Hypothetical - House repossessions etc

iMax

Just a hypothetical question.

As an example, a friend of mine who was recently laid off was getting more & more anxious about mortgage payments & falling to arrears. His wife luckily is still working & they're managing, but they are struggling.

The three of us were having a chat & he voiced this concern & I was stuck as to what to say & his wife just came out with "They can't evict everyone, who's going to buy another house after being evicted from their old one?" Now it's very simplified, but she does have a valid point.

If it was me for example, I can't afford to pay any more than my mortgage already is, if the rates go up, I'm going to start to fall into arrears, now I can keep paying what I currently pay to them, but the balance between the new rate & the old is going to be arrears. If it ever got to the point that I can't pay my mortgage (& that's entirely possible at some date in the future), the bank will take me to court, have me evicted & I'll have to rent somewhere. Chances are I'll be able to rent a bigger place for less than I'm paying for my mortgage but that's an aside.

Now, me newly evicted, will have absolutely no incentive to pay what I owe to the bank for arrears/balance, nor will I be able to since I have to now pay rent for my new supersized plush pad. They'll pursue me probably, but just now don't have it to give them, so is it off prison for me ? Probably, but wait, don't we have overloaded prisons already ? Aren't they chock full of murderers, rapists, thieves, tv licence evaders & corrupt politicians & bankers ? They were getting what I could give them before they turfed me out, now they'll get less, where's the business smarts in that ?

We know that homes are being repossessed on an increasing basis (don't know what the figure is, because it's being kept quiet).

So if more & more are being laid off & falling into arrears & more houses are going to be reposessed, what are they going to do with them ?

Nijmegen

Go read Morgan Kelly's article. Whole idea that when we all start foreclosing on mortgages, the country is really screwed.

As to whether or not you'd lose your house, well, that's the big "WTF do we do now lads?" question for banks, for government, for individuals.

feicim

Morgan Kelly hints that if mortgage defaulters are in large enough numbers they will be a power unto themselves. Its easy to lock up a handful but doing it to thousands is not realistic for numerous reasons. Imagine how annoyed you would be if your brother / sister / friend / parent got locked up for not paying a mortgage. This could lead to severe public disorder. The Irish have been very quiet considering all that is going on but aggressive actions like this taken by the banks/government could be the straw that breaks the camels back. Its seems hard to rile the Irish up but once they get going all hell can break loose.

Some middle ground of some form will inevitably have to be sought.

The government is well aware that it is not only the rich bankers (or poor bankers with rich wives;)) who can leave the country to declare themselves bankrupt to achieve more favourable terms.... its ignoring this issue completely. For now. No doubt is will surface soon enough.

iMax

Have read it & that's what put the question in my head.

I do honestly believe we're 100% screwed as a nation. We will NEVER recover. But, as a nation we have to go on.

I have a child who is my main priority, if it comes to a choice between her being fed/clothed etc over arrears on the mortgage, well then she's going to win out (& I'll be saving up to pay her airfare for when she hits 18 & wants to emigrate).

I know we're broke, I know things are going to get worse, I have a rough idea of how bad it'll get, but, what I don't know is what happens.

Is it just a shut down ?

We're kicked out of the EU (unlikely but a possibility), we pretty much end up back in the economic stone-age, we still have basic things like small exports, we have far less luxuries, we do what we can, when we can, it's crap, but it's not the end of the world, (just is as we know it). We'll possibly have to have a new currency (wonder if we can get the US to bail buy us out?)

Maybe we should rename the country Hawaii East.

Cyrus

ive been thinking about this too since reading kellys article,

and what struck me was, if a movement began, premised on the idea of not paying mortgages and handing the keys back, id say it could gather pace very quickly, and there would be real strength in the numbers.

why should the people who are paying to bail the banks out continue to pay to restore them into viable businesses?

im not saying i agree with any of this by the way im just hypothesising, but i do think this could actually happen and plenty of people would jump on the bandwagon

iMax

Cyrus wrote: »

<SNIP> i do think this could actually happen and plenty of people would jump on the bandwagon

I think it's not too far away, will start small & gather momentum. This country is a powderkeg & the fuse has been lit, we just don't know how long the fuse is.

Rabble Rabble

Morgan is right. If 200,000 people default - a number which includes plenty of Gardai, and we are paying for the mis-managment and fraudulent activity of the banks ( who apparanly lied to the Government and thus the guarantee is worthless), then these people will not pay and nobody is going to turf them out of their housing. A garda is not going to turf out a garda.

I would prefer we did this in an orderly fashion. The government owns the banks, wipes out the debtholders and shareholders, owns the mortgages and forgives with a new bankruptcy law which seizes no other assets, but does stop people getting a big loan for a few years.

Then people rent back from the government at a nominal fee. This frees up the labour market ( one bad effect might be an increase in emigration). it will also increase consumer demand. It will not prop up house prices. Wins all round. Except for Anglo, and AIB.

gmale

iMax wrote: »

I think it's not too far away, will start small & gather momentum. This country is a powderkeg & the fuse has been lit, we just don't know how long the fuse is.

3 months if we are lucky

gollem_1975

Cyrus wrote: »

ive been thinking about this too since reading kellys article,

and what struck me was, if a movement began, premised on the idea of not paying mortgages and handing the keys back, id say it could gather pace very quickly, and there would be real strength in the numbers.

why should the people who are paying to bail the banks out continue to pay to restore them into viable businesses?

im not saying i agree with any of this by the way im just hypothesising, but i do think this could actually happen and plenty of people would jump on the bandwagon

this is the "social conflict" that Kelly alludes to. not everyone in the country is at risk of defaulting on their mortgage . I myself heeded the advice I got on websites during the bubble and was prudent financially. why should people like me bail out those who took on mortgages they shouldn't have ? its a tough question.
I personally would have a huge difficulty about families being turfed out of homes onto the street and tbh I don't think with the amount of surplus housing in the country there is going to be any problems with keeping a roof over peoples heads for a long time to come.

Rabble Rabble

gollem_1975 wrote: »

this is the "social conflict" that Kelly alludes to. not everyone in the country is at risk of defaulting on their mortgage . I myself heeded the advice I got on websites during the bubble and was prudent financially. why should people like me bail out those who took on mortgages they shouldn't have ? its a tough question.
I personally would have a huge difficulty about families being turfed out of homes onto the street and tbh I don't think with the amount of surplus housing in the country there is going to be any problems with keeping a roof over peoples heads for a long time to come.

The losers will be people still repaying their mortgages, and not in negative equity. If you didnt buy then when the banks start lending again you can buy for peanuts, on my plan.

gollem_1975

Rabble Rabble wrote: »

The losers will be people still repaying their mortgages, and not in negative equity. If you didnt buy then when the banks start lending again you can buy for peanuts, on my plan.

but why would those people happily keep repaying if 200,000 other people (figure quoted from MK's article) were to default en masse.

also consider that the country now owns most of the banks and all of their debt..won't that hit the taxpayer when these people stop repaying ?

Rabble Rabble

gollem_1975 wrote: »

but why would those people happily keep repaying if 200,000 other people (figure quoted from MK's article) were to default en masse.

also consider that the country now owns most of the banks and all of their debt..won't that hit the taxpayer when these people stop repaying ?

There will be a moratorium period. People in negative equity can apply to default - people who aren't will have the option. That would mean losing their equity, which might happen anyway as this policy will reduce house prices.

As for the results - we are paying Anglo's Debtors and AIB debtors. Not paying that and taking over the banks is cheaper than the alternative, and Kelyy says no banks will loan next year anyway - a capitalised nationalised bank might ( or once loans are written off the rest are transferred to HSBC for a dollar).

There are two options here, do the default orderly, or dis-orderly.

Nijmegen

The big issue as they say is, what of people still paying their mortgages? Or those with no mortgage? They'll end up paying for those defaulting just as we're all paying for the banks.

The's the Catch-22.

A smarter system than default would be write downs.

