House repossession rates are far too low

Dwork · 15-03-2013 01:08AM

Mongfinder General wrote: »

Sure why not just repossess all the housing stock? Interest Rates of 8 or 9% should do it. Then we we'll have state owned banks with worthless state owned houses on state owned balance sheets. Fcuk it, we can have socialist republic while we're at it.

Anyone remember 17%??. I do. Mother of God. It would be carnage now.

Smidge · 15-03-2013 01:10AM

Three Seasons wrote: »

No one here wants people to be homeless. I'd like to see the government set up emergency shelters as a fail safe against families of repossessed homes becoming homeless.

But there needs to be rules by which we operate our society and economy. People can't be allowed to live in their house indefinitely without paying their mortgage. What's the point of giving the deeds as collateral in the first place if otherwise?

Then without a form if collateral the mortgage market dies and sh1t hits the fan and the potential for many more repossessions could crystallise.

When you sign a contract to pay a series of mortgage payments with the caveat that the house can be reposed in the event of default you can't complain when your house is repossessed upon default. If contracts mean nothing our society is fukced.

If you don't agree to the terms and conditions don't sign the fukcing contract.

The risk of losing your job at a future date is your own risk. Take that into account before deciding to sign the contract. Maybe more people would actually save up a reserve fund before signing the contract and not put themselves in a situation where they can barely cover their bills from the outset.

And do you know what would happen if people saved up a reserve fund before signing the contract. House prices would drop and become more affordable. Personal responsibility needs to be encouraged as it works out better for all long term.

That has to be the single most sensible thing I have ever read on boards.
And the fact that you have thought of where to put these people afterwards is a relief.

I think a ghetto would be a fabulous idea, then someone else can come in and buy the house for a half of the cost that the market put on the house and have a great laugh at the big thicks who maybe worked in the same factory job with their partner for 20 odd years.
Imagine...FACTORY workers lived in your new home, better get out the bleach quick smart.

Serves them right I say, sticking in a factory job and supporting their family, until through no fault of their own, the factory shuts up shop and off to China or elsewhere with them for cheaper labour. Damn cheek of the unskilled hard worker imo.

Grayson · 15-03-2013 01:11AM

KyussBishop wrote: »

Is a homeowner getting a mortgage, the moral equivalent to someone buying a gun and killing someone? What a facially ridiculous analogy.

The banks and the government are responsible not just for the size of homeowners debts, by encouraging the property bubble, they are responsible for their inability to pay those debts, because the banks and government caused the economic crisis, that has put people out of jobs, and made them unable to meet payments (and are also, along with the EU, responsible for failing to put in place recovery policies, that would give them jobs to meet those repayments once again).

Were the homeowners supposed to be prescient, and see the crisis coming; the worst crisis in 3/4 of a century? (which practically all economists, bar a small minority, did not see coming?)

If I am responsible for inflating the price of an asset, and destabilizing the economy through issuing risky loans based on those inflated assets, is that all ok and the fault of the person I'm giving the loans to, all because they 'signed the contract'? Bullshít.

Did I ever say that killing someone was the same as getting a mortgage? No, I didn't. I said that even if the government creates a situation where I can get a gun, I'm still the person who pulls the trigger. I am responsible for my actions.
If I get a mortgage, I'm the person responsible. More than that, I signed a document that admits I'm the person responsible.

And if I buy something, I don't expect it to retain it's price forever. Everything, electronics, cars, housed, precious stones, even gold, increases and loses value.

Sure, the government has some responsibility. And so do developers. And don't get me started on the leeches that are estate agents. And I believe that the people in power should be held accountable for their actions. But that doesn't lessen the responsibility of those that took out a mortgage. It's not like there's a fixed amount of responsibility. It's not like my responsibility for siging on a dotted line is lessened because someone else did something stupid as well.

If someone loses their home because they can't make payments, that's what should happen. I don't believe people should go homeless. The government has a separate duty to assist those in need of housing. They should provide social housing. But the government, and me as a tax payer, does not have a responsibility to help someone stay in an over priced box, or a responsibility to stop them from going bankrupt.

Mongfinder General · 15-03-2013 01:12AM

Dwork wrote: »

Anyone remember 17%??. I do. Mother of God. It would be carnage now.

and 20% inflation in the early 80s. Absolute basket case. The difference back then was that sums borrowed were 3 times your salary. Not so 5 years ago.

