Negative Equity Mortgages approved by CBI

checkcheek

Oh I agree that prices are going to fall but i just feel that everybody is in the frame of mind that house prices are goin down!

Sleepy

checkcheek wrote: »

How do you know were not at the bottom of the market, i keep saying this but this could be the bottom, nowadays everybody has the same mind set as a few years ago, people always seem to think that house prices can go only one way, years ago it was believed that they would only go up, not its believed they can only go down!

For me, I just can't see a price decline going from circa 15% in a year to a raise. I'm expecting at least a 5-10% decline this year a slowing in the decline and then a plateau until the economy begins to see substantial growth again and much as I hope I'm wrong, I can't see significant, employment-creating, growth in the short to medium term.

Deleted User wrote: »

It does seem to me though that while people do have to bear responsibility for their decisions, the state institutions who encouraged those decisions, and failed to legislate against all the reckless behaviour and who failed to properly regulate borrowing, as well as the banks who facilitated it all at great profit and in dubious circumstances (albeit both under different leaderships) are now standing back and washing their hands of it all, and singing the same song you are:

"You made your own bed, now lie in it"

It could be argued that many of the TD's that legislated at the time are lying in their bed: they lost their jobs. Unfortunately, they were in the position to ensure their beds were lined with comfortable pensions.

MadsL

Deleted User wrote: »

While i don't share your rather cold, dispassionate view of the situation, i can't argue with much of what you say. A lot of people dug their own hole during the boom, it's true, and fundamentally i do agree that it is ultimately people's responsibility to deal with the consequences of their decisions. As far as socialization of losses go biffo and lenihan were stupid enough to socialise the bank losses, and unfortunately, two wrongs don't make a right.

It does seem to me though that while people do have to bear responsibility for their decisions, the state institutions who encouraged those decisions, and failed to legislate against all the reckless behaviour and who failed to properly regulate borrowing, as well as the banks who facilitated it all at great profit and in dubious circumstances (albeit both under different leaderships) are now standing back and washing their hands of it all, and singing the same song you are:

"You made your own bed, now lie in it"

In the US you can negotiate your way out of a bad mortgage by taking some pain, but then the bank takes pain as well. the Short Sale - bank agrees an amount based on the current market value + a fair chunk of the overage depending on what you owe. they write of some of the debt in exchange for getting their money now rather than in foreclosure.

In Ireland the banks suggest you take a 125% mortgage? If taking a 100% mortgage was a bad idea, what the f is this??

Sleepy

People living with the consequences of their bad decisions and the banks attempting to accommodate those who are suitable candidates to be accommodated in this fashion. Labour force mobility is important both for people's quality of life and for the recovery of our economy.

Yes, I'd be happier if the banks had been left to do the same (We should have temporarily nationalised BOI and AIB whilst letting Anglo and the other non-systemic hit the wall at full tilt imho) but an idiotic decision by a former government doesn't justify an idiotic one by the current one.

hognef

MadsL wrote: »

In the US you can negotiate your way out of a bad mortgage by taking some pain, but then the bank takes pain as well. the Short Sale - bank agrees an amount based on the current market value + a fair chunk of the overage depending on what you owe. they write of some of the debt in exchange for getting their money now rather than in foreclosure.

In Ireland the banks suggest you take a 125% mortgage? If taking a 100% mortgage was a bad idea, what the f is this??

These people already have 125% (or higher) mortgages. What difference does it make if they move that to another house? Their net debt doesn't change as a result. This is simply allowing people to move to more suitable homes. Also, to some extent, it might save the taxpayer from covering even more bank losses.

daltonmd

Welease wrote: »

This is not about escaping debt, and would be unlikely to be offered to those who were unable to service their current mortgages..

At present they can't sell their current house, as they are unable to pay the negative equity sum in a single payment, so are locked into that house. This allows people who can afford their current mortgages, to sell the property and purchase another property moving the negative equity across..
Very useful for those who want to trade up (or possibly down) or those who want to move to secure new/different employment.

So they pay double the NE over the lifetime of the new mortgage - that's money that will never be spent in the economy, in the shops, pubs, small businesses. This notion that "Negative Equity is not a problem" is a myth. It is a huge problem and kicking that can down the road will cause more damage.

Loading more debt onto people is doing exactly to them what the government is doing to the country, more loans on top of loans that will never be repaid. Introducing this measure when we are looking at years of paycuts, higher taxes, stealth taxes is crazy, can they guarantee those who take up this crazy scheme that they will have their jobs in 5 years time or the same/higher disposable income .

If they want to solve the problem then they should order the banks to write down the debts, just as their debt was written down and the taxpayer put on the hook for it.

We need people to have money to spend in the economy - not redirected to the banks yet again, we need people spending to create demand and stimulate growth. This is yet another way to stifle growth. The difference with this measure is that is it channels money into the banks over a longer term.

Welease

daltonmd wrote: »

So they pay double the NE over the lifetime of the new mortgage - that's money that will never be spent in the economy, in the shops, pubs, small businesses. This notion that "Negative Equity is not a problem" is a myth. It is a huge problem and kicking that can down the road will cause more damage.

Loading more debt onto people is doing exactly to them what the government is doing to the country, more loans on top of loans that will never be repaid. Introducing this measure when we are looking at years of paycuts, higher taxes, stealth taxes is crazy, can they guarantee those who take up this crazy scheme that they will have their jobs in 5 years time or the same/higher disposable income .

If they want to solve the problem then they should order the banks to write down the debts, just as their debt was written down and the taxpayer put on the hook for it.

We need people to have money to spend in the economy - not redirected to the banks yet again, we need people spending to create demand and stimulate growth. This is yet another way to stifle growth. The difference with this measure is that is it channels money into the banks over a longer term.

You seem to think that everyone is struggling to pay their mortgages and that any debt is bad.. That is simply not true..Why should the debts of people who can afford their mortgages and want to trade up to bigger houses need to be written down? That simply doesn't make sense..

To take your proposal to it's fullest conclusion.. why not limit all people to purchasing 1 bed shacks.. so that we maximise money flowing out in the economy and minimise debt?

daltonmd

Welease wrote: »

You seem to think that everyone is struggling to pay their mortgages and that any debt is bad.. That is simply not true..Why should the debts of people who can afford their mortgages and want to trade up to bigger houses need to be written down? That simply doesn't make sense..

To take your proposal to it's fullest conclusion.. why not limit all people to purchasing 1 bed shacks.. so that we maximise money flowing out in the economy and minimise debt?

Where do I think, say or even hint that everyone is struggling?

Where do I say that any debt is bad?

You simply aren't looking at the bigger picture, but you're not alone in that.

Why would we limit all people to purchase one bed shacks? You've lost me.

As to maximise money to "flow out of the economy"??? Maybe you can clarify?

Welease

daltonmd wrote: »

Where do I think, say or even hint that everyone is struggling?

Where do I say that any debt is bad?

daltonmd wrote: »

Loading more debt onto people is doing exactly to them what the government is doing to the country, more loans on top of loans that will never be repaid. Introducing this measure when we are looking at years of paycuts, higher taxes, stealth taxes is crazy, can they guarantee those who take up this crazy scheme that they will have their jobs in 5 years time or the same/higher disposable income .

If they want to solve the problem then they should order the banks to write down the debts, just as their debt was written down and the taxpayer put on the hook for it.

You seem to believe that these loans wont be repaid and that debt write down is the solution.. For people who fall into this category and could avail of the changes.. they will be able to service their debt, and they don't need debt write down..

daltonmd wrote: »

You simply aren't looking at the bigger picture, but you're not alone in that.

I am looking at the bigger picture.. I understand that there are many many people who can and will continue to service their loans, but they need flexibility to be allowed to move properties, and not be locked into the current until the mortage is paid off.

daltonmd wrote: »

Why would we limit all people to purchase one bed shacks? You've lost me.

As to maximise money to "flow out of the economy"??? Maybe you can clarify?

You seem to believe that increasing debt is bad.. it's not.. it can be useful and necessary to move both personal and state economies along.. It's unsustainable debt that is the problem.. People with unsustainable debt would likely not be eligible to avail of these changes.

daltonmd

Welease wrote: »

You seem to believe that these loans wont be repaid and that debt write down is the solution.. For people who fall into this category and could avail of the changes.. they will be able to service their debt, and they don't need debt write down..



I am looking at the bigger picture.. I understand that there are many many people who can and will continue to service their loans, but they need flexibility to be allowed to move properties, and not be locked into the current until the mortage is paid off.



You seem to believe that increasing debt is bad.. it's not.. it can be useful and necessary to move both personal and state economies along.. It's unsustainable debt that is the problem.. People with unsustainable debt would likely not be eligible to avail of these changes.

You misunderstand - you were the one who said "as they are unable to pay the negative equity sum in a single payment", so even though they aren't struggling they cannot repay that debt. So the answer? Load up with more debt (the new mortgage on top of the NE) so they repay double in the long term.
You are not looking at the bigger picture - they need less debt to be flexible not more. They aren't locked into a property they are locked in debt.

Increasing the debt means that less money can come into the economy - it's all going one way and that's to the banks.

antoobrien

daltonmd wrote: »

Increasing the debt means that less money can come into the economy - it's all going one way and that's to the banks.

I'm curious, how is this increasing the debt? The person that's taking this on is already in debt (not as much as when they bought the property though, because they will have paid off some of the principle).

The way I see this proposal is that a property owner will sell their existing property (e.g. 1/2 bed apartment) to buy another (e.g. house).

So we're talking about the price of the house, offset by the sale price of the apartment. Will there be significant extra debt from this, not likely if the buyer is looking to get something affordable.

The new mortgages will still have to be within the reals of the ability of the applicant to pay back - so we're talking 4/5 times income.

I think the bigger question around this is how many people will even be eligible for this?

Welease

daltonmd wrote: »

You misunderstand - you were the one who said "as they are unable to pay the negative equity sum in a single payment", so even though they aren't struggling they cannot repay that debt. So the answer? Load up with more debt (the new mortgage on top of the NE) so they repay double in the long term.
You are not looking at the bigger picture - they need less debt to be flexible not more. They aren't locked into a property they are locked in debt.

Increasing the debt means that less money can come into the economy - it's all going one way and that's to the banks.

Actually i think you misunderstand and dont see the bigger picture...