Same Catch-22, less people turfed out of homes the banks can't sell.

gollem_1975

Rabble Rabble wrote: »

As for the results - we are paying Anglo's Debtors and AIB debtors.

does debtors include the depositors ?

Rabble Rabble wrote: »

Not paying that and taking over the banks is cheaper than the alternative, and Kelyy says no banks will loan next year anyway - a capitalised nationalised bank might ( or once loans are written off the rest are transferred to HSBC for a dollar).

i think i'll quit while i'm behind

Rabble Rabble

Nijmegen wrote: »

They'll end up paying for those defaulting just as we're all paying f.

There is not cost to the taxpayer, as we - in my scenario - have removed the bank guarantee for debtors. Thats cheaper. Decreases in rent will offset any increases in taxes, were there any.

The losers are mortgage holders who have some equity. In general they would be - by the time this hits the fan ( i.e. the 8% interest rates) - the older population with lower mortgage repayments left and so on.

This would be a transfer of the wealth which was pushed to property owners of a certain generation back to the 20-30 year olds. It is going to happen in an orderly , or a dis-orderly fashion.

200,000 people will not be turfed out of their homes.

Gurgle

iMax wrote: »

We know that homes are being repossessed on an increasing basis (don't know what the figure is, because it's being kept quiet).

That seems a bit oxy-moronic.

Either we know that repossessions are on the increase because we have the figures, or we don't know because they're being kept quiet.

(facts shmacts and all that...)

Inquitus

Rabble Rabble wrote: »

There is not cost to the taxpayer, as we - in my scenario - have removed the bank guarantee for debtors. Thats cheaper. Decreases in rent will offset any increases in taxes, were there any.

The losers are mortgage holders who have some equity. In general they would be - by the time this hits the fan ( i.e. the 8% interest rates) - the older population with lower mortgage repayments left and so on.

This would be a transfer of the wealth which was pushed to property owners of a certain generation back to the 20-30 year olds. It is going to happen in an orderly , or a dis-orderly fashion.

200,000 people will not be turfed out of their homes.

I would imagine the only thing likely to happen is that the 200,000 people will be declared bankrupt and have their house rented back to them when it happens, but rented back at market rates. The downside is bankrupcy is harsh, the upside is instead of paying 2.5k a month to live in their house they now get it for 1.2k or w/e.

jimmycrackcorm

Rabble Rabble wrote: »

Morgan is right. If 200,000 people default - a number which includes plenty of Gardai, and we are paying for the mis-managment and fraudulent activity of the banks ( who apparanly lied to the Government and thus the guarantee is worthless), then these people will not pay and nobody is going to turf them out of their housing. A garda is not going to turf out a garda.

I think there is an overbearing sense of negativity in posts. First of all, by any means the figure of 200,000 is a very pessimistic figure. Secondly why would Gardai default? They aren't losing their jobs, they may have to take another paycut and tighten their belts but these are the last people who will be defaulting. If anything the only defaults they will suffer are their second house investment properties.

There are plenty of people in negative equity who are actually still well able to fund their mortgages. Their complaints are that they are unable to move house, but they may never have chosen to move anyway.

cyrus wrote:

what struck me was, if a movement began, premised on the idea of not paying mortgages and handing the keys back, id say it could gather pace very quickly, and there would be real strength in the numbers.

Seeing as Irish people won't go out in protest, it's unlikely such a movement would occur. Also repossessions would build up granuarly so without a mass-occurance of these there would be an insufficient spark to create such a movement.

Rabble Rabble

Inquitus wrote: »

I would imagine the only thing likely to happen is that the 200,000 people will be declared bankrupt and have their house rented back to them when it happens, but rented back at market rates. The downside is bankrupcy is harsh, the upside is instead of paying 2.5k a month to live in their house they now get it for 1.2k or w/e.

Basically that is what I am saying.

However, afaik - In general you cant have assets if you are bankrupt. I am creating a loan forgiveness program for people who are in negative equity, otherwise people would have to sell cars etc. I am pretty sure that is how bankruptcy normally works.