Bullseye1 · 15-03-2013 01:13AM

Yes the banks should have been allowed fail. But they weren't by our incompetent government. Facilities exist for businesses to absolve themselves of debt through administration and liquidation. It's only a matter of time before another bank goes to the wall. More likely to be AIB.

Three Seasons wrote: »

They should be allowed to fail as a result of their mistakes.

Contracts already signed remain valid regardless of bad business decisions they made.

Imagine you are the owner of a business and you are owed 100k by your debtors. Now imagine you make a bad business decision and invest in an ineffective marketing strategy resulting in losses.

Do you think this gives the debtors the right to say, sorry, not going to pay you back because you made mistakes. Those mistakes are irrelevant to the contract between you and your debtors. They have to pay you your money regardless.

Bullseye1 · 15-03-2013 01:16AM

Maybe we could put them on an island and make them crush rocks to work off their debt.:pac:

Smidge wrote: »

That has to be the single most sensible thing I have ever read on boards.
And the fact that you have thought of where to put these people afterwards is a relief.

I think a ghetto would be a fabulous idea, then someone else can come in and buy the house for a half of the cost that the market put on the house and have a great laugh at the big thicks who maybe worked in the same factory job with their partner for 20 odd years.
Imagine...FACTORY workers lived in your new home, better get out the bleach quick smart.

Serves them right I say, sticking in a factory job and supporting their family, until through no fault of their own, the factory shuts up shop and off to China or elsewhere with them for cheaper labour. Damn cheek of the unskilled hard worker imo.

Boombastic · 15-03-2013 01:18AM

JRant wrote: »

My honest answer is I just don't know.

Your right though, only the gamblers seem to be benefiting at the moment.

I don't accept "we" went mad at all. Lots of people I know saw there was no value in the market and rented instead. Now their in early 30's looking to plant roots, so to speak, but are effectively froozen out of the current market.

I know it wasn't everyone, I didn't either, but in general

Holland, Germany etc all had the same availability of credit as we did and lots of people over there were looking at the Irish in amazement and our carry on

I remember my friends commenting on it in astonishment that people here didn't seem to mind living on credit for holidays, cars, houses etc. We* lost all concept of saving for things until we could afford them. 110% mortgages to furnish the house, throw a new car in with the mortgage. 4 holidays a year. Sure you were nobody if you didn't have a 4X 4 to drop the kids to school :pac:

*in general

KyussBishop · 15-03-2013 01:18AM

Three Seasons wrote: »

Their losses shouldn't be socialised to the tax payer if that's what your getting at.

But that's not really relevant to the independent contract you have with the bank.

It's perfectly relevant; as I said on the last page:
If I am responsible for inflating the price of an asset, and destabilizing the economy through issuing risky loans based on those inflated assets [making people I issue the loan to, unable to pay], is that all ok and the fault of the person I'm giving the loans to, all because they 'signed the contract'?

Very clearly that is not ok, that is morally repugnant on many levels, and your focusing purely on the letter of the law (the contract) here to justify that, when banks breached regulations and engaged in fraud (i.e. broken the letter and spirit of the law), and by doing so created the very conditions crippling homeowners now.

Paying any respect to the banks share of responsibility here, inherently means them sharing a significant part of the burden, but you are trying to ignore that and imply the burden should fall entirely upon the homeowner; that's de-facto arguing to absolve banks of their responsibilities here.

Three Seasons wrote: »

They should be allowed to fail as a result of their mistakes.

Contracts already signed remain valid regardless of bad business decisions they made.

Imagine you are the owner of a business and you are owed 100k by your debtors. Now imagine you make a bad business decision and invest in an ineffective marketing strategy resulting in losses.

Do you think this gives the debtors the right to say, sorry, not going to pay you back because you made mistakes. Those mistakes are irrelevant to the contract between you and your debtors. They have to pay you your money regardless.

Oh look, more specious analogies; imagine you're the owner of a business, you massively inflate the price of some assets, give out 100k in loans for people to buy those assets, and your reckless business actions cause those debtors to lose their jobs, then when they can't repay because your reckless actions have not just cost them their jobs, but are preventing them from getting another job due to harming the economy; when they are stuck in that situation, you decide to screw them twice-over, by repossessing their assets.

You want to totally absolve the banks of any responsibility here, and are blind to their role in the crisis. To you 'the contract' means banks bear no responsibility for any of their actions.

Smidge · 15-03-2013 01:19AM

Bullseye1 wrote: »

Maybe we could put them on an island and make them crush rocks to work off their debt.:pac:

And use those rocks to build new houses maybe?
Shacks, preferably.

AlekSmart · 15-03-2013 01:19AM

Mongfinder General wrote: »

and 20% inflation in the early 80s. Absolute basket case. The difference back then was that sums borrowed were 3 times your salary. Not so 5 years ago.

From memory,my original Irish Permanent criteria was 1.5 times my own salary or twice the joint salary.

Either way,this prudence came to be widely derided by prospective homeowners,as the clamour grew for easier access to funding,and guess what,that clamour was listened to,and thus was born the principle of Light Touch regulation,Irish Style....:rolleyes:

Bullseye1 · 15-03-2013 01:21AM

Smidge wrote: »

And use those rocks to build new houses maybe?
Shacks, preferably.

Preferably galvanised sheeting so when it rains they are reminded of their misery.

KyussBishop · 15-03-2013 01:25AM

Grayson wrote: »

Did I ever say that killing someone was the same as getting a mortgage? No, I didn't.

Then don't compare the two in a flawed analogy, where the made-up situation you are striking-down, is totally inapplicable to the one you are replying to.

Grayson wrote: »

I said that even if the government creates a situation where I can get a gun, I'm still the person who pulls the trigger. I am responsible for my actions.
If I get a mortgage, I'm the person responsible. More than that, I signed a document that admits I'm the person responsible.

And if I buy something, I don't expect it to retain it's price forever. Everything, electronics, cars, housed, precious stones, even gold, increases and loses value.

Sure, the government has some responsibility. And so do developers. And don't get me started on the leeches that are estate agents. And I believe that the people in power should be held accountable for their actions. But that doesn't lessen the responsibility of those that took out a mortgage. It's not like there's a fixed amount of responsibility. It's not like my responsibility for siging on a dotted line is lessened because someone else did something stupid as well.

If someone loses their home because they can't make payments, that's what should happen. I don't believe people should go homeless. The government has a separate duty to assist those in need of housing. They should provide social housing. But the government, and me as a tax payer, does not have a responsibility to help someone stay in an over priced box, or a responsibility to stop them from going bankrupt.

I want homeowners to bear responsibility; what I don't want, is for them to bear the responsibility of the banks and of government as well, which is what your "but they signed a contract" argument precisely does (especially as it totally ignores the fraud and incompetence that led to the size of the debt on that contract).

It's not just 'a mistake' on bank and governments part, it's direct negligence and even fraud.

Remember, homeowners would not be in this mess, were it not for the banks overinflating the property bubble, and putting the economy into its current mess; if the government and EU were not so incompetent at managing the crisis either, they could have been out of their current trouble as well.

Smidge · 15-03-2013 01:25AM

Bullseye1 wrote: »

Preferably galvanised sheeting so when it rains they are reminded of their misery.

And on another plus, if these people are unemployed they could be then seen as "working" so cut them of their social welfare payment.

Win,Win..I say

Boombastic · 15-03-2013 01:25AM

KyussBishop wrote: »

................................
Oh look, more specious analogies; imagine you're the owner of a business, you massively inflate the price of some assets, give out 100k in loans for people to buy those assets, and your reckless business actions cause those debtors to lose their jobs, then when they can't repay because your reckless actions have not just cost them their jobs, but are preventing them from getting another job due to harming the economy; when they are stuck in that situation, you decide to screw them twice-over, by repossessing their assets.

You want to totally absolve the banks of any responsibility here, and are blind to their role in the crisis. To you 'the contract' means banks bear no responsibility for any of their actions.

You want to absolve the mortgage holder Edit, just seen in your last post, posted at the same time, that you don't

If my business is trying to sell you a 1992 ford focus for €50,000. Do you buy it or not? Is the fault of my business if you do?

FoxT · 15-03-2013 01:27AM

Interesting thread! there are a few points I think I understand..

