State intervention on mortgages - Proposal

yoshytoshy

ei.sdraob wrote: »

how many people have fallen thru the welfare net in this manner? why would the above not qualify for rent allowance

ei.sdraob wrote: »

yes theres this pot of gold just lying around in a field over there, go fetch it like a good lad

Indeedy do.

AARRRRGH

ei.sdraob wrote: »

the country is already helping out property owners thru various schemes

* rent supplement was 511million in 2009

then theres

* mortgage interest relief
* mortgage interest suppliments
* stamp duty exemptions
* section 23
* renewal write offs
* rent a room relief


jebus the list goes on


the state should be cutting its expenditure not increasing it

if institutions stop buying irish bonds (400million a week) then overnight you will find how poor the country really is

Dont forget rent relief too. Imagine the saving by abolishing that. Why on earth should you get tax relief on rent.

Laminations

69 while i understand your desire to see equity in government support, two wrong bail outs dont make a right. However although i dont think the tax payer should shoulder the burden for mortgage holders i do hold the banks responsible. The responsibility for personal borrowings should lie on the individual but also the bank. They issued the loan so there should be an onus on the banks to renegotiate all mortgages for primary homes. And i dont mean a renegotiation that would let the borrower off paying. I mean an extension of the term allowing a reduction of current payments, people could up their repayments again in a few years when we are back on track. Or the banks could split the mortgage so they retain part ownership of the house and part of the borrowers repayments would be considered rent. Councils have done 50/50 rent mortgage packages before.
Also i find it disgusting that people try and compare Sean Fitz to a regular borrower suggesting he deserves similar leniency. It appears he is getting plenty of leniency, 7mil of unpaid interest written off? The banks renegotiate with the big boys as they'll never pay back and us tax payers foot the bill. Renegotiations for mortgages could be done in such a way that tax payers wouldn't pay.

Hagar

Now we are getting somewhere, I was hoping someone would come up with an alternate proposal, I'll be the first to admit that mine wasn't 100% viable. Too many people knock other peoples ideas but are slow to come up with their own. I like the 50/50 idea. That could be workable.

69

69 wrote: »

Now we are getting somewhere, I was hoping someone would come up with an alternate proposal, I'll be the first to admit that mine wasn't 100% viable. Too many people knock other peoples ideas but are slow to come up with their own. I like the 50/50 idea. That could be workable.

But with the 50/50 idea, how exactly would the bank recoup their initial investment? By selling half of your house?

ei.sdraob

Laminations wrote: »

Also i find it disgusting that people try and compare Sean Fitz to a regular borrower suggesting he deserves similar leniency. It appears he is getting plenty of leniency, 7mil of unpaid interest written off? The banks renegotiate with the big boys as they'll never pay back and us tax payers foot the bill. Renegotiations for mortgages could be done in such a way that tax payers wouldn't pay.

try to compare?

under @69s proposal whats there to stop someone like Sean getting bailed out?

he is innocent until proven guilty (sadly ) remember that

this is a daft "proposal" at a time when the country is bankrupt, there simply is no money to run day to day services never mind bail people out who made stupid mistakes


i find it incredible that in the last month this whole "bailout for mortgage holders" is being pushed so hard, here on boards and in media by few vested interests such as the property council

next yee be telling us (like the crowd on frontline) that if they dont get bailed out they will commit suicide (sick) :mad:

Laminations

Rojomcdojo wrote: »

But with the 50/50 idea, how exactly would the bank recoup their initial investment? By selling half of your house?

Well it was a scheme for first time buyers (dont know if it is still around) but i think it could be retrofitted to current mortgage holders in trouble,

The main idea is that the mortgage is renegotiated so that borrowers only pay say 50% (arbitrary) of the cost reducing their monthly payments to a manageable level- the mortgage lender holds the other 50%.

For this the lender charges rent on their bit of the property they hold (a manageable sum on top of the monthly payment) and the borrower would be expected to take care of the other costs of home owning.

If the price of the property increases (as NAMA is hoping) the homeowner will get 50% of the price when they sell. So the stake will increase with the value of the house.

If prices crash? well they already have. If they crash further well we are all screwed anyway because of NAMA.