Rabble Rabble

jimmycrackcorm wrote: »

I think there is an overbearing sense of negativity in posts. First of all, by any means the figure of 200,000 is a very pessimistic figure. Secondly why would Gardai default? They aren't losing their jobs, they may have to take another paycut and tighten their belts but these are the last people who will be defaulting. If anything the only defaults they will suffer are their second house investment properties.

There are plenty of people in negative equity who are actually still well able to fund their mortgages. Their complaints are that they are unable to move house, but they may never have chosen to move anyway.

You didnt read Morgan's article entirely. Basically, default is a problem with cash flow, not negative equity. Although both together will tend to concentrate the mind. Garda salaries will take more cuts sometime next year, and interest rates will go to 8% ( see what Kelly wrote). Thats the problem. If a Guard over-invested he could be in trouble, regardless of employment.

Rabble Rabble

jimmycrackcorm wrote: »

Seeing as Irish people won't go out in protest, it's unlikely such a movement would occur. Also repossessions would build up granuarly so without a mass-occurance of these there would be an insufficient spark to create such a movement.

Defaulting is a matter of not paying. The bank has to instigate procedures. That takes a while. Give duffy a call and you're sorted.

Less effort than a protest.

jimmycrackcorm

Rabble Rabble wrote: »

You didnt read Morgan's article entirely. Basically, default is a problem with cash flow, not negative equity. Although both together will tend to concentrate the mind. Garda salaries will take more cuts sometime next year, and interest rates will go to 8% ( see what Kelly wrote). Thats the problem. If a Guard over-invested he could be in trouble, regardless of employment.

Yes I did read the article, I think that is obvious. But a Garda losing his investment house is not the same issue as his home. Losing his investment house is the existing scenario we have such as with ghost estates.

Also many of those "Gardai" acquired their mortgages at tracker rates - if so then they'll probably still be lucky. The big implosion yet to occur is with interest only investments - they will be the banks problems and subsequently the taxpayers. I only hope that the projected losses we are going to have to pay back factor in lots of these...

jmayo

Cyrus wrote: »

ive been thinking about this too since reading kellys article,

and what struck me was, if a movement began, premised on the idea of not paying mortgages and handing the keys back, id say it could gather pace very quickly, and there would be real strength in the numbers.

why should the people who are paying to bail the banks out continue to pay to restore them into viable businesses?

And why should people who have nearly paid off their mortgages or have no mortgages at all pay for those who went out and over borrowed ?

The options of jingle mail, debt forgiveness or new lax banruptcy laws does result in victims and the victims in this case is those who were either lucky enough to be of a certain age or smart enough not to buy into the property bubble.
If people do not pay the banks for their loans who does it affect, but the people who now own the banks and have to make up for the banks losses i.e. the citizens of the state and more particularly the taxpayers.

gollem_1975 wrote: »

but why would those people happily keep repaying if 200,000 other people (figure quoted from MK's article) were to default en masse.

also consider that the country now owns most of the banks and all of their debt..won't that hit the taxpayer when these people stop repaying ?

If I see johnny down the road defaulting on his 500,000 mortgage and getting to live in his hosue on some cheap rent it back scheme, why should I continue to pay off my 100,000 mortgage ?
Why should mary, who doesn't even have a house, bother hanging around when her taxes are now sustaining johnny and paying off his defaulted 500,000 mortgage ?
There is a hazard in this idea, and it is that does lucky to be certain age profile and particularly those sensible during the boom are being punished.

Nijmegen wrote: »

The big issue as they say is, what of people still paying their mortgages? Or those with no mortgage? They'll end up paying for those defaulting just as we're all paying for the banks.

Exactly

Rabble Rabble wrote: »

There is not cost to the taxpayer, as we - in my scenario - have removed the bank guarantee for debtors. Thats cheaper. Decreases in rent will offset any increases in taxes, were there any.

There is a cost to the taxpayer.
Who exactly are left with the banks' losses but the taxpayers.

Rabble Rabble wrote: »

The losers are mortgage holders who have some equity. In general they would be - by the time this hits the fan ( i.e. the 8% interest rates) - the older population with lower mortgage repayments left and so on.

So it alright for these people to be losers ?