1- Repos should increase, so that people who are unable to meet their monthly repayments are freed of their debt.

2 - doing this will help the market 'find the bottom' so that properties can once again reach their 'fair value'

3 - why did the Govt not bail out the mortgage holders instead of the banks?

Lets start with the first point:

Suppose you borrowed 300k to buy a house that is now worth 150k, and you cannot meet the repayments.

If the bank reposesses your home, then let us suppose that you lose your home & are freed of your debt.
The bank loses an asset worth 300k (the loan) and instead has an asset now of 150k.

There are 90,000 houses in this situation, approx. So if these 90,000 houses were repo'd then the banks
would lose total assets of 90,000*150,000 = 13.5 Billion euro.

Now, the banks are able to loan money because they get money in 4 primary ways:
1 - deposits
2 - short term loans from other banks
3 - issuance of extra shares onto the open market
4 - selling bonds or other debt instruments.

If the bank assets fall in value by 13.5 billion, then they will forced to stop issuing loans
and
1 - they will not have enough money to meet the demands of their depositors -> leading to a risk of depositors withdrawing their money, (and getting back only a fraction of what they deposited)
and
2 - other banks wont loan them any more money
and
3 - nobody will want to buy their shares
and
4 - nobody will want to buy their bonds, either.

Long story short, if the banks repo all the houses and forgive the debts, the taxpayer (few of us that are left), will need to come up with another 13.5 billion, sharp.
(think Croke park 3, Croke Park 4, layoffs in public service, etc)

SO - IF THE BANKS REPO THE HOUSES, TAXPAYERS WILL PAY FOR LOSSES INCURRED.

Now, to point 2. The argument that it might be worthwhile as it will help property market find bottom & reach 'fair value'

THERE IS NO SUCH THING AS FAIR VALUE
The value of a property is simply, what a buyer is prepared to pay.
This is determined by a number of factors including, crucially, what the bank is prepared to loan to the buyer.
If bank balance sheets shrink by 13.5 billion - they will be unable to loan anything to anybody. Even if they are bailed out,
we have already seen it will take a long time for mortgage lending to return to a level that could be regarded as 'normal'
and if the people who remain in work are being taxed more heavily to pay for yet another bank bailout, then they, in turn ,
will have lower incomes & lower ability to pay.

'Helping the market to reach bottom' is meaningless. During the boom, nobody thought about 'helping the market to reach its top'

This brings us on to 3 - why did the Govt not bail out the mortgage holders instead of the banks?
The reason they havent done so is because it would cost the taxpayer even more. (see reference to 13.5 billion, above)
Now, the 13.5 billion may be off. It might be 5 billion, or it might be 20 billion. The govt has bailed out the banks to the minimum extent
commensurate with permitting them to continue trading. The govt has been trying to keep the banks going, whilst minimising taxpayer burden.

It is recognised that the banks have to work out deals with mortgage holders who are in distress. However, this needs to be minimised,
otherwise the taxpayer will be burdened more, the economy will be depressed further, and employment recovery will be delayed.

Sorry this post is so long, I dont know enough about it to write a shorter one...

-FoxT

Three Seasons · 15-03-2013 01:28AM

KyussBishop wrote: »

It's perfectly relevant; as I said on the last page:
If I am responsible for inflating the price of an asset, and destabilizing the economy through issuing risky loans based on those inflated assets [making people I issue the loan to, unable to pay], is that all ok and the fault of the person I'm giving the loans to, all because they 'signed the contract'?

Very clearly that is not ok, that is morally repugnant on many levels, and your focusing purely on the letter of the law (the contract) here to justify that, when banks breached regulations and engaged in fraud (i.e. broken the letter and spirit of the law), and by doing so created the very conditions crippling homeowners now.

Paying any respect to the banks share of responsibility here, inherently means them sharing a significant part of the burden, but you are trying to ignore that and imply the burden should fall entirely upon the homeowner; that's de-facto arguing to absolve banks of their responsibilities here.

Oh look, more specious analogies; imagine you're the owner of a business, you massively inflate the price of some assets, give out 100k in loans for people to buy those assets, and your reckless business actions cause those debtors to lose their jobs, then when they can't repay because your reckless actions have not just cost them their jobs, but are preventing them from getting another job due to harming the economy; when they are stuck in that situation, you decide to screw them twice-over, by repossessing their assets.