In order to move house they need to be able to pay off the complete mortgage which includes the negative equity in a single instance, otherwise the bank will not allow the property to be sold.. Unless (for example) they have €100K lying around then they are stuck with that property for the term of loan.
The can pay the debt, and can easily service the debt over the 20+ years agreed, but they cannot pay €100K in a single go now (how many people can?).. The debt level is not an issue for them.. the payment of neg equity in a single go is.. It's a different issue completely.

Forcing them to pay the neg equity actually removes 100K from the economy in a single go.. Whereas allowing that 100K to roll over to monthly payments keeps the vast majority of money in the economy along with all the associated economic benefits of having people trade properties.

It's also worth noting that once the money gets to the bank it doesn't sit there hidden as you seem to imply.. It gets lent out to business & people etc.. So it's important to keep money circulating through the system, part of the reason why we needed to recapitalise the banks.

daltonmd

Welease wrote: »

Actually i think you misunderstand and dont see the bigger picture...

No, it's you, really.:rolleyes:

Welease wrote: »

In order to move house they need to be able to pay off the complete mortgage which includes the negative equity in a single instance, otherwise the bank will not allow the property to be sold.. Unless (for example) they have €100K lying around then they are stuck with that property for the term of loan.

100k today and after it's rolled over 20 years? 150k, 200k?? It is still money going to the banks and not into the economy.

Welease wrote: »

The can pay the debt, and can easily service the debt over the 20+ years agreed, but they cannot pay €100K in a single go now (how many people can?).. The debt level is not an issue for them.. the payment of neg equity in a single go is.. It's a different issue completely.

They cannot pay the debt if they cannot pay it in one go and move, if they roll it over they are adding more debt onto debt. Debt is debt whether you can pay it in one go or over time.

Welease wrote: »

Forcing them to pay the neg equity actually removes 100K from the economy in a single go.. Whereas allowing that 100K to roll over to monthly payments keeps the vast majority of money in the economy along with all the associated economic benefits of having people trade properties.

I never said they should be forced. But I am glad you agree that to repay the debt to the bank takes it out of the economy - which is what I said. It doesn't matter if it's on one go or over time - it is gone.

Welease wrote: »

It's also worth noting that once the money gets to the bank it doesn't sit there hidden as you seem to imply.. It gets lent out to business & people etc.. So it's important to keep money circulating through the system, part of the reason why we needed to recapitalise the banks.

Ah, but with people in so much debt it means they cannot borrow more and the banks will not lend it to them as has been highlighted everywhere - the banks aren't lending.


This issue isn't this proposed solution, it is simply that Negative Equity has far reaching implications on the economy.

daltonmd

antoobrien wrote: »

I'm curious, how is this increasing the debt? The person that's taking this on is already in debt (not as much as when they bought the property though, because they will have paid off some of the principle).

They are in Negative Equity yes.

antoobrien wrote: »

The way I see this proposal is that a property owner will sell their existing property (e.g. 1/2 bed apartment) to buy another (e.g. house). So we're talking about the price of the house, offset by the sale price of the apartment. Will there be significant extra debt from this, not likely if the buyer is looking to get something affordable.

No, we are talking about the negative equity on the mortgage for the 1/2 bed apt on top of a new mortgage for a new house. Apartments have tanked so if you paid 300k for one you'd be lucky to get 100k for it now - 200k less your repayments, not forgetting that if you put down a deposit then it is gone. It all depends then on where people want to move - if it's for jobs then it's closer to a city which will be a bit more expensive then commuterland.

antoobrien wrote: »

The new mortgages will still have to be within the reals of the ability of the applicant to pay back - so we're talking 4/5 times income.

But they are still in Negative equity, repaying a new mortgage for probably twice the price of a mortgage on the value of the property - crazy in my opinion...

antoobrien wrote: »

I think the bigger question around this is how many people will even be eligible for this?

Great point - and I doubt there are many to be honest, at least I hope not anyway.

Welease

daltonmd wrote: »

100k today and after it's rolled over 20 years? 150k, 200k?? It is still money going to the banks and not into the economy.

Err the banks ARE part of the economy.. Money goes in .. then it goes out again in the form of loans, funding etc. If banks don't have funding.. then they can't loan.. if they can't loan.. companies close.. if they close the economy slows down..

Debt is part of the economy.. and it's acceptable.. Unsustainable debt is the problem.. They are not the same..

And the people who will be able to avail of this service are not in unsustainable debt.. They have sustainable manageable debt, and want the freedom to trade properties (for various reasons), which itself helps stimulate the economy..

daltonmd wrote: »

They cannot pay the debt if they cannot pay it in one go and move, if they roll it over they are adding more debt onto debt. Debt is debt whether you can pay it in one go or over time.

And sustainable debt is not nor has it ever been the issue.. It's necessary.. How many people can pay off their mortgage in a single go? If they could.. they wouldnt need a mortgage...

You seem to have an issue with any type of debt.. Tell me how you plan to go through life without accumulating any type of debt?
Because most plans (esp. those which include buying property) will require debt.. The issue is making sure the debt is sustainable.. The people who will be able to use these new facilities have sustainable debt..

They are not, nor have they been the source of the banks or Ireland economic issues. The problems lies with people who have unsustainable debt.. This facility does not, and will not effect them nor does it intend to alleviate their issues..