What about people who paid off chunks off their mortgage early, becuase persish the thought they were sensible with their money and sensible about how much they borrowed in the first place ?

It seems the goal of some people is to now screw those of us who were not idiots during the boom.

These same people who are looking for personal NAMAs, debt forgiveness are probably the same ones complaining about banks being bailed out and how the government never take responsibility.

Rabble Rabble

jmayo wrote: »

Why should mary, who doesn't even have a house, bother hanging around when her taxes are now sustaining johnny and paying off his defaulted 500,000 mortgage ?
There is a hazard in this idea, and it is that does lucky to be certain age profile and particularly those sensible during the boom are being punished.

YOu are not following this. I am saying that we default on the non-sovereign bank debt and we do this. That saves us the interest on 50Bn. Or is it 60Bn? Or is it 70Bn? ( You can see what is spooking the sovereign bond market). Therefore people who never bought will not be subsidising anyone, their taxes would be less, and their rent will most probably fall.

Which leaves us with people who were - as you say yourself - lucky to be certain age profile.

I am not prepared to sacrifice the 20 and 30 year olds of the country to eternal debt for 40 year loans because people of 50+ years of age have made off like bandits.

To maintain people in equity in their houses above what they paid for in goods and services, so that 20 and 30 year olds stay in negative equity for their lifetime, while still paying off the debt on the banks to whom they owe money to via their taxes - thats the moral ugliness.

And - for people who bought pre 1995 the house prices would have to drop by 80% for any loses. I'll get my smallest ever violin.

amen

Garda salaries will take more cuts sometime next year

interesting. Of course if I was in power the only peoples salary I would not cut would the Garda and Army.

Need to keep the loyal. Would be a good way to break wage parity between different departments as well!

Rabble Rabble

jmayo wrote: »

These same people who are looking for personal NAMAs, debt forgiveness are probably the same ones complaining about banks being bailed out and how the government never take responsibility.

I have no personal horse in the race - I am living in England in a rental.

However NAMA helped both the developers and people with property. By putting a floor under your losses. by putting a floor under property falls.

This has possibly protected you from negative equity.

Clearly you want to be bailed out, just not the people already in negative equity. And you want to be bailed out by the people in negative equity. My idea is fairer, dont you think?

AckwelFoley

Rabble Rabble wrote: »

The losers will be people still repaying their mortgages, and not in negative equity. If you didnt buy then when the banks start lending again you can buy for peanuts, on my plan.

Ill keep repaying my mortgage.

When things pick up, and they will, when i dont know - i'll still have a good credit rating.

Inquitus

Rabble Rabble wrote: »

Clearly you want to be bailed out, just not the people already in negative equity. And you want to be bailed out by the people in negative equity. My idea is fairer, dont you think?

Personally I think rewarding the most stupid with debt forgiveness is not an option. Let them go bankrupt, but take all their assets, and ensure they can't borrow a penny for a decade. That way it's not too easy to walk away from your obligations, but those truly struggling can improve their life instantly by removing onerous mortgage obligations in place of much more affordable rent.

Sea Sharp

I remember hearing something about foreign banks potentially coming over to assist people struggling with their mortgages with the catch being that they'll get a big chunk of the money when the house is finally gets sold.

Dempo1

The mortgage crisis is already a powder keg waiting to explode and i suspect the real figure for those in arrears is nearing 200,000. Just over the weekend it was reported BOI have already restructured up to €10 Billion of its mortgage loans whether is be moratoriums, interest only payment options etc.

On top of the already challenge for those struggling to meet mortgage payments, other personal loans are now catching up with a massive increase in judgments for personal debts, the next step will be installment orders which Judges are reluctant to issue against those on welfare so the natural next step is Judgment Mortgages against already struggling mortgage holders. Either way 2011 is looking decidedly grim and somethings going to give.

To top it off the Budget is going to crucify everyone, especially those still actually working, The interest rate for Bonds went to 8% today making it near impossible for Ireland Inc to borrow money in the new year and we now have the IMF breathing down our necks, we are essentially ****ed and i doubt its going to take a combined boycott of mortgage payments to force the issue. O and this is before mortgage interests start to rise.