Laminations

ei.sdraob wrote: »

try to compare?

under @69s proposal whats there to stop someone like Sean getting bailed out?

he is innocent until proven guilty (sadly ) remember that

Innocence or guilt doesn't matter, what 69 was proposing would cover borrowings for a home (mortgage) and you drag in Sean Fitz who owes 70mil from property speculation? He deserves no leniency regardless of whether he was fiddling the books or operating fraudulently. His borrowings were not of a personal mortgage nature. The only place I disagree with 69 is that tax payers or the state should foot the bill. The state should force banks to renegotiate given the help they have received.

I'd even suggest that homeowners who bought houses below or at average prices (for that county) or within 2 standard deviations of the average should be helped first and foremost. Banks should not be bending over backwards to keep Twink in her mansion or anyone else who bought an extremely lavish house - these people can always trade down.

Finally, (and many people may disagree) I think we need a financial services pension clawback levy. Anyone in the financial sector (management level up) or government or policy roles who were active during the period of the fake property tiger boom should have a deduction from their pensions now (or when they retire). I'm thinking of people like Bertie, or Fingers or Neary, players and institutions could be identified in the banking inquiry. This would be their cross to bare for f***ing up and hoisting NAMA (the current unfair bail out) on our heads. Sectoral persion levies already exist so it could work

ei.sdraob

Laminations wrote: »

Innocence or guilt doesn't matter, what 69 was proposing would cover borrowings for a home (mortgage) and you drag in Sean Fitz who owes 70mil from property speculation? He deserves no leniency regardless of whether he was fiddling the books or operating fraudulently. His borrowings were not of a personal mortgage nature. The only place I disagree with 69 is that tax payers or the state should foot the bill. The state should force banks to renegotiate given the help they have received.

I'd even suggest that homeowners who bought houses below or at average prices (for that county) or within 2 standard deviations of the average should be helped first and foremost. Banks should not be bending over backwards to keep Twink in her mansion or anyone else who bought an extremely lavish house - these people can always trade down.

Finally, (and many people may disagree) I think we need a financial services pension clawback levy. Anyone in the financial sector (management level up) or government or policy roles who were active during the period of the fake property tiger boom should have a deduction from their pensions now (or when they retire). I'm thinking of people like Bertie, or Fingers or Neary, players and institutions could be identified in the banking inquiry. This would be their cross to bare for f***ing up and hoisting NAMA (the current unfair bail out) on our heads. Sectoral persion levies already exist so it could work

whats the difference between someone who lost 70 million or half a million

due to property "speculation"?


eitherway you are taking money from whatever little productive companies and people are left and waste it on people who gambled and lost

hell that money could be used on infrastructure, healthcare, public service and welfare all of which are getting hit


this "mortgage holder" bailout is obscene


whats there to stop people going out and getting a house that they know they cant afford and then getting helped by the state



this thread is just ridiculous

the_dark_side

Rojomcdojo wrote: »

But with the 50/50 idea, how exactly would the bank recoup their initial investment? By selling half of your house?

I don't understand what you mean by the 'banks initial investment'

Laminations

ei.sdraob wrote: »

whats the difference between someone who lost 70 million or half a million

due to property "speculation"?


eitherway you are taking money from whatever little productive companies and people are left and waste it on people who gambled and lost

hell that money could be used on infrastructure, healthcare, public service and welfare all of which are getting hit


this "mortgage holder" bailout is obscene


whats there to stop people going out and getting a house that they know they cant afford and then getting helped by the state



this thread is just ridiculous

I'd appreciate if you read my posts before accusing me of condoning a state bailout for mortgage holders. There is no difference in 70mil or half a mil if it was property speculation. Buying a home and living in it is not property speculation. Nor is it my problem if the home you bought is now worth less or you cant afford it. I'm saying it is the individuals problem but also the banks problem and they have a responsibility to renegotiate, not to reduce the overall money owed but to agree alternative methods of repayment, whether extending the term or part renting from the bank so they maintain some ownership.

The banks would become part landlords on many houses but I doubt this could be considered a bailout for the mortgage holder, they are now paying for a house they will never own (but it would be hoped when they are in a more stable financial position they can renegotiate again to pay back more). People bought houses because they didnt want to rent so I doubt they'd see this as getting off easy, and they'd still owe the bank the same, they'd just have more manageable monthly repayments.