Tsad

What about a scenario where the overall debt is not increased by taking out the 2nd mortgage? Set aside the 25% neg equity BOI rule for a moment. What if the rule was you can take out the 2nd mortgage regardless of how large the neg equity is, as long as the cost of the 2nd mortgage plus the neg equity, is equal to or less than the remaining cost of the 1st mortgage?

Now some might say this is unrealistic as the 2nd house would then need to be a "move down" rather than a "move up". Not necessarily so if you add in "location". Possible e.g. - a starter 1-bed bought in Dublin suburb in the boom for 300k now sells for 100k less. The couple decide to move down the country to Mullingar or Tullamore or whereever. You can get a large family home there for 200k. Add the 100k neg equity to the 2nd mortgage and they are back at the level they were with the first house. Leaving aside other possible issues (such as losing tracker) it would appear that no additional debt is being created. Plus 2 houses sold! Obviously doesn't suit everyone but could attract a greater number than the current proposal?

daltonmd

Welease wrote: »

Err the banks ARE part of the economy.. Money goes in .. then it goes out again in the form of loans, funding etc. If banks don't have funding.. then they can't loan.. if they can't loan.. companies close.. if they close the economy slows down..

Debt is part of the economy.. and it's acceptable.. Unsustainable debt is the problem.. They are not the same..

And the people who will be able to avail of this service are not in unsustainable debt.. They have sustainable manageable debt, and want the freedom to trade properties (for various reasons), which itself helps stimulate the economy..

And sustainable debt is not nor has it ever been the issue.. It's necessary.. How many people can pay off their mortgage in a single go? If they could.. they wouldnt need a mortgage...

You seem to have an issue with any type of debt.. Tell me how you plan to go through life without accumulating any type of debt?
Because most plans (esp. those which include buying property) will require debt.. The issue is making sure the debt is sustainable.. The people who will be able to use these new facilities have sustainable debt..

They are not, nor have they been the source of the banks or Ireland economic issues. The problems lies with people who have unsustainable debt.. This facility does not, and will not effect them nor does it intend to alleviate their issues..

Firstly can you not personalise the argument. This is about Negative Equity and the effect it has on the economy - not on what you wrongly perceive are my issues.

The banks are the problem. They are why we are where we are. Banks borrow from other banks, that's how they give out long term mortgages.

The economy is not based on the property market - this proposal may help people move but it won't put anymore money directly into the economy. It just means the banks are getting their money back, after we bailed them out already.

During the boom people were in positive equity, they tapped into this and spent the money in the economy, fuelling it. Now they are in Negative Equity and the reverse is happening. If they are spending large chunks servicing negative equity then they are not spending it in the economy, if they are not spending there is no demand, if there is no demand there are no jobs, if there are no jobs then there is no growth.

Here are a couple of articles on Negative Equity for your information.

http://www.examiner.ie/opinion/columnists/matt-cooper/why-the-government-isnt-interested-in-solving-our-mortgage-debt-crisis-170606.html

http://trueeconomics.blogspot.com/2011/10/16102011-negative-equity-and-debt.html

MadsL

I'm waiting to hear the first Short Sale being openly discussed in the media. The banks surely cannot wait much longer to foreclose on those in arrears, and there must be a fair few flights to Oz gone with keys being dropped through letterboxes.

Welease

daltonmd wrote: »

Firstly can you not personalise the argument. This is about Negative Equity and the effect it has on the economy - not on what you wrongly perceive are my issues.

I'm not personalising any arguement beyond referring to what you seem to be saying.. It is going to somewhat difficult to respond, if i cannot refer to where I believe you are saying the issues exist.. In previous posts you are complaining about debt, you are now stating the issue is about negative equity.. They are not the same issue.. So I am trying to ascertain where you believe the problem lies..
If you take offense I apologise, but it also should be noted that you seem comfortable with telling me I am incapable of seeing the bigger picture which in the same vein would be considered a personal insult..

So with that out of the way

daltonmd wrote: »

The banks are the problem. They are why we are where we are. Banks borrow from other banks, that's how they give out long term mortgages.

I am well aware of how the funding work.. Not sure why you feel it necessary to add that.. Re: the banks issue.. been done to death 1000's of times here.. It's the banks.. its everyone.. its developers.. it's noone .. again not relevant to any points being made..

daltonmd wrote: »

The economy is not based on the property market - this proposal may help people move but it won't put anymore money directly into the economy.

No the economy is not based on the propety market.. Noone said it was.. but the property market is an important part of the economy!One could argue that a healthier trade is housing does indeed help the economy as there are many associated services from estate agents, diy companies, trademen etc etc that are dependant on a healty housing industry.

daltonmd wrote: »

It just means the banks are getting their money back, after we bailed them out already.

These are performing loans.. You won't get funding if your loan is not performing and can service the new increased level of debt.. So this point is once again completely irrelevant.

daltonmd wrote: »

During the boom people were in positive equity, they tapped into this and spent the money in the economy, fuelling it. Now they are in Negative Equity and the reverse is happening. If they are spending large chunks servicing negative equity then they are not spending it in the economy, if they are not spending there is no demand, if there is no demand there are no jobs, if there are no jobs then there is no growth.

