NAMA is insane

ei.sdraob

In today’s Irish Times, Fiona Reddan has an interesting short article about Nama’s planned mortgage-enhancement scheme. The scheme is intended to unload some of Nama’s large inventory of houses and flats without unduly lowering property prices. The scheme, at least as it has been described so far, will work as follows. Suppose that Nama wants to sell a particular flat for €100,000. It will offer a buyer the following deal. The purchaser must put down €10,000 in cash, and take out a mortgage from a bank for €72,000. Nama will pay (itself) the remaining €18,000 and record the flat as sold at 10,000+72,000+18,000 = €100,000. If after an initial period, say five years, the fair market value of the house is more than €82,000 (the amount already paid by the homeowner) than the homeowner must “top up” the difference to a maximum of €18,000. If the fair-market value of the house is €82,000 or less at this date, the homeowner has no need to pay the remainder.

The same logic works for any sales price scaled up correspondingly, I use a €100,000 flat for illustration

* above illustration from irisheconomy
* original article here


This is just crazy now they are trying to get the public (who owns NAMA :rolleyes:) to get involved in their crazy derivative scheme and take a gamble by on artificially priced assets,
This is what happens when the state tries to artificially manipulate prices and digs itself a hole it is now trying to exit, with the usual "smart whoore" schemes (how did the guarantee workout again). grrr

Permabear

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ei.sdraob

• CannyMcSavvyLandlord buys NAMAed apartment as per above scheme
• CannyMcSavvyLandlord rents it out to junkies etc
• value of the apartment plummets to nothing as the neighbourhood turns into a ghetto
• all while you are collecting money from junkies most likely being paid disability etc by state and/or being involved in crime
• wait out till the mortgage is paid of and date passes
• ...
• profit???

Why would there be any incentive for any of the buyers to maintain and upgrade their properties? All incentives are there to trash the place and run them into the ground.



aside, to add insult to injury

BONUSES averaging €7,700 each were paid to hundreds of staff in NAMA and the National Treasury Management Agency last year from a total bonus pot worth €2m.
About 14 people in these agencies are earning more than Taoiseach Enda Kenny with salaries above €250,000 a year compared to the Taoiseach's salary of €200,000.
A further three agency staff are paid between €200,000 to €250,000 and 27 are paid between €150,000 to €200,000.
The total amount paid in bonuses to staff at the NTMA last year was €1.98m, which represents 6.6pc of the NTMA's overall payroll.
Altogether 258 out of the 304 staff shared in the bonus bonanza with payments averaging €7,681 each.
Nine of the most senior executives at the NTMA waived their bonuses worth €905,000 for last year.

Jobs for the boys eh
edit: jobs for solicitors too it seems

The scheme is intended to unload some of Nama’s large inventory of houses and flats without unduly lowering property prices

:rolleyes::rolleyes::rolleyes:
Good god. What is wrong with them

Permabear

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hinault

I don't know what it is about this country but the "save the property sector/landlord sector" has killed this country.

This is another variation on the same theme.

Dannyboy83

The scheme, at least as it has been described so far, will work as follows. Suppose that Nama wants to sell a particular flat for €100,000. It will offer a buyer the following deal. The purchaser must put down €10,000 in cash, and take out a mortgage from a bank for €72,000. Nama will pay (itself) the remaining €18,000 and record the flat as sold at 10,000+72,000+18,000 = €100,000. If after an initial period, say five years, the fair market value of the house is more than €82,000 (the amount already paid by the homeowner) than the homeowner must “top up” the difference to a maximum of €18,000. If the fair-market value of the house is €82,000 or less at this date, the homeowner has no need to pay the remainder.

It feels like NAMA/The people behind NAMA, are just making it up as they go along.

Cookie_Monster

Nama will pay (itself) the remaining €18,000 and record the flat as sold at 10,000+72,000+18,000 = €100,000.

how can they possibly get away with that bit

tenchi-fan

I think we need to unwind Nama, it's the dodgiest bank of them all.

NAMA can't trick investors, but it can trick the Irish consumer into paying over €82k for a run-down shed worth €60,000 for which no bank in their right mind would give a mortgage for unless it was part of a crazy scheme which limited the bank's exposure to risk and placed it all on the taxpayer.

ei.sdraob

And when it all goes pear shaped they can dump the toxic loans onto ... ... NAMA 2.0 :eek:

thebman

What is going to determine the fair market value in the future?

My guess is that money will not be collectible.

thebman

thebman wrote: »

What is going to determine the fair market value in the future?

Nama of course!

Suppose that Nama wants to sell a particular flat for €100,000.

:pac: