Debt Forgiveness

Xenophile

Forget about debt forgiveness in relation to distressed home mortgages. As I said in an earlier post NAMA should have a fire sale.

The proceeds of these sales should be used to buy out distressed home mortgages over a period of a further 20,30,40 or fifty year period.

Let the home owner decide on what way they want to live their lives in a stress free style as possible. Let NAMA buy part of the mortgages at variable interest rates and yes if children and grand children end up paying for part of their inheritance, so what. Many of them are likely to be in Australia or New Zealand or elsewhere at the time.

Of course provision should be made for the home owner to buy back the equity at any stage.

Keep it simple. Yes I think this is possible for any of us who are prepared to think outside the box.

hmmm

Xenophile wrote: »

Let the home owner decide on what way they want to live their lives in a stress free style as possible.

I'd like a stress free lifestyle as well. Will I get a handout, or is it only people who have property? What about renters? Waterford glass workers? People whose pensions were hurt by the crash? Bank shareholders? Unemployed? Will they all get a handout too?

Keep it simple. Yes I think this is possible for any of us who are prepared to think outside the box.

The taxpayer has put 10s of billions into NAMA and would like that money back. You want to hand it out to property owners. Keep thinking.

Xenophile

Xenophile wrote: »

It's time Nama had a "fire sale" for the assets on their books get what you can for them now that market sentiment right now is good towards Ireland and you can bet that there would be lots of overseas interest.

Xenophile wrote: »

It's time Nama had a "fire sale" for the assets on their books get what you can for them now that market sentiment right now is good towards Ireland and you can bet that there would be lots of overseas interest.

I misnamed my earlier post so I have re-named it as there is obviously a great fear of moral hazard. Maybe also a lot of resentment and jealousy.

I am also surprised to see the resistance to ordinary people getting a break as outlined in my proposal for Nama to buy into the property. People should not be expected to put their life on hold while this whole mess is being sorted out.

What I proposed was an extension of the period of personal loans in the same way as the country is requesting the extension of the time period of it's National Loans.

Abolish most aspects of the proposed personal insolvency legislation. Free up capital now tied up in NAMA to help the mortgagee to be paid back at a later date.

Xenophile wrote: »

Forget about debt forgiveness in relation to distressed home mortgages. As I said in an earlier post NAMA should have a fire sale.

The proceeds of these sales should be used to buy out distressed home mortgages over a period of a further 20,30,40 or fifty year period.

Let the home owner decide on what way they want to live their lives in a stress free style as possible. Let NAMA buy part of the mortgages at variable interest rates and yes if children and grand children end up paying for part of their inheritance, so what. Many of them are likely to be in Australia or New Zealand or elsewhere at the time.

Of course provision should be made for the home owner to buy back the equity at any stage.

Keep it simple. Yes I think this is possible for any of us who are prepared to think outside the box.

carpejugulum

Xenophile wrote: »

Keep it simple. Yes I think this is possible for any of us who are prepared to think outside the box.

Making others pay for your mistakes is the oldest trick ever.

You mistake NAMA for a magic money tree.

SBWife

So you want NAMA to hold a fire sale, take the losses against its equity, become insolvent, and then what happens? Does the government, IMF, EU bail out that bad bank as well?

Wildlife Actor

Definitely important to think outside the box. Paralysis seems to be the policy at present.

Its just...who are the "ordinary people" who get the break and how do you get into that club?

Xenophile

SBWife wrote: »

So you want NAMA to hold a fire sale, take the losses against its equity, become insolvent, and then what happens? Does the government, IMF, EU bail out that bad bank as well?

A fire sale may realise more than we expect. Paralysis and stagnation are the present order of the the day. How can it be making money at the moment paying huge salaries out of very little income. Also many of the original owners were put on a gravy train. No personal insolvency for these guys!

SBWife

Xenophile wrote: »

A fire sale may realise more than we expect. Paralysis and stagnation are the present order of the the day. How can it be making money at the moment paying huge salaries out of very little income. Also many of the original owners were put on a gravy train. No personal insolvency for these guys!