Here are a couple of articles on Negative Equity for your information.

http://www.examiner.ie/opinion/columnists/matt-cooper/why-the-government-isnt-interested-in-solving-our-mortgage-debt-crisis-170606.html

http://trueeconomics.blogspot.com/2011/10/16102011-negative-equity-and-debt.html

Negative equity will continue to exist irrespective of whether this new facility exists or not.. So the point again is completely irrelevant. The facility is not designed to fix negative equity is to to remove the inability to trade when negative equity exists..

If this facility never existed.. exactly the same level of negative equity would exist tomorrow.. It wont increase it.. and it won't diminish it..So whats your point?

daltonmd

MadsL wrote: »

I'm waiting to hear the first Short Sale being openly discussed in the media. The banks surely cannot wait much longer to foreclose on those in arrears, and there must be a fair few flights to Oz gone with keys being dropped through letterboxes.

I'd say so, if I was in my late 20's/30's with a young family I'd be gone. As it stands 1 in 14 mortgages are in arrears of 6 months or more, wonder how many are 30 days, 60 days, 90 days and so on - god knows how many are hanging on by the skin of their teeth and even those doing their best to manage will re-think and wonder what the hell they're doing...

Welease

Daltonmd,

A thought occurred to me while i was pottering around the house, it will help expain my position.. Apologise for directing this directly at you, it obviously applies to all who have issues with this new facility, but i wanted to seperate it from our embedded responses to each other..

This facility is designed to allow people with neg. equity who are capable of servicing their loans to move properties..

What would the removal of this facility achieve?...

If you can't give a reasonable answer to this.. then I would suggest your issue is not with this facility. it lies with other issues not being addressed.
But those issues are not something this facility is designed or intends to address..

daltonmd

Welease wrote: »

I'm not personalising any arguement beyond referring to what you seem to be saying.. It is going to somewhat difficult to respond, if i cannot refer to where I believe you are saying the issues exist.. In previous posts you are complaining about debt, you are now stating the issue is about negative equity.. They are not the same issue.. So I am trying to ascertain where you believe the problem lies..
If you take offense I apologise, but it also should be noted that you seem comfortable with telling me I am incapable of seeing the bigger picture which in the same vein would be considered a personal insult..

So with that out of the way

You are personalising it when you say:

"You seem to think that everyone is struggling to pay their mortgages and that any debt is bad.
To take your proposal
You seem to believe
You seem to believe that increasing debt is bad.
It's also worth noting that once the money gets to the bank it doesn't sit there hidden as you seem to imply.
You seem to have an issue with any type of debt.

I have never said or implied any of these statements - this is your interpretation of what I wrote - not what I wrote. When I said to you that you don't seem to see the bigger picture I referred to this statement where you say:

"Why should the debts of people who can afford their mortgages and want to trade up to bigger houses need to be written down?"

And note here that it is you calling the Negative Equity debt. Mind you to me they are one and the same because negative equity as it stands must be repaid to the bank. But again the point is that if people are paying large chunks off mortgages which they got during the boom and are paying higher taxes, taken paycuts. looking at new taxes then surely you can see that it is only a matter of time before the sustainable deb becomes unsustainable?

I'm not offended but you are not reading my posts as they are written you are telling me that I am saying things when I am not.

Now, with that out of the way

Welease wrote: »

I am well aware of how the funding work.. Not sure why you feel it necessary to add that.. Re: the banks issue.. been done to death 1000's of times here.. It's the banks.. its everyone.. its developers.. it's noone .. again not relevant to any points being made..

Well you said that banks are an important part of the economy, well I agree with you but not bad banks, good healthy ones - not the ones we have. (maybe one or two but heavily restructured and stripped of waste)

Welease wrote: »

No the economy is not based on the propety market.. Noone said it was.. but the property market is an important part of the economy!One could argue that a healthier trade is housing does indeed help the economy as there are many associated services from estate agents, diy companies, trademen etc etc that are dependant on a healty housing industry.

A healthy functioning property market is a result of a healthy economy - not the other way around as it became during the boom.

Welease wrote: »

These are performing loans.. You won't get funding if your loan is not performing and can service the new increased level of debt.. So this point is once again completely irrelevant.

Which the banks received a bailout from the taxpayer to cover those losses.

Welease wrote: »

Negative equity will continue to exist irrespective of whether this new facility exists or not.. So the point again is completely irrelevant. The facility is not designed to fix negative equity is to to remove the inability to trade when negative equity exists..

Of course it is not designed to fix Negative Equity - that's the problem. The solution is to write down the debt of homeowners burdened with these monster mortgages.

Welease wrote: »

If this facility never existed.. exactly the same level of negative equity would exist tomorrow.. It wont increase it.. and it won't diminish it..So whats your point?

Write down mortgage debt. It is the only solution and will be a huge step in rebuilding this economy.

daltonmd

Welease wrote: »

Daltonmd,

A thought occurred to me while i was pottering around the house, it will help expain my position.. Apologise for directing this directly at you, it obviously applies to all who have issues with this new facility, but i wanted to seperate it from our embedded responses to each other..

This facility is designed to allow people with neg. equity who are capable of servicing their loans to move properties..

What would the removal of this facility achieve?...