You want to totally absolve the banks of any responsibility here, and are blind to their role in the crisis. To you 'the contract' means banks bear no responsibility for any of their actions.

You do realise the destabilisation of the economy was as much caused by house buyers as it was cheap credit.

The banks are businesses, it is not their responsibility to look after the economy, it is their responsibility to maximise profit.

Why should the banks have to write down debt? If you signed the contract you must suffer the consequences. It is not the banks responsibility to make sure the economy is good enough to give you a job. It is your own responsibility to ensure you have a job to pay back debts.

The responsibility of looking after the economy lies with the government, not the banks. The people choose the government.

Boombastic · 15-03-2013 01:30AM

FoxT wrote: »

...........................................

Suppose you borrowed 300k to buy a house that is now worth 150k, and you cannot meet the repayments.

If the bank reposesses your home, then let us suppose that you lose your home & are freed of your debt.
The bank loses an asset worth 300k (the loan) and instead has an asset now of 150k.

There are 90,000 houses in this situation, approx. So if these 90,000 houses were repo'd then the banks
would lose total assets of 90,000*150,000 = 13.5 Billion euro.

........................

The bank has an asset of 150,000 but the owner will still owe the 150,000 (they'll now be able to manage this lower loan payment)

Three Seasons · 15-03-2013 01:32AM

KyussBishop wrote: »

Then don't compare the two in a flawed analogy, where the made-up situation you are striking-down, is totally inapplicable to the one you are replying to.

I want homeowners to bear responsibility; what I don't want, is for them to bear the responsibility of the banks and of government as well, which is what your "but they signed a contract" argument precisely does (especially as it totally ignores the fraud and incompetence that led to the size of the debt on that contract).

It's not just 'a mistake' on bank and governments part, it's direct negligence and even fraud.

Remember, homeowners would not be in this mess, were it not for the banks overinflating the property bubble, and putting the economy into its current mess; if the government and EU were not so incompetent at managing the crisis either, they could have been out of their current trouble as well.

The banks bearing the responsibility should mean suffering losses and being answerable to the shareholders and creditors.

Bearing the responsibility does not mean you have to give away free money.

Bullseye1 · 15-03-2013 01:33AM

Boombastic wrote: »

You want to absolve the mortgage holder Edit, just seen in your last post, posted at the same time, that you don't

If my business is trying to sell you a 1992 ford focus for €50,000. Do you buy it or not? Is the fault of my business if you do?

I assume your borrowing money from the bank at €50,000. Do you think the bank knowing your borrowing €50,000 for a clapped out Focus will give you the money. Can you not come up with a better analogy? Oh and for probably the 100th time should the banks be resolved of all responsibility. I'm tired of this dance.

Smidge · 15-03-2013 01:34AM

""""Lets start with the first point:

Suppose you borrowed 300k to buy a house that is now worth 150k, and you cannot meet the repayments.

If the bank reposesses your home, then let us suppose that you lose your home & are freed of your debt.
The bank loses an asset worth 300k (the loan) and instead has an asset now of 150k."""

Imo Foxt, I don't there is a chance in hell of the bank "forgiving" the 300k debt.
So, in essence, the homeowner will be homeless and still owe the 300k to the bank.
But the great part of that is that the bank can then go on(using your figures here:))to sell said property for 150k

So all told(and in most basic terms)the bank gets 450k for that house.

(for some reason my post quote didn't work,Foxt.
First part quoted is yours!

JRant · 15-03-2013 01:38AM

Boombastic wrote: »

I know it wasn't everyone, I didn't either, but in general Holland, Germany etc all had the same availability of credit as we did and lots of people over there were looking at the Irish in amazement and our carry on I remember my friends commenting on it in astonishment that people here didn't seem to mind living on credit for holidays, cars, houses etc. We* lost all concept of saving for things until we could afford them. 110% mortgages to furnish the house, throw a new car in with the mortgage. 4 holidays a year. Sure you were nobody if you didn't have a 4X 4 to drop the kids to school :pac:

*in general

I remember receiving letters in the post from my bank with pre-approved loans/credit-cards for up to €10k during the boom. All you had to do was sign the form, send it back in and Bob's your uncle, crazy stuff really. The whole economy was completely flooded with cheap credit and to be honest I can see how so many people got into difficulty but nobody was forced into it. As somebody who was prudent with their finances it very disheartening to continually see people who took on risk looking for benefical treatment.

