Government Mortgages

Saruman

This could be naive of me but I was listening to Newstalk earlier and they were talking about what can be done to tackle the housing crisis, specifically people who can't keep up their mortgage payments any more. There are proposals to prevent their eviction but no ideas on how to police that.

Would it not make sense for the government to purchase those mortgages off the banks in the same way the banks sell to vulture funds?

The homeowner gets to stay in their home and not be made homeless. They can choose to either pay the mortgage off during the remainder of their years or else they forfeit the house to the government upon their death.

It helps to build up the stock of social housing the government has long term and no one is made homeless as a result.
They can then concentrate on social housing for those that really need it.

I'm sure there are all kinds of reasons why this wouldn't be a runner but it was just a thought.

SB_Part2

Saruman wrote: »

The homeowner gets to stay in their home and not be made homeless. They can choose to either pay the mortgage off during the remainder of their years or else they forfeit the house to the government upon their death.

So they wouldn't pay any money for their home if they were giving the home up on their death? Do I have that right?

I could see lots of problems with this. What happens if they die and they have children? Do the children get kicked out the house as well? The kids would be homeless then.

SarahMollie

Pleanty of reasons why this isnt a great plan, but heres just one.

Our housing shortage is acute right now. We need houses asap.

When banks issue mortgages, they term is typically capped at whatever age a person reached retirement age, 65. So the defaulters are likely to be well under 65 years old.

So by the time these mortgages are paid off/these people die and the houses become available, we could be talking 20-50 years into the future

Doesnt really help us now and also could lead to the state owning a glut of properties at a point in time when they're not needed.

Graham

I actually really like Sarumans proposal.

I could go and borrow a couple of million euro, find myself a nice swanky pad in Foxrock then stop paying the mortgage safe in the knowledge the state would pick up the tab for the rest of my natural....

What could possibly go wrong.

ct5amr2ig1nfhp

A new estate was built close to where we live. There were about 50-60 houses all for sale with apartments going in next.

The builder has refused to pay any of the local council levies/taxes 'for now'. Instead the builder has decided to hold on to the houses so he can rent them. All houses are now rented. It appears he is waiting on the local council to take the houses off his hands for social/coucil housing. If the houses are purchased by the local council, no levies are due.

What a win for the builder! Market value for each house plus no levies from the council.

As long as this sort of situation is going on, they'll never be enough houses.

Government Mortgages - how will it work if I have a house and government mortgage but refuse to pay the mortgage? Can you imagine the nightmare it would be in this country to get me out of the house. No thank you.

Saruman

Graham wrote: »

I actually really like Sarumans proposal.

I could go and borrow a couple of million euro, find myself a nice swanky pad in Foxrock then stop paying the mortgage safe in the knowledge the state would pick up the tab for the rest of my natural....

What could possibly go wrong.

It would need to be means tested of course. We are talking about dire situations here. Good luck borrowing a couple of million euro to buy a house by the way. :P

It would only be in a situation where the person can't work in order to pay off the mortgage. Perhaps they are on long term disability and stuck with state benefit.
Clearly if you were working and just decided to stop paying the mortgage, the government could easily take it another way such as direct from PAYE.

It wouldn't count where the house can be sold and the person downsize to something more affordable.

As I said, it's a naive idea but there might be something in it if it was done properly to avoid it being taken advantage of.

Cuddlesworth

Saruman wrote: »

It would need to be means tested of course. We are talking about dire situations here. Good luck borrowing a couple of million euro to buy a house by the way. :P

It would only be in a situation where the person can't work in order to pay off the mortgage. Perhaps they are on long term disability and stuck with state benefit.
Clearly if you were working and just decided to stop paying the mortgage, the government could easily take it another way such as direct from PAYE.

It wouldn't count where the house can be sold and the person downsize to something more affordable.

As I said, it's a naive idea but there might be something in it if it was done properly to avoid it being taken advantage of.

Or, and just hear me out on this, you evict them and let them use the social housing system. You know, like the way its supposed to work. Rather then creating artificial barricades to private entity's, driving up the cost of mortgages and creating unreasonable expectations for any future crash that is on the cards.

SarahMollie

Saruman wrote: »

it's a naive idea but there might be something in it if it was done properly to avoid it being taken advantage of.

Corrected.

