us into this mess.

cyclopath2001

From the Financial Times, looks like some people are looking at both sides of the lender/borrower relationship:

Latvian loan plan threatens Nordic banks
Nordic banks face losses on lending to Latvia under government proposals to limit the amount that lenders can collect from defaulting mortgage holders. The plans could lessen the pain of devaluation.

The Latvian government led by Valdis Dombrovskis, prime minister, confirmed on Tuesday that it was drafting legislation that would cap the amount banks could collect to the current value of properties rather than the value of the loan. This would trigger big losses for banks such as Swedbank, SEB and Nordea, which dominate the Latvian market, because property prices have fallen 70 per cent.....

P. Breathnach

cyclopath2001 wrote: »

From the Financial Times, looks like some people are looking at both sides of the lender/borrower relationship...

That is the "lending without recourse" model, where the amount recoverable is limited to the value of the asset(s) used as security. That was the deal given to the Anglo-Irish Bank Golden Circle. It is also a common practice in the US -- and we can see that it did not save US banks from destruction.

Nevertheless, I would favour such an approach when loans are made. It would discourage banks from advancing recklessly large loans to people purchasing homes. Such loans were an important factor in inflating our property bubble.

But I also think it would be wrong to change the rules retrospectively. In Ireland's case, it would encourage people to walk away from negative equity situations even though many can well afford to service their loans. We are already deep enough in the doo-doo bailing out the banks: we don't need to create another hole in the system requiring even more bailing out.

cyclopath2001

P. Breathnach wrote: »

But I also think it would be wrong to change the rules retrospectively.

But the banks would be very happy if people's terms and conditions of employment were renegotiated & pay and pensions cut, so why not mortgages?

murfie

Nobel Prize-winning economist Joseph Stiglitz said the Government is "squandering" public money with its plan to bail out the banks........

..............Stiglitz, a professor at Columbia University in New York, told RTE yesterday that overpaying for the loans was “criminal”.

“It’s a massive transfer of money from the public to bankers,” he said today.

independent.ie

Couldnt find anything on RTE about this, eventhough they say in the article he was interviewed by RTE.

We need an alternative to NAMA, as it is right now we are handing the banks a get out of jail free card!!

Seth Brundle

See http://www.rte.ie/news/2009/1006/primetime_av.html?2623781,null,230