If you can't give a reasonable answer to this.. then I would suggest your issue is not with this facility. it lies with other issues not being addressed.
But those issues are not something this facility is designed or intends to address..

The removal of this facility will achieve very little, much like the introduction of it will achieve very little. It's existence merely spreads out debt over a longer term and insures the banks get their money back.

Maybe a few people might be able to move, at a price of course and maybe someone can then buy their property at a knockdown price - ironic really because not only does the bank then get the full boom mortgage repaid by homeowner number one, but it then has another bankroll of cash from the buyer who will be paying again for the same property!!

This Government will throw all the wrong solutions at the problem, Negative Equity mortgages, Nama loans - they are all the same, they are geared towards the banks and are of no long term financial gain to the mortgage holder and the taxpayer (who are one and the same in a lot of cases).

Every year more and more people are dipping into NE, it is a disaster waiting to happen.

daltonmd

Welease wrote: »

I've been pondering this while walking around and am directing this to you Welease.

Look at the proposal and ask yourself this. If there are people who are comfortably managing their mortgages while in significant Negative Equity then it would be safe to assume that they are working wouldn't it? Well if they are in a good position then I would absolutely agree when you say "why should we write down these mortgages" - because if they can afford to take the NE as a personal loan and move up then that's fine - but - these are not the people who need help.

Nor is it those who are in comfortable homes who "want" to trade up, that need the help.

It is those who are deep in NE who have maybe lost their jobs, cannot sell to relocate to find work, who are being subsidised already by the government who badly need help to move.

It's the wrong solution for the wrong problem.

But I still believe that even those who are "managing" are doing so by cutting down on essentials to some degree in order to repay these mortgages.

Welease

daltonmd wrote: »

The removal of this facility will achieve very little, much like the introduction of it will achieve very little. It's existence merely spreads out debt over a longer term and insures the banks get their money back.

I don't think either of us have figures to substantiate a claim to the audience size.. but it is guaranteed to help some.. So it's better than nothing.
And it appears you agree there is no actual benefit to not having this facility.. So I fail to see your issue with it.

daltonmd wrote: »

Maybe a few people might be able to move, at a price of course and maybe someone can then buy their property at a knockdown price - ironic really because not only does the bank then get the full boom mortgage repaid by homeowner number one, but it then has another bankroll of cash from the buyer who will be paying again for the same property!!

Ok.. so it does what it sets out to do.. and allows people to do what they want to do.. Great..

daltonmd wrote: »

This Government will throw all the wrong solutions at the problem, Negative Equity mortgages, Nama loans - they are all the same, they are geared towards the banks and are of no long term financial gain to the mortgage holder and the taxpayer (who are one and the same in a lot of cases).

Actually you seem to agree that the solution achieves exactly what it sets out to do. Allow people in Neg Eq to move.
It may not achieve all that you want to do, but it wasn't designed nor does it claim to attempt to. Your issue appears to be with the lack of solutions to other issues. Fair enough.

daltonmd wrote: »

Every year more and more people are dipping into NE, it is a disaster waiting to happen.

Can you be more specific about what "disaster".. granted it's obviously not a situation we would prefer to be in.. but if the loans are serviceable then people got the property they wanted at a price they could afford.. They will continue to pay the exact same amount of money out as they did when there property was worth "more"..
Should we have debt forgiveness for every car owners who's car is also worth less than when they bought it? It seems to be a very celtic tiger issue that property must go up in price and other items can go down.. and if property goes down (in isolation) then an economic disaster befalls us...

Welease

daltonmd wrote: »

I've been pondering this while walking around and am directing this to you Welease.

Look at the proposal and ask yourself this. If there are people who are comfortably managing their mortgages while in significant Negative Equity then it would be safe to assume that they are working wouldn't it? Well if they are in a good position then I would absolutely agree when you say "why should we write down these mortgages" - because if they can afford to take the NE as a personal loan and move up then that's fine - but - these are not the people who need help.

Nor is it those who are in comfortable homes who "want" to trade up, that need the help.

It is those who are deep in NE who have maybe lost their jobs, cannot sell to relocate to find work, who are being subsidised already by the government who badly need help to move.

It's the wrong solution for the wrong problem.

????

No.. it's a solution to one problem.. and it solves it simply and adequately..

Other solutions will be required for the other problems..

daltonmd

Welease wrote: »

I don't think either of us have figures to substantiate a claim to the audience size.. but it is guaranteed to help some.. So it's better than nothing.
And it appears you agree there is no actual benefit to not having this facility.. So I fail to see your issue with it.





Ok.. so it does what it sets out to do.. and allows people to do what they want to do.. Great..


Actually you seem to agree that the solution achieves exactly what it sets out to do. Allow people in Neg Eq to move.
It may not achieve all that you want to do, but it wasn't designed nor does it claim to attempt to. Your issue appears to be with the lack of solutions to other issues. Fair enough.



Can you be more specific about what "disaster".. granted it's obviously not a situation we would prefer to be in.. but if the loans are serviceable then people got the property they wanted at a price they could afford.. They will continue to pay the exact same amount of money out as they did when there property was worth "more"..
Should we have debt forgiveness for every car owners who's car is also worth less than when they bought it? It seems to be a very celtic tiger issue that property must go up in price and other items can go down.. and if property goes down (in isolation) then an economic disaster befalls us...