Best and probably only option for the banks is a complete restructuring of mortgage debt, extended periods etc.

Rabidlamb

I see plenty of posters quoting 8% rates for the future.
Where has this figure been plucked from ?.
Is this expected increases in the ECB added to the upward spiral of variable rates ?.
Surely <1% trackers will never see rates this high.

PCPhoto

why don't the banks extend the lengths of current mortgages ?

- so instead of a 30-40yr mortgage .... people would now have a 60 or 80yr mortgage (something which their kids (or next of kin) would take over - in the event of death.... worst case the bank gets payments (maybe not as high as expected but over a longer term - so they make more in the long run).

So if/when someone dies their estate would either be property of the bank or the next of kin (assuming the debt is still there)

surely that would make more sense.

I have absolutely no economics knowledge - but in terms of ensuring that banks get constant payments and assist those who have trouble making payments at current rates.

Are the banks in so much financial trouble that they need to get the full mortgage prices in ?

NOTE: I have been telling my parents since 2005 that I couldn't afford to get on the property ladder - thank god for my lack of willingness to save money.

AckwelFoley

PCPhoto wrote: »

why don't the banks extend the lengths of current mortgages ?

- so instead of a 30-40yr mortgage .... people would now have a 60 or 80yr mortgage (something which their kids (or next of kin) would take over - in the event of death.... worst case the bank gets payments (maybe not as high as expected but over a longer term - so they make more in the long run).

So if/when someone dies their estate would either be property of the bank or the next of kin (assuming the debt is still there)

.

That is practiced in some other country, the name of which illudes me now, but it is common enough.. somewhere in central europe i believe.

Personally, i dont like it as the banks get more interest the longer the term, but if its makes payments lower... i suppose it may suit both parties involved

Inquitus

snyper wrote: »

That is practiced in some other country, the name of which illudes me now, but it is common enough.. somewhere in central europe i believe.

Personally, i dont like it as the banks get more interest the longer the term, but if its makes payments lower... i suppose it may suit both parties involved

It's definitely common in Japan.

cson

Completely against passing on debt directly like that to successors. It's one thing indirectly lumbering the future generations with the cost of the bank bailout, another completely to expect them to pay for a house they didn't buy.

gollem_1975

Inquitus wrote: »

It's definitely common in Japan.

I think intergenerational mortgages are common in japan since their own property bubble in the 1980's and not something as thats been in existence since the Samurai.

From what I have heard they way the Japanese dealt with their bubble is not the way to go... but then again if that wasn't the way to go and looking at japan who are 20 years since their bubble burst..they're not doing half bad for themselves are they ? so people lets not get too pessimistic ( we are living in the 5th best country in the world didn't you know )

I would not be in favour of 80 year mortgages for the same reason as I would not be in favour of 100% mortgages or interest only mortgages.

if we had stuck to proper guidelines in terms of 25 year mortgages and 3 times annual salary we mighn't be in the situation we are in today.

also excuse my naievity but doesn't life assurance pay off the mortgage if the mortgage holder dies in Ireland. therefore theres no need for 80 year mortgages right ?

The_Thing

Within five years, both Civil War parties are likely to have been brushed aside by a hard right, anti-Europe, anti-Traveller party that, inconceivable as it now seems, will leave us nostalgic for the, usually, harmless buffoonery of Biffo, Inda, and their chums.

I'll be voting for them based on their anti-traveller stance.

dan_d

In answer to the OP's original post, I think the biggest problem out of all these problems relating to mortgages is that we don't have a plan to solve this. Our system does not allow for handing back keys and is Victorian when it comes to bankruptcy. However we are now in an extremely unique situation, where both of those things become obsolete, and something else has to be brought in to contribute towards helping the situation.

We don't have the some thing else.Yet (I add hopefully).

There's absolutely no doubt that something has to be done, because this is the massive elephant in the room that it would appear every politician is blithely ignoring.