Contrary to what people think the residential portfolio at NAMA is for the most part occupied, and the rent take significant. Given the current rental yields up to 8-10% selling residential before NAMA is required to would be a mistake, as it would eat up equity and reduce ongoing cash flow and operating profits. Not a workable solution.

As far as I recall a large number of developers have declared bankruptcy, albeit in other jurisdictions, they didn't have the time to wait for the government here to come up with the PIP.

Xenophile

SBWife wrote: »

Contrary to what people think the residential portfolio at NAMA is for the most part occupied, and the rent take significant. Given the current rental yields up to 8-10% selling residential before NAMA is required to would be a mistake, as it would eat up equity and reduce ongoing cash flow and operating profits. Not a workable solution.

As far as I recall a large number of developers have declared bankruptcy, albeit in other jurisdictions, they didn't have the time to wait for the government here to come up with the PIP.

The residential portfolio is the elephant in the room keeping the price of residential properties artificially high. As soon as they are sold off the market can begin to find it's true level.

When I refer to Debt Non Forgiveness what I have in mind is home owner occupiers re-mortgages. So once again I suggest that NAMA sell off as much of their portfolio as to help give a life back to ordinary people.

Wildlife Actor

But again, who are the ordinary people? At what point on the pay scale do I lose my ordinariness? And does it matter of I have dependent children? Can anybody self-employed be ordinary? And if I'm one of those bad guys who earns more than E100000 a year, can I be ordinary again if I spend 60000 of it paying back business debts caused by a customers going bust?

Or is it all about what time of the day you eat your dinner?

Xenophile

Love nor Money wrote: »

But again, who are the ordinary people? At what point on the pay scale do I lose my ordinariness? And does it matter of I have dependent children? Can anybody self-employed be ordinary? And if I'm one of those bad guys who earns more than E100000 a year, can I be ordinary again if I spend 60000 of it paying back business debts caused by a customers going bust?

Or is it all about what time of the day you eat your dinner?

Ordinary people = Common Honest Decent People.

SBWife

Xenophile wrote: »

Ordinary people = Common Honest Decent People.

That's how Sean Dunne would describe himself, sure didn't he tell the New York Times that he'd still pick up change if it were dropped on the floor.

Wildlife Actor

Ditto Sean Quinn

And if you're not common, a bit of a snob perhaps, but work hard, pay your taxes and so on...are you out for lack of commonness?

Or if you're a bit of a flasher in your spare time, are you then indecent and out of the club?

And if your wife doesn't know you're a flasher in your spare time, are you out for lack of honesty?

Xenophile

Definition modified.

Xenophile wrote: »

Ordinary people = Common Honest Decent Hard Working People.

SBWife

Dunne, Quinn and many others worked hard. Long hours, on call 24/7, reviewing documents on weekends, conference calls when they'd prefer to be out on the town or in front of the telly. They weren't hooding bricks but it wasn't a cake walk either.

gaius c

SBWife wrote: »

Contrary to what people think the residential portfolio at NAMA is for the most part occupied, and the rent take significant. Given the current rental yields up to 8-10% selling residential before NAMA is required to would be a mistake, as it would eat up equity and reduce ongoing cash flow and operating profits. Not a workable solution.

As far as I recall a large number of developers have declared bankruptcy, albeit in other jurisdictions, they didn't have the time to wait for the government here to come up with the PIP.

Got a source for that because if there's one thing we know about NAMA, it's that we know very little about how this secretive agency runs? They also contradict themselves at regular intervals. Look at their conflicting answers on how many properties they have in Dublin for an example.

clear thinking

For residential mortgages in the former INBS in distress no harm writing in to the liquidator offering €1.00 to buy back your loan. If it was fully provided for you should be able to get it. It is after all a liquidation.

The moral hazard has passed as any loans like this have already been bailed out by the tax payer.

smcgiff

clear thinking wrote: »

For residential mortgages in the former INBS in distress no harm writing in to the liquidator offering €1.00 to buy back your loan. If it was fully provided for you should be able to get it. It is after all a liquidation.