Again you are taking what I am writing it and twisting it to suit your argument. Buying a car for 10k is a little different than buying a house. The loan on a car is normally 5 years not 30.

If you cannot see the damage that forcing people to repay debt on a property that is worth 50% of what it was what bought for is doing, as well as taking job losses and watching their disposable incomes shrink, then what can I tell you.

This "facility" is designed and aimed at the very people who do not need it. Working people comfortable repaying their mortgage who do not need to move. They may "want" to - but it is those who "need" to move, to find work that need a solution. It is those who cannot repay the mortgages who need the help - those with "unsustainable debt" that need help.

You want me to be more specific when I say it is a disaster waiting to happen?

http://m.irishtimes.com/newspaper/breaking/2012/0217/breaking25.htm?via=latest

"The data reveals more than 9 per cent of home loans had fallen behind by 90 days or more at the end of December - which accounts for 70,911 mortgages."

"A total of 100,700 of the State's 770,000 residential mortgages are in arrears or have been restructured.
The numbers of homes in arrears is up by almost 8,000 compared to the end of September last year."

"The figures show that 74,379 residential mortgage accounts had been restructured compared to 69,735 at the end of September. More than 36,797 householders are keeping up with the restructured arrangements, but 37,582 are experiencing some form of arrears."

No mention here of how many are 30+, 60+, 90+.....

What do you see for the next 5 years Welease? Cos personally what I see is no growth, no jobs,higher taxes, lower disposable income and continued house price falls - so what do you think the numbers will look like next year? Or the year after? How many of the sustainable serviceable mortgages will be left?

The solution to the problem is to write down the debt - it has to be done and will be - eventually. It will be done on a case by case by the banks, there will be conditions but at the end of the day people need to be freed from the debt first and only then will everything else start moving.

Welease

daltonmd wrote: »

If you cannot see the damage that forcing people to repay debt on a property that is worth 50% of what it was what bought for is doing, as well as taking job losses and watching their disposable incomes shrink, then what can I tell you.

Because you continue to interchange problems and present them as one.. They are different problems, and need different solutions..

A property being worth 50% of the initial purchase price, does not effect a person's ability to repay that loan.. A person's ability to sustain that loan is completely removed from the value of the asset.. Neg Eq does not have
an effect unless they wished to move. This solution address the movement problem.

Losing their job is a different issue.. That can make the debt unsustainble, this facility does not apply nor is it intended to apply to people with unsustainable debt..
Other facilities (incl. changing bankruptcy laws) are being implemented to address those problems (irrespective of where people agree with how they should be handled)

daltonmd wrote: »

This "facility" is designed and aimed at the very people who do not need it. Working people comfortable repaying their mortgage who do not need to move. They may "want" to - but it is those who "need" to move, to find work that need a solution. It is those who cannot repay the mortgages who need the help - those with "unsustainable debt" that need help.

Really, I know several people who are desperate for a solution like this.. And it sounds like there are those in the banks who also understand this is needed, which is exactly why the facility has been put in place..
If as you say, more and more people are going into NE, then it is very much needed otherwise everyone will be locked into their current properties until the conclusion of the loan.. Can you name a single person who thinks this is a good idea?
Just because it's not the biggest problem, does not mean that the problem doesnt exist..

daltonmd wrote: »

You want me to be more specific when I say it is a disaster waiting to happen?

http://m.irishtimes.com/newspaper/breaking/2012/0217/breaking25.htm?via=latest

"The data reveals more than 9 per cent of home loans had fallen behind by 90 days or more at the end of December - which accounts for 70,911 mortgages."

"A total of 100,700 of the State's 770,000 residential mortgages are in arrears or have been restructured.
The numbers of homes in arrears is up by almost 8,000 compared to the end of September last year."

"The figures show that 74,379 residential mortgage accounts had been restructured compared to 69,735 at the end of September. More than 36,797 householders are keeping up with the restructured arrangements, but 37,582 are experiencing some form of arrears."

No mention here of how many are 30+, 60+, 90+.....

daltonmd wrote: »

This is about Negative Equity and the effect it has on the economy - not on what you wrongly perceive are my issues.

daltonmd wrote: »

Every year more and more people are dipping into NE, it is a disaster waiting to happen.

???? You are complaining about Negative Equity and you present an article about unsustainble loans?
Once again.. Negative Equity and Unsustainable loans are not one and the same.. This facility it to work on a segment of NE issues.. It has absolutely nothing to do with unsustainable loans..

daltonmd wrote: »

What do you see for the next 5 years Welease? Cos personally what I see is no growth, no jobs,higher taxes, lower disposable income and continued house price falls - so what do you think the numbers will look like next year? Or the year after? How many of the sustainable serviceable mortgages will be left?

I don't think my vision of the future is relevant to the implementation of a facility to allow the movement of mortgages with NE..

daltonmd wrote: »

The solution to the problem is to write down the debt - it has to be done and will be - eventually. It will be done on a case by case by the banks, there will be conditions but at the end of the day people need to be freed from the debt first and only then will everything else start moving.

Once again.. this is about the movement of NE mortgages.. That is not a solution to this problem.. it's a solution to a different problem..