Read my posts before commenting, otherwise your comments are ridiculous

And whats to stop people going out and getting a house they cant afford now? the banks aren't lending wrecklessly anymore and the regulator (I hope) is doing his job.

ei.sdraob

Laminations wrote: »

I'd appreciate if you read my posts before accusing me of condoning a state bailout for mortgage holders. There is no difference in 70mil or half a mil if it was property speculation. Buying a home and living in it is not property speculation.

I buy a home for 0.5 million on credit, i know i cant afford it, i live in it and then of course cant pay the mortgage
what do you call that again?

Laminations wrote: »

Nor is it my problem if the home you bought is now worth less or you cant afford it.

the OPs proposal is to make it your, mine and everybody else's problem

Laminations wrote: »

I'm saying it is the individuals problem but also the banks problem and they have a responsibility to renegotiate

that's what banks are doing already, renegotiating all sorts of loans, and if it does end-up in court more than likely (as per recent cases) the judge would order the 2 parties to come to some sort of an agreement

Laminations wrote: »

The banks would become part landlords on many houses but I doubt this could be considered a bailout for the mortgage holder,

it would if the bank is spending and taking in taxpayers money, just a more convoluted way of doing it

Laminations wrote: »

And whats to stop people going out and getting a house they cant afford now? the banks aren't lending wrecklessly anymore and the regulator (I hope) is doing his job.

I can walk into the bank tomorrow and more than likely get close to half a million from the manager ( already recently refused a mortgage and bought in cash), every-time they see me they try to push mortgages, loans, pensions, investments etc

They still lending too loosely imho

Laminations wrote: »

and the regulator (I hope) is doing his job.

yes sure :rolleyes: "hope"

the regulator has no credibility left, who knows they probably on a work to rule too

Laminations

ei.sdraob wrote: »

the OPs proposal is to make it your, mine and everybody else's problem

I'm not in agreement with the OPs proposal

Tim Robbins

I'd be against such a scheme. We are very close to negative equity but we have cut back on a huge range of things to make sure we are not.

You have to reward and incentivise people to make good finacial decisions in any sort of functioning economy. Under the OP's proposal it would be worth my life to keep living the high life and then let the state pick up the tab.

What I think would be a better idea would instead of a bank reposessing the house, the state did. The property owners would be guarenteed to keep their house and paid the state the remainder of the morgage. The morgage could be re-negotiated then over a longer time period.

If the property owners ever sold the place, the state would take what is owed to them. You can't forget that home owners are getting more TRS than they ever have. Anyone with a killer mortgage would be getting huge tax relieve already.

Laminations

ei.sdraob wrote: »

I can walk into the bank tomorrow and more than likely get close to half a million from the manager ( already recently refused a mortgage and bought in cash), every-time they see me they try to push mortgages, loans, pensions, investments etc

They still lending too loosely imho

So your experience of a bank trying to lend you money (a person in a financial position to buy a house in cash) leads you to conclude they are lending too loosely??

Laminations

ei.sdraob wrote: »

I buy a home for 0.5 million on credit, i know i cant afford it, i live in it and then of course cant pay the mortgage
what do you call that again?

Hmmmm. What do I call that.....
Foolish?
A lifetime of repayments and debt?
Time to renegotiate to something you can afford to pay?
Time for the bank to repossess part of the house/mortgage (holding a stake they can cash in on sale) while charging you the rest of the mortgage plus rent?
Not a pretty situation for the individual or the bank?
Not the tax payers problem?

There are plenty of things I would call it - property 'speculation' is not one of them.

ei.sdraob

Laminations wrote: »

So your experience of a bank trying to lend you money (a person in a financial position to buy a house in cash) leads you to conclude they are lending too loosely??

that and the fact that people are still getting 5x their salary in loans for homes, and close to 90% mortgages

ei.sdraob

Laminations wrote: »

Hmmmm. What do I call that.....
Foolish?
A lifetime of repayments and debt?
Time to renegotiate to something you can afford to pay?
Time for the bank to repossess part of the house/mortgage (holding a stake they can cash in on sale) while charging you the rest of the mortgage plus rent?
Not a pretty situation for the individual or the bank?
Not the tax payers problem?