Inquitus

dan_d wrote: »

In answer to the OP's original post, I think the biggest problem out of all these problems relating to mortgages is that we don't have a plan to solve this. Our system does not allow for handing back keys and is Victorian when it comes to bankruptcy. However we are now in an extremely unique situation, where both of those things become obsolete, and something else has to be brought in to contribute towards helping the situation.

We don't have the some thing else.Yet (I add hopefully).

There's absolutely no doubt that something has to be done, because this is the massive elephant in the room that it would appear every politician is blithely ignoring.

The biggest problem is that we effectively own all the banks, so allowing mass mortgage default and punishing the banks for poor lending practices is not possible, as essentially we are just shifting an individuals debt to be the nations collective debt. Clearly it is inherently unfair to punish those who didn't buy into the housing boom even further by forcing them to assume the irresponsible Irishpersons negative equity.

Mr.Micro

dan_d wrote: »

In answer to the OP's original post, I think the biggest problem out of all these problems relating to mortgages is that we don't have a plan to solve this. Our system does not allow for handing back keys and is Victorian when it comes to bankruptcy. However we are now in an extremely unique situation, where both of those things become obsolete, and something else has to be brought in to contribute towards helping the situation.

We don't have the some thing else.Yet (I add hopefully).

There's absolutely no doubt that something has to be done, because this is the massive elephant in the room that it would appear every politician is blithely ignoring.

So far this mortgage arrears thing has been put on the back burner and it may be another big problem for the future. People borrowed massive money and many feel rightly or wrongly that they do not have to pay it back, because they cannot or will not be burdened with paying back when in massive negativity equity, whatever reason.

Amhran Nua

The easiest method to resolve the mortgage question to make sure the mortgages get repaid in full, which means plenty of jobs that pay well. The government has promised hundreds of thousands of these jobs, but have provided no details as to where they are going to come from. This should have been the primary focus from day one.

Mass defaults are not an option, all that does is shift the burden of debt repayment from those who borrowed too much to the backs of the taxpayer. And regardless of how many were to pursue such a course of action, every single one of those properties would be seized.

What Kelly is postulating is that the ECB and EU will turn up the heat and toss Ireland on the fire as an object lesson to the rest; all that shows is that he's an economist and shouldn't comment outside his field. Also maybe he should take a sun holiday somewhere.

Inquitus

Amhran Nua wrote: »

Mass defaults are not an option, all that does is shift the burden of debt repayment from those who borrowed too much to the backs of the taxpayer. And regardless of how many were to pursue such a course of action, every single one of those properties would be seized.

Mass defaults are getting more likely as time passes. 5% of Irish mortgages are 90 days or more in arrears, swathes of others have been temporarily changed to interest only which is not sustainable longterm. The Government has legislated to prevent foreclosures for 12mths from the start of the arrears, and alot of people are going to pass the 12mths soon. The Budget is going to place more pain on everyone this year, next year, and for two more after that. Interest rates will not remain this low forever.

There's alot of things that are going to cause alot of mortgage payers alot of pain, debt forgiveness is clearly not an option, but the possibility of mass defaults is not as unlikely as you seem to think.

Amhran Nua

Inquitus wrote: »

There's alot of things that are going to cause alot of mortgage payers alot of pain, debt forgiveness is clearly not an option, but the possibility of mass defaults is not as unlikely as you seem to think.

Possibly but consider this - 95% of mortgages are not as badly off as that, therefore they are likely still paying up. If we can create more jobs we create more options for those people, as well as shoring up the exchequer.

The only real spectre Kelly raised there was the prospect of major hikes in interest rates, that would be bad. Realisitically though, how much of an incentive does the ECB have to pursue that option? Ireland isn't the only country with severe credit problems. And even then, the ECB's mandate is stability of inflation at a certain level, if inflation starts to rise, debts get eaten away with the same stroke, even if they do prompt interest rate rises.

Thoie

Rabble Rabble wrote: »

I am not prepared to sacrifice the 20 and 30 year olds of the country to eternal debt for 40 year loans because people of 50+ years of age have made off like bandits.

I'm in the age bracket that you say you don't want to sacrifice, as is my friend, who'll I refer to as Mary.