But for the sake of discussion, how do you intend to fund the writedown of all these mortgages?

daltonmd

Welease wrote: »

Because you continue to interchange problems and present them as one.. They are different problems, and need different solutions..

Nope - it's the one problem, Negative Equity.

Welease wrote: »

A property being worth 50% of the initial purchase price, does not effect a person's ability to repay that loan.. A person's ability to sustain that loan is completely removed from the value of the asset.. Neg Eq does not have
an effect unless they wished to move. This solution address the movement problem.

But pay cuts/job losses/higher taxes/lower disposable income does.

Welease wrote: »

Losing their job is a different issue.. That can make the debt unsustainble, this facility does not apply nor is it intended to apply to people with unsustainable debt..
Other facilities (incl. changing bankruptcy laws) are being implemented to address those problems (irrespective of where people agree with how they should be handled)

But the existing problem is negative equity. Look at it this way, without NE if people lost their jobs and couldn't repay their mortgages they could sell and get rid of the mortgage - they can't do that now, they can't afford to repay the existing mortgage and have to depend on the state to live.

Welease wrote: »

Really, I know several people who are desperate for a solution like this.. And it sounds like there are those in the banks who also understand this is needed, which is exactly why the facility has been put in place..
If as you say, more and more people are going into NE, then it is very much needed otherwise everyone will be locked into their current properties until the conclusion of the loan.. Can you name a single person who thinks this is a good idea?
Just because it's not the biggest problem, does not mean that the problem doesnt exist..

Desperate people? With jobs who can easily afford to service their mortgages? What are they desperate for?

People are locked in debt until the conclusion of the loan.

Welease wrote: »

???? You are complaining about Negative Equity and you present an article about unsustainble loans?
Once again.. Negative Equity and Unsustainable loans are not one and the same.. This facility it to work on a segment of NE issues.. It has absolutely nothing to do with unsustainable loans..

You don't see where job losses, paycuts, falling house prices = unsustainable loans?

Welease wrote: »

I don't think my vision of the future is relevant to the implementation of a facility to allow the movement of mortgages with NE..

But that's the point - again, if people are in a good position, working bringing in a good income then they do not need this - they can go to the bank and turn their NE into a personal loan if they wish and move on.

Welease wrote: »

Once again.. this is about the movement of NE mortgages.. That is not a solution to this problem.. it's a solution to a different problem..

If you are in employment with a good income and can happily and comfortably service your existing mortgage then you don't have a problem so don't need a solution.

Welease wrote: »

But for the sake of discussion, how do you intend to fund the writedown of all these mortgages?

It was already funded with the 70 billion that was put into the banks.

Welease

daltonmd wrote: »

Nope - it's the one problem, Negative Equity.

If it was a single problem.. Then a single solution would suffice.. This solution works for the problem it attempts to solve, but does not solve all problems.. So sorry.. its more than a single problem.

daltonmd wrote: »

But pay cuts/job losses/higher taxes/lower disposable income does.

So the problem is unsustainable loans via those issues.. not NE.. If there was none of the above.. the loan would be serviceable, irrespective of the NE.

daltonmd wrote: »

But the existing problem is negative equity. Look at it this way, without NE if people lost their jobs and couldn't repay their mortgages they could sell and get rid of the mortgage - they can't do that now, they can't afford to repay the existing mortgage and have to depend on the state to live.

The NE is one of the problems agreed.. and this is one solution to the problem for certain people.. It's not the sole problem as you suggest.. The problem also lies with all the other issues you mentioned above pay cuts, jobs losses, higher taxes etc.. Removing NE still wont allow an unemployed person to repay a 300K loan..

daltonmd wrote: »

Desperate people? With jobs who can easily afford to service their mortgages? What are they desperate for?

Desperate to move.. For a variety of reason incl. access to extremely limited special needs services for children, loss of previous jobs now with 3 hour daily minute commutes, inability to liquidate an assets in a failed relationship, requirement to move to a bigger house as now have family.. and some just becuase they can afford to service a mortgage on a bigger place. Just because it's not a problem you deal with, doesnt make it ok to dismiss it and believe they don't need help.

daltonmd wrote: »

People are locked in debt until the conclusion of the loan.

Again sustainable debt is different from unsustainable debt.

daltonmd wrote: »

You don't see where job losses, paycuts, falling house prices = unsustainable loans?

I do. I have been explaining they are unsustainble loans to you for the last few hours... I also have the ability to see that NE is not the sole problem there as you claim..

daltonmd wrote: »

But that's the point - again, if people are in a good position, working bringing in a good income then they do not need this - they can go to the bank and turn their NE into a personal loan if they wish and move on.

Not all moves are based on financial issues.. as per my response above..
You think a bank will give a 100K personal loan to someone so they can liquidate their sole asset capable of covering that loan? Get real..

daltonmd wrote: »

If you are in employment with a good income and can happily and comfortably service your existing mortgage then you don't have a problem so don't need a solution.

Wrong again.. For all the reasons given above..

daltonmd wrote: »

It was already funded with the 70 billion that was put into the banks.

No it wasn't.. I suggest you read up on how banks work and the issues trackers are currently causing with ongoing funding.. no one has funded a further reduction of billions of Euro's in banks loan books.