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Negative equity-Whats the big deal?

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Comments

  • #182
    Ryder
    Registered Users, Registered Users 2 Posts: 992 ✭✭✭Ryder


    The Corinthian wrote: »
    It was easy for anyone willing to look is the point. That we were in a bubble was common knowledge, after that figuring out that bubbles burst (hence the name) isn't difficult to discover, as is what happens when it does.

    This is not occult knowledge, limited to a few with 'specialized knowledge', it's just a few hours of research on the Web and a little common sense.

    I agree in so far as what you've described is not terribly realistic; more a hysterical sob story.

    Prices have apparently stabled and are beginning to increase again, eventually they will climb back to pre-2008 levels, although it may take years, so people are not actually holding onto any 'dead' asset (more hyperbole on your part). The economy will recover. To "harness mortgage holders to a yoke" (even more hyperbole) is not the answer, but neither is this nonsense of bailing them out, because that 60 billion has to ultimately be paid by someone - how about you chew on that reality too?

    Likewise, so if all the idiots who overextended themselves get bailed out by the tax payer, then it makes little difference to me too - but I'd rather not return some day and find that Ireland has become a nation where we expect to be bailed out by those who less reckless (or lazy); and that is what will happen.

    The only people suggesting this are those who seem to want to avoid any culpability for their predicament. Unless they get bailed out completely, they're being 'harnessed to a yoke'.

    I don't believe that doing that would be practical or beneficial to the economy, but at the same time they do need to accept that they share a large part of the blame for why they're presently in the situations they're in.

    you wield logic so powerfully, yet....how do you explain the reality? 100,000 mortgages on arrears, the rate is increasing. Sure, the economy will grow, everything is cyclical.....right? But a rise I. 5 years or 50 years makes little difference to a householder in trouble.

    I said earlier that's its not a blame game, yet you keep returning to that point. I get the feeling that you feel people should learn their lesson? Fine....but close to 60billion will need to be found to address this problem, eventually. Every year a solution is delayed, the economy will stagnate make any recovery more difficult. Do you genuinely think that the personal debt/mortgage problem is being addressed?


  • #183
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    I don't think its fair to lay blanket blame without taking into consideration the USC, which has left people struggling to pay mortgages. Blame is not going get people very far and neither is flaggelation.

    So the government bailed out the banks, one of which has failed anyway, by lending money to them. This money was taken from people's salaries and they call it the USC. The government will profit [through loans to the banks] from the money they have taken from the people via the USC to bail out banks leaving people unable or struggling to pay their mortgages. This money is taken from those who bought during the bubble, before the bubble, and those who were wise enough to see what was coming and chose not to buy at all. So everyone is getting punished for the banks' recklessness regardless of their risk taking or non risk taking.

    Even if people were willfully blind or did not know any better, it is not just the crash of property value that is making things more difficult, but also the government confiscation of salaries via the USC.

    So while some responsibility must be apportioned to those who did borrow incredible amounts for shacks on 10 square feet of land with cracks in the walls and ridiculous workmanship, it is far more complex because of the USC and in fairness I can't blame them for wanting some slack or at least some of the money back the government is stealing from them [and the non mortgage holders].


  • #184
    ardmacha
    Registered Users, Registered Users 2 Posts: 7,476 ✭✭✭ardmacha


    This money was taken from people's salaries and they call it the USC. The government will profit [through loans to the banks] from the money they have taken from the people via the USC to bail out banks leaving people unable or struggling to pay their mortgages.

    This is complete and utter nonsense. The USC and other taxes are needed to fund services as there is no longer a large revenue from stamp duty and other property boom related taxation and because many people are contributing less as there is a larger number of unemployed and some people have reduced incomes.

    It isn't rocket science, if a large part of revenue is funded from boom related activities then when the boom ends it has to be funded from something else. This is simple normality.


  • #185
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    ardmacha wrote: »
    This is complete and utter nonsense. The USC and other taxes are needed to fund services as there is no longer a large revenue from stamp duty and other property boom related taxation and because many people are contributing less as there is a larger number of unemployed and some people have reduced incomes.

    It isn't rocket science, if a large part of revenue is funded from boom related activities then when the boom ends it has to be funded from something else. This is simple normality.

    The USC is not funding any services other than loans to the banks.

    People are still paying PAYE, and PRSI too, now property tax also, plus their own bin charges, plus higher sales taxes and taxes at the pump, solid fuel taxes and carbon taxes. Plus you have to buy your own books for school, plus voluntary contributions, plus you have to pay the fire department if you call them out for a fire, plus poop tax, plus water tax coming up.

    It is not paying for services. People are paying taxes as well as private money for services.

    Right. They have no money from their over priced stamp duty, gained from their over prices houses, so they are stealing it from paychecks to float the banks.

    Whatever the reasons are for it, it still leaves people will less money to pay their mortgages.


  • #186
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    Ryder wrote: »
    you wield logic so powerfully, yet....how do you explain the reality? 100,000 mortgages on arrears, the rate is increasing. Sure, the economy will grow, everything is cyclical.....right? But a rise I. 5 years or 50 years makes little difference to a householder in trouble.
    I see you're not really taking time to read what I am writing, so I'll try to explain myself once again for you.

    I am not suggesting that nothing should be done to alleviate the circumstances of many of those with negative equity mortgages. Neither am I suggesting that they can all be tarred with the same brush or universally 'punished' for their temerity to buy property during a bubble. Please try to dismiss these strawmen from your mind.

    Anyone who buys property shares one trait; they are ultimately responsible for their investment. However that is where the similarities end as there were many levels of recklessness that differentiate them:
    • Some bought early on, when the word 'bubble' was at best just a whisper. They were diligent when buying, considered all the consequences as far as it was reasonably possible and did not overstretch themselves, yet because of the perfect storm that followed, could not predict the severity of the consequences.
    • Some bought later and through herd mentality and fear (of being priced out of the market) overstretched themselves financially, taking on debt that they struggled with during the boom, let alone during a recession. Such was their fear of being left behind that they ignored any arguments against purchase, or often for more modest purchases.
    • And some were driven by greed. They bought not solely to live in the properties themselves, but as investments; leveraging themselves to ridiculous amounts in the blind certainty that values would continue to increase and they could make quick profits 'flipping' the properties - until the music stopped one day and they no longer could.
    So to begin with not all 'trapped' mortgage holders are the same, and in reality those most negatively affected - who bought late and overstretched themselves the most - are probably those most guilty of being the architects of their fate.

    On one extreme you have the defenders against moral hazard, who would refuse any assistance on the basis that such people should sleep in the bed they made. On the other side, you have debtors who absolutely refuse to take any responsibility for their actions and are offended by measures such as the Personal Insolvency Bill on the basis that they feel they should not be made to suffer any of the consequences of their bad investments - after all, they're victims.

    So how do you deal with the issue?
    I said earlier that's its not a blame game, yet you keep returning to that point. I get the feeling that you feel people should learn their lesson?
    I do think this is important, I'm afraid. Not out of begrudgery or spite, but because if you let people off when they act in an irresponsible or anti-social fashion, they end up doing so again. Worse still, those who do act responsibly realize there's no reason not to.

    For example, there's been a lot of talk on social welfare payments in recent years; how the system in Ireland actually rewards the indolent and fraudsters. You can remain unemployed indefinitely and often be better off financially than you could if full-time employed.

    Meantime, those who work and pay for them receive nothing for their tax - the only real difference is that should they ever need social welfare it's not means