Three Seasons · 15-03-2013 01:38AM

Smidge wrote: »

""""Lets start with the first point:

Suppose you borrowed 300k to buy a house that is now worth 150k, and you cannot meet the repayments.

If the bank reposesses your home, then let us suppose that you lose your home & are freed of your debt.
The bank loses an asset worth 300k (the loan) and instead has an asset now of 150k."""

Imo Foxt, I don't there is a chance in hell of the bank "forgiving" the 300k debt.
So, in essence, the homeowner will be homeless and still owe the 300k to the bank.
But the great part of that is that the bank can then go on(using your figures here:))to sell said property for 150k

So all told(and in most basic terms)the bank gets 450k for that house.

(for some reason my post quote didn't work,Foxt.
First part quoted is yours!

No it doesn't. The bank gets the 150k for the house and still has a 150k loan. That's 300k it has before interest comes in.

KyussBishop · 15-03-2013 01:39AM

Three Seasons wrote: »

You do realise the destabilisation of the economy was as much caused by house buyers as it was cheap credit.

The banks are businesses, it is not their responsibility to look after the economy, it is their responsibility to maximise profit.

Yes it is banks responsibility! It is their responsibility to ensure proper credit checks on people taking out loans (which they were not doing, as loans were being issued to totally unsuitable people, against regulations/laws), and to properly assess the risk of their own assets (including debt assets), and to stay within reserve criteria (which many banks breached and failed to report, again breaching regulations/laws); much of this was outright fraudulent as well.
Banks bear huge responsibility here, and government also for failing to properly police the banks, to make sure they were following the law/regulations.

You're also saying its ok for the banks to overinflate a property bubble, which was clearly unsustainable, and thus cause an economic crisis, and that all that is justified because they are only obligated to provide short-term profits; that's utter nonsense.

Three Seasons wrote: »

Why should the banks have to write down debt? If you signed the contract you must suffer the consequences. It is not the banks responsibility to make sure the economy is good enough to give you a job. It is your own responsibility to ensure you have a job to pay back debts.

The responsibility of looking after the economy lies with the government, not the banks. The people choose the government.

Oh right, so it's homeowners responsibility to fix the banks mess as well, so they can get jobs again, to return to repaying their overinflated debts to the banks?

Come off it, you're using every argument possible here to totally absolve the banks of blame; you don't work in finance by any chance?

Bullseye1 · 15-03-2013 01:40AM

Three Seasons wrote: »

So we are on the same page can you clarify what exactly the banks should bear the responsibility for?

How about taking responsibility for irresponsible loans. The banks were equally irresponsible or have you forgotten about Anglo and the 60 billion. Don't worry your kids will remind you of it in your retirement.

meathstevie · 15-03-2013 01:40AM

Three Seasons wrote: »

No one here wants people to be homeless. I'd like to see the government set up emergency shelters as a fail safe against families of repossessed homes becoming homeless.

But there needs to be rules by which we operate our society and economy. People can't be allowed to live in their house indefinitely without paying their mortgage. What's the point of giving the deeds as collateral in the first place if otherwise?

Then without a form if collateral the mortgage market dies and sh1t hits the fan and the potential for many more repossessions could crystallise.

When you sign a contract to pay a series of mortgage payments with the caveat that the house can be reposed in the event of default you can't complain when your house is repossessed upon default. If contracts mean nothing our society is fukced.

If you don't agree to the terms and conditions don't sign the fukcing contract.

The risk of losing your job at a future date is your own risk. Take that into account before deciding to sign the contract. Maybe more people would actually save up a reserve fund before signing the contract and not put themselves in a situation where they can barely cover their bills from the outset.

And do you know what would happen if people saved up a reserve fund before signing the contract. House prices would drop and become more affordable. Personal responsibility needs to be encouraged as it works out better for all long term.

That's right buddy, we need rules. Like for examples rules that prohibit banks from behaving like gambling addicts, that force banks to keep proper records and accounts and someone should be appointed to make sure that all of the above is done.

Please save us from your the market is sacred and will sort everything mantra. The market and nothing but the market is what puts horse in burgers and makes bankers behave like manic gamblers.

I will make the point again and again, look at Wallstreet, those buckos are like market economy taliban and what's the first thing they do when the market starts biting them in the arse; they suspend trading because they don't want to sustain the losses.

KyussBishop · 15-03-2013 01:42AM

Three Seasons wrote: »

The banks bearing the responsibility should mean suffering losses and being answerable to the shareholders and creditors.

Bearing the responsibility does not mean you have to give away free money.

They bear responsibility for both the size of homeowners debt (through overinflating the property bubble), and for many homeowners inability to meet their mortgage payments (through destroying economic activity, making these people lose jobs); much of this achieved through illegality and fraud.

Boombastic · 15-03-2013 01:43AM

Smidge wrote: »

""""Lets start with the first point:

Suppose you borrowed 300k to buy a house that is now worth 150k, and you cannot meet the repayments.

If the bank reposesses your home, then let us suppose that you lose your home & are freed of your debt.
The bank loses an asset worth 300k (the loan) and instead has an asset now of 150k."""

Imo Foxt, I don't there is a chance in hell of the bank "forgiving" the 300k debt.
So, in essence, the homeowner will be homeless and still owe the 300k to the bank.
But the great part of that is that the bank can then go on(using your figures here:))to sell said property for 150k

So all told(and in most basic terms)the bank gets 450k for that house.

(for some reason my post quote didn't work,Foxt.
First part quoted is yours!

Firstly people should not have taken out 100% mortgages. Why hadn't they some of the money saved? Say 50,000. Otherwise you are just punishing the people who did save.

What do they say 2.5 times your salary for a mortgage, isn't it? So if a person borrowed 250,000, they must have had an income of 100,000 (if they were anyway smart and did their research). But we know people borrowed 4 and 5 times their wages and more. :rolleyes:

250,000 borrowed to buy 300,000 house
House is now worth 150,000 - this only matters if you're selling it now. If back gets it back and sells it for 150,000, there is 100,000 of a difference to be paid back.

Bank gets back what the lent, person pays back what they borrowed.

Grayson · 15-03-2013 01:44AM

KyussBishop wrote: »

Then don't compare the two in a flawed analogy, where the made-up situation you are striking-down, is totally inapplicable to the one you are replying to.

I want homeowners to bear responsibility; what I don't want, is for them to bear the responsibility of the banks and of government as well, which is what your "but they signed a contract" argument precisely does (especially as it totally ignores the fraud and incompetence that led to the size of the debt on that contract).

It's not just 'a mistake' on bank and governments part, it's direct negligence and even fraud.

Remember, homeowners would not be in this mess, were it not for the banks overinflating the property bubble, and putting the economy into its current mess; if the government and EU were not so incompetent at managing the crisis either, they could have been out of their current trouble as well.

It doesn't matter.

I think Bertie should be behind bars. The whole board of Anglo should be there too. And loads of others. But they didn't commit fraud in enabling people to get mortgages in the boom. They were incompetent, but that's it. And unfortunately it's not like we can jail them for malpractice.

And buyers caused the over-inflating of the housing market. The banks just enabled them.

Grayson · 15-03-2013 01:48AM

meathstevie wrote: »

That's right buddy, we need rules. Like for examples rules that prohibit banks from behaving like gambling addicts, that force banks to keep proper records and accounts and someone should be appointed to make sure that all of the above is done.

Please save us from your the market is sacred and will sort everything mantra. The market and nothing but the market is what puts horse in burgers and makes bankers behave like manic gamblers.

I will make the point again and again, look at Wallstreet, those buckos are like market economy taliban and what's the first thing they do when the market starts biting them in the arse; they suspend trading because they don't want to sustain the losses.

Banks weren't gambing addicts. They were casinos or well, banks, that lent money to gamblers. And those gamblers gambled on the housing market

Smidge · 15-03-2013 01:48AM

Three Seasons wrote: »

No it doesn't. The bank gets the 150k for the house and still has a 150k loan. That's 300k it has before interest comes in.

So what you are saying is that if the bank repo's a 300k house and sells it on to a new owner for 150k the bank is going to "offset" that 150k off MY bad debt?

How very kind of them:rolleyes:

House repossession rates are far too low

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