I bought a place a few years ago, but I didn't buy the fancy schmancy 500k 1 bed apartment. I bought something I can afford, in a place that suits me, and took out a mortgage that I stress tested myself for.

Mary looked around, wanted a place of her own, but everywhere that suited her were too expensive. She did her sums, and continued renting.

My parents, having worked their asses off during the recession of the 80s to ensure we had a roof over our heads didn't make off like bandits - they were financially responsible and put extra money towards their mortgage payments to pay it off early and then used their money to build up a solid pension.

We are the people you want to sacrifice in place of the feckless 20 and 30 year olds who showed no fiscal responsibility and lived lives beyond their means. You want to punish me, Mary and my parents for not being reckless?

gollem_1975

Thoie wrote: »

I'm in the age bracket that you say you don't want to sacrifice, as is my friend, who'll I refer to as Mary.

I bought a place a few years ago, but I didn't buy the fancy schmancy 500k 1 bed apartment. I bought something I can afford, in a place that suits me, and took out a mortgage that I stress tested myself for.

Mary looked around, wanted a place of her own, but everywhere that suited her were too expensive. She did her sums, and continued renting.

My parents, having worked their asses off during the recession of the 80s to ensure we had a roof over our heads didn't make off like bandits - they were financially responsible and put extra money towards their mortgage payments to pay it off early and then used their money to build up a solid pension.

We are the people you want to sacrifice in place of the feckless 20 and 30 year olds who showed no fiscal responsibility and lived lives beyond their means. You want to punish me, Mary and my parents for not being reckless?

the antithesis of the 20 and 30 year old stereotype is one of MCWilliams pet theory's about the celtic tiger years in that the period saw a huge transfer of wealth from the young to the old. these 'feckless' 20 and 30 year olds would have been better off living the life of reilly than trying to get on the property ladder based on the advice of their elders.
unfortunately you guys are going to take some of the pain, nobody is going to avoid it tbh.
If we are going to generalise based on age it was the older generation that fscked things up/didn't provide leadership/put pressure on the younger people to get on the ladder/bought multiple properties for their solid pensions etc.
but then again i don't like to generalise

iMax

Thoie wrote: »

You want to punish me, Mary and my parents for not being reckless?

Simple fact is, we're all currently being punished irrespective of being reckless or not & will continue to be punished severely in the future.

While I can pay my mortgage I will, if I can't (& like I said, there is a slim possibility it will come to that, for all of us), well, if repossession comes knocking, I'll hold off on it for as long as I can, then I'll take my family & leave this cesspit.

feicim

Rabidlamb wrote: »

I see plenty of posters quoting 8% rates for the future.
Where has this figure been plucked from ?.
Is this expected increases in the ECB added to the upward spiral of variable rates ?.
Surely <1% trackers will never see rates this high.

The 8% rate is based on the fact that this is closer to what some banks are paying for money to loan out to the irish public for mortgages. Banks are loaning moeny out at 5-6% and they are running at a loss, which they appear to think is a good idea as it puts another floor under house price reductions. (high interest drives house prices down further).

The trackers are still linked to ECB rate and will continue to operate as they have been doing.

feicim

Inquitus wrote: »

.. Clearly it is inherently unfair to punish those who didn't buy into the housing boom even further by forcing them to assume the irresponsible Irishpersons negative equity.

Agreed. It is unfair. But lets face what has been fair since the bust?

Mortgage defaults will happen whether or not debt forgiveness will happen.

Either way, the money won't be paid. That is a given.

What needs to be decided is how this default will be managed.

If the powers that be can negotiate some part of the money back rather than letting people default out and out (even defaulters have a capacity to pay something). This way is fairer as the tab to be picked up by the taxpayer will be smaller.

Say "Jimmy" can't afford his mortgage payments and is in negative equity. The bank gets heavy threatens to evict hi. He decides, screw this, I'm off to some other part of the world leaving the full debt behind (for someone else to pay).

Alternatively the banks should determine what this Jimmy can pay, and take what they can get as its better than nothing.