Eh, my mortgage is with IBRC (formerly with INBS) - I'm pretty sure if I handed in €1.00 to clear my mortgage I'd be told to go jump. In a liquidation the liquidator is under an obligation to get as much for the assets as possible and €1.00 is unlikely to be the best they can get.

As for distressed - how distressed do you want me to be

clear thinking

smcgiff wrote: »

Eh, my mortgage is with IBRC (formerly with INBS) - I'm pretty sure if I handed in €1.00 to clear my mortgage I'd be told to go jump. In a liquidation the liquidator is under an obligation to get as much for the assets as possible and €1.00 is unlikely to be the best they can get.

As for distressed - how distressed do you want me to be

Offer the €1.00 plus continued payments at what you currently pay and you would find that they may have to settle for your offer.

e.g. current repayments €1000 p/m for 20 years at 4% probably equates to an NPV of €150k plus your euro. if the property is worth €150k then they'll have to take your offer and write off any loan value over €150k (eg your negative equity) as this will have to be reflected in the liquidators loan value.

If the property is worth less than €150k you would actually be able to reduce your monthly payment.

gaius c

clear thinking wrote: »

Offer the €1.00 plus continued payments at what you currently pay and you would find that they may have to settle for your offer.

e.g. current repayments €1000 p/m for 20 years at 4% probably equates to an NPV of €150k plus your euro. if the property is worth €150k then they'll have to take your offer and write off any loan value over €150k (eg your negative equity) as this will have to be reflected in the liquidators loan value.

If the property is worth less than €150k you would actually be able to reduce your monthly payment.

Or how about:
1. They repossess the property and sell it for €150k.
2. They chase the defaulter for the outstanding balance, which will probably be within their means.

clear thinking

gaius c wrote: »

Or how about:
1. They repossess the property and sell it for €150k.
2. They chase the defaulter for the outstanding balance, which will probably be within their means.

You haven't defaulted if you are continuing to make payments. A court won't grant repossession if you have been engaging and making yest efforts to make payments.

INBS customers trying this will need to spend €0.60 on a stamp to see if it works. They would well advised to try it.

The Corinthian

Xenophile wrote: »

Ordinary people = Common Honest Decent Hard Working People.

I know someone who's a hard working, honest bloke. Supports his family too. Problem is he's got a bit of a problem with gambling; casinos and the horses.

Can he qualify too so he can get some of his gambling debts covered?

TBH, I think you need to work on your definition a bit more.

gaius c

clear thinking wrote: »

You haven't defaulted if you are continuing to make payments. A court won't grant repossession if you have been engaging and making yest efforts to make payments.

INBS customers trying this will need to spend €0.60 on a stamp to see if it works. They would well advised to try it.

If you are not making repayments in full, you are defaulting and can lose the asset the loan is secured again.

Pay your financial obligations or lose your home. It's a very simple formula and it's what people sign up to when they take out a mortgage.

You want to have your cake (optional mortgage repayments) and eat it too (keep the house).

realitykeeper

Debt forgiveness should not be an option unless you personally own the money to be forgiven. Bankruptcies obtained in foreign jurisdictions should not be recognized by the Irish courts. The planned bankruptcy legislation in this country should be abandoned. Why should the responsible pay for the stupid? The government should set about systematically reversing every single thing that has been done since the night of the guarantee. With hundreds of thousands of pending mortgages in this country the government had the banks over a barrel because the banks can`t move mortgaged houses out of the country. To collect payment, the banks were at the mercy of the Irish courts which are subject to Irish legislation. The guarantee itself was never binding because the government is not an insurance company and the banks never paid a premium to be insured against a credit crunch. As for liquidity and access to credit - we would not need these things to any great extent if we were serious about regaining our competitiveness through austerity.

Xenophile

The Corinthian wrote: »

I know someone who's a hard working, honest bloke. Supports his family too. Problem is he's got a bit of a problem with gambling; casinos and the horses.

Can he qualify too so he can get some of his gambling debts covered?

TBH, I think you need to work on your definition a bit more.

First thing to do about gambling is to make it illegal to use credit cards to place bets!

As regards definition I will get there eventually, thanks for your help

The Corinthian

Xenophile wrote: »

First thing to do about gambling is to make it illegal to use credit cards to place bets!

Perhaps we should make the buying or selling of property using credit illegal, but the same logic?

As regards definition I will get there eventually, thanks for your help

You might try a definition not based principally on an appeal to emotion, is what I would suggest.

Xenophile

The Corinthian wrote: »

Perhaps we should make the buying or selling of property using credit illegal, but the same logic?

Anyone who has that kind of financial freedom to be allowed to spend a few hundred thousand € on their credit card should be allowed to do what they like with it within the law.

SBWife

Xenophile wrote: »

Anyone who has that kind of financial freedom to be allowed to spend a few hundred thousand € on their credit card should be allowed to do what they like with it within the law.

Since when is a credit card the only form of credit, last I checked my home mortgage fell into this category.

lucky john

realitykeeper wrote: »

Why should the responsible pay for the stupid?

This statment is where it all comes down too really. for the most part the line is drawn between thoes that agree with or thoes that disagree with this.


If it was only that straight forward. if you could do like the banks and create something like a "good bank... bad bank" set up. maybe "responsible citizen..Irresponsible citizen" . That way us sensible people could get on with things without having to worry about the "stupid" people dragging us down.

Of course its never that easy. Wheather we like it or not we are all citizens in this one small country. The knock on effect of having such a sizable chunk on people as long term zombies in this economy is becoming plainer every day.

Its like a slow death in my local town. Shops, pubs, hotels, restaurants are either closing or letting staff go. Its scarry how many locals are on three day weeks or on week on week off. As for kids getting summer work....:(
Just look at the shelves in any shop in your local town. Lots of space as stock is kept to a minimum. The knock on effect travels up the supply line to the factories that supply these businesses.

I fear that this is been repeated all over europe. No matter how much spin Enda puts on things we are all still in trouble. When the Titanic sank the rich got the life rafts first. The responsible that wore the life jackets drowned with the stupid that didnt.

Unless we find a way to accept the need for some sort of system that helps the people with debt to become active in the economy again, the slow death will continue. The only government department that will get a bigger budget will be social welfare. Taxes will grow, services will be cut and wheather we like it or not we will have pay indirectly anyway.

Sure, if we could turn back the clock to the bank bailout, if we had let Anglo go bust, if we had raised taxes in the good times. Lots of "if's". Unfortunately the rear view mirror is always way clearer than the windshield (Buffet I think). We need a solution from where we are now. We, the tax payer, are about to write off €130m of INM debt. Will that be such an emotive issue for us? Why should €50,000 of our neighbours debt be a bigger issue?

faceman

realitykeeper wrote: »

Debt forgiveness should not be an option unless you personally own the money to be forgiven.

Why should the responsible pay for the stupid?

Who are the "stupid" and who are the "responsible"?

Is someone who has been made redundant or taken pay cuts and now unable to pay their mortgage the "stupid"?

The Corinthian

lucky john wrote: »

Of course its never that easy. Wheather we like it or not we are all citizens in this one small country. The knock on effect of having such a sizable chunk on people as long term zombies in this economy is becoming plainer every day.

True, but that does not imply that debt forgiveness is going to help.

After all, it would be foolish to believe that home owners with mortgages (one third of home owners have none) are the single most important influence on consumption in the Irish economy - they're a fraction of the size of the total workforce, after all, and it is because that total workforce has less disposable income that the economy has been affected, not because those with heavy mortgages have.

All other things being equal (i.e. debt forgiveness or another approach, we still have to be in a position to afford it), it makes far more sense to reduce the tax burden and introduce economic incentives for the whole economy, not just a fraction of it. To instead put inordinate resources into just that minority for 'the good of the economy' makes no sense.

faceman wrote: »

Is someone who has been made redundant or taken pay cuts and now unable to pay their mortgage the "stupid"?

If someone overstretched themselves financially, whereby 40%+ of their salary was going to cover the mortgage; ignoring the distinct possibility that we may have recessions, higher interest rates or taxes in the future, banked on rent from a lodger being a 'safe revenue stream' or worse still gambled on capital appreciation, then I wouldn't so much say they're 'stupid', as much as they probably should not be allowed to breed.