BrokenArrows

Since there is such a housing shortage why dont the government force banks to make it easier/cheaper to get a mortgage for a self build. Obviously we dont want people building huge mansions on this but would be limited by size/value and location etc.

Graham

BrokenArrows wrote: »

Since there is such a housing shortage why dont the government force banks to make it easier/cheaper to get a mortgage for a self build. Obviously we dont want people building huge mansions on this but would be limited by size/value etc.

Force as in 'remove/reduce the current lending criteria' and insist the banks loan money to people they wouldn't lend to on a commercial basis?
Self-build as encourage thousands of one of developments to be submitted all over the countryside?

I'm not sure that approach is going to reduce construction costs/charges/fees etc etc etc.

Polo_Mint

I wonder if this would work.

Government build a house.

House costs 250,000

You pay 1000 a month.

1000 every month knocked off the price.

You stay living there you get to keep the house when you pay off 250,000.

You move out at anytime, You lose the money you paid and the 250,000 starts again for the next person.

It is not yours to sell unless you stump up the 250,000 to pay the government to buy the house.

Cuddlesworth

Polo_Mint wrote: »

I wonder if this would work.

Government build a house.

House costs 250,000

You pay 1000 a month.

1000 every month knocked off the price.

You stay living there you get to keep the house when you pay off 250,000.

You move out at anytime, You lose the money you paid and the 250,000 starts again for the next person.

It is not yours to sell unless you stump up the 250,000 to pay the government to buy the house.

That's a interest free mortgage with a minor downside which could be easily avoided. Couldn't the government just build a house for 250k, charge rent over 100 years keeping it in line with inflation and by the end have a substantial asset portfolio combined with income with could be used to continue the expansion of social housing.

Villa05

Cuddlesworth wrote:

Couldn't the government just build a house for 250k, charge rent over 100 years keeping it in line with inflation and by the end have a substantial asset portfolio combined with income with could be used to continue the expansion of social housing.

That solution would be too intelligent for our overlords to comprehend

We don't do common sense in this country anymore

Piriz

Dublin City Council now has arrears of over €20 million as a result of residents not paying rent, and says there is a “culture of under-declaration of income”.

http://www.thejournal.ie/dublin-city-council-rent-payment-1276720-Jan2014/

We have enough problems with hand outs..

4ensic15

The money the government would spend building houses would have to be borrowed. The result of that is that it wouldn't be allowed by the EU and would be lunatic anyway given the level of government debt.
The government should deal with the short term problem by
1. relaxing the housing standards regulations so that units are brought back into use. It is ridiculous that places that are habitable are not used because they don't have an ensuite when people are sleeping in cars.
2. Stopping multi unit houses being converted for the time being.
3. make it more attractive for owwners of dwellings to rent them out rather than leave them idle.
4. Clamp down on AIrbnb.
5 .Put wooden huts into the colleges and house students in them till the crisis abates.

All of this could be done in weeks.

4ensic15

4ensic15 wrote: »

5 .Put wooden huts into the colleges and house students in them till the crisis abates.

Was following you up until this point.... Where exactly do you propose colleges put these huts? most colleges that have land available to build student accommodation are doing so already.

Piriz

Bedrooms that are currently unoccupied in existing social housing should be available to house homeless people.
People who have been given social housing with bedrooms beyond their needs should be made to share those rooms. House sharing is good enough for those who pay high % of their income in the private rental sector , the same level of sharing can take place in social housing too. Controversial yes, but a viable solution, we need a rethink of the way social housing is administered.

Another idea to manage the mortgage arrears crisis is to reshuffle the deck too, i.e. Own a house worth 400k but can only afford to pay half the mortgage then you will be rehoused in a property worth 200k (where that owner is also in arrears) within reasonable distance, the 200k owner in arrears will be rehoused in a cheaper property, this could become one type of strategy to assist with the arrears crisis, it could be difficult to administer but it could be configured.
The current state of play is resulting in 39,000 of mortgage holders in long term arrears and a public back lash against repossessions, but the renters, the performing mortgage holders via increased interest rates and the tax payers via state owned banks are picking up the tab..

Villa05

Piriz wrote:

Dublin City Council now has arrears of over €20 million as a result of residents not paying rent, and says there is a “culture of under-declaration of incomeâ€.

Is this made up of working tenants only. Are council rents deducted from social welfare where social welfare is the only income in the household

Villa05

Piriz wrote:

Bedrooms that are currently unoccupied in existing social housing should be available to house homeless people.

Could be interesting if a druggie was housed with a peaceful family and the druggie battered half the household while tripping some night. Wonder would the council be liable in such a scenario

Piriz wrote:

Another idea to manage the mortgage arrears crisis is to reshuffle the deck too, i.e. Own a house worth 400k but can only afford to pay half the mortgage then you will be rehoused in a property worth 200k.

Why is so difficult to do what every sane country does in an event of non payment. What part of the brain malfunctions when someone does not understand this. Can that part of the brain be fixed

hometruths

Villa05 wrote: »

Why is so difficult to do what every sane country does in an event of non payment. What part of the brain malfunctions when someone does not understand this. Can that part of the brain be fixed

Agreed. This is the solution, we have to face the unpalatable truth that if you are unable or unwilling to pay your mortgage you must have your house repossessed.

Any other suggestion is just going to increase the problem of mortgage arrears.

We are in the insane position that we have the government simultaneously threatening to legislate against banks enforcing the security on non performing mortgages whilst also claiming the banks are price gouging when their interest rates are compared to other countries (who do repossess).

It's mind boggling that they cannot see the consequences.

CIARAN_BOYLE

Piriz wrote: »

Bedrooms that are currently unoccupied in existing social housing should be available to house homeless people.
People who have been given social housing with bedrooms beyond their needs should be made to share those rooms. House sharing is good enough for those who pay high % of their income in the private rental sector , the same level of sharing can take place in social housing too. Controversial yes, but a viable solution, we need a rethink of the way social housing is administered.

I agree with this. There is no need for 80 year old women to live alone in 5 bed room council houses because they had 5 kids 60 years ago.

People and families should of course have the option to downgrade their council house rather than share.

4ensic15

Deleted User wrote: »

Was following you up until this point.... Where exactly do you propose colleges put these huts? most colleges that have land available to build student accommodation are doing so already.

There is still land around the various colleges. A wooden hut would not take up much room. The colleges still have plenty of spare ground.

Piriz

Villa05 wrote: »

Could be interesting if a druggie was housed with a peaceful family and the druggie battered half the household while tripping some night. Wonder would the council be liable in such a scenario



Why is so difficult to do what every sane country does in an event of non payment. What part of the brain malfunctions when someone does not understand this. Can that part of the brain be fixed

Im all for repossessions but i see the stumbling block that they will contribute to the homeless crisis and this puts the government in a bind thus the courts can not manage the crisis, my idea ensures most people are housed and can pay their way, with some assets being sold off by the banks to recoup some of the debts.

everyone's a winner (almost):D

Lumen

Piriz wrote: »

Im all for repossessions but i see the stumbling block that they will contribute to the homeless crisis and this puts the government in a bind thus the courts can not manage the crisis, my idea ensures most people are housed and can pay their way, with some assets being sold off by the banks to recoup some of the debts.

everyone's a winner (almost):D

Repossessions do not increase homelessness. Homelessness is in the main caused by insufficient supply of housing w.r.t. demand. Repossession is neutral for housing supply and demand at a micro level. At a macro level repossession increases supply as it makes it possible to lend people money to buy new builds.

percy212

AirBnb needs to die.

Villa05

Lumen wrote:

Repossessions do not increase homelessness. Homelessness is in the main caused by insufficient supply of housing w.r.t. demand. Repossession is neutral for housing supply and demand at a micro level. At a macro level repossession increases supply as it makes it possible to lend people money to buy new builds.

In a normal country your point would be correct, however in Bannana rebublic, banks reposses then warehouse thus having the property empty and off the market. Stock is released slowly back on the market to maintain a rising property bubble

Piriz

Lumen wrote: »

Repossessions do not increase homelessness. Homelessness is in the main caused by insufficient supply of housing w.r.t. demand. Repossession is neutral for housing supply and demand at a micro level. At a macro level repossession increases supply as it makes it possible to lend people money to buy new builds.[/quote

Thank you for this analysis, i believe this to be correct, however public sentiment, political agenda and short term / immediate stress / risk of homelessness are blockades to repos, have been for years, just look at how community welfare officers are increasing rent allowance, look at the 39k mortgages in long term arrears, the 20milĺion dublin city council social housing rent arrears, not to mention all the long term arrears to public limited companies/ landlords not paying their loans,
Ireland: where paying your mortgage is optional (the NY Times)