There are plenty of things I would call it - property 'speculation' is not one of them.

if its foolish then why should the taxpayer pay for it as per @ops proposal? sure some people loose thousands on horses, should they be bailed out too for being "foolish"
words foolish and speculation and gambling often go hand in hand

if I go and get alot of credit tomorrow and buy a house that i know i could not afford, and quite likely will further fall in price
what would you call that? would you be happy bailing me out as per @op proposal

as i said earlier in thread the OP has not provided any figures or anything to backup his argument and the need for a "mortgage holder" bailout
he said that people would end up on streets, but its quite obvious that is very unlikely in this country and we still have a safety net

your proposal is for banks to renegotiate loans, and thats what they are doing anyways now

we already are indirectly helping mortgage holders by bailing out the banks and with NAMA propping up prices, and of course all sorts of "relief" schemes
why in gods name would the taxpayer now have to fork out more to help out the "poor" mortgage holders as per OP

Laminations

ei.sdraob wrote: »

if its foolish then why should the taxpayer pay

ei.sdraob wrote: »

would you be happy bailing me out as per @op proposal

Are you reading what I am saying?

Laminations wrote: »

Hmmmm. What do I call that.....
Foolish?
A lifetime of repayments and debt?
Time to renegotiate to something you can afford to pay?
Time for the bank to repossess part of the house/mortgage (holding a stake they can cash in on sale) while charging you the rest of the mortgage plus rent?
Not a pretty situation for the individual or the bank?
Not the tax payers problem?

Laminations wrote: »

I'm not in agreement with the OPs proposal

I'm suggesting renegotiations for loans that were taken out for a home. You say this is already happening? Maybe it is. And if it is then there shouldn't be a major problem with mortgage defaults.

I'm not the first to suggest the 50/50 scheme (although McWilliams tries to include the State in his idea)

David McWilliams wrote:

The State could demand, as a condition of recapitalisation, that the banks re-negotiate thousands of mortgages. The principal could be halved now so that the debtor continues to service the debt, but on a much lower amount. This way they don’t default and the bank does not end up with a bad loan. But the debtor doesn’t get away with it. It is not a debt write-off, it is just deferred.
Initially, the State and the bank take the hit on the level of loan deferral. They pay 50/50. But this deferral, which is the difference between the old principal and the new principal, goes to the State so that when these houses finally rise in value again in, let’s say, a decade, the upside goes to the State and a proportion to the bank.
The bank’s proportion is much smaller than the State’s because the bank messed up in the first place. So although the State and the bank cough up 50/50 to pay now for the deferral, the State gets proportionally more of the upside so the taxpayer, not the future shareholder, is paid first and most.
The impact of such a move would be to release the noose of debt from around the necks of thousands of our younger generation. This will give them hope and maybe a reason to stick around. For the banks, it means the debt write-off will be smaller than they would otherwise be, and the loans will continue to be serviced.
This means the minister’s recapitalisation of the banks, with our money, might cost us less in the medium term because a smaller proportion of the mortgage loan book will go sour. Most significantly for liquidity, it will signal a floor to the house prices.

Note the emboldened part - it is NOT a bail out.


He explains how it would work

Consider a house bought in the boom for €200,000. The couple who bought it could just cover it with both working. One loses their job. The mortgage repayments now, more than likely, swamp them completely. They will not spend and the economy will contract more as a result.
What if we slashed their principal in half, so they now service a loan of €100,000? The State finances a proportion of this with a state-wide bond and the bank finances its bit out of its capital.
The State and, to a lesser extent, the bank, gets an option on all the price upside, up to and beyond, the old price over the next 10 years. As prices move back up, the State’s option becomes very valuable.
This means the State behaves responsibly and gives its citizens a break, while the citizens behave responsibly and ultimately pay the State back when they can. It is a win-win for everyone and is precisely the sort of lateral thinking we need to be coming up with.

I would disagree with him in involving the State and the tax payer, I think the banks should manage their proportion and charge a small rent for this.

pah

SLUSK wrote: »

If you bought a house an now cannot afford to pay the mortgage you have to sell the house and start renting. Why should others bail you out?

LOL :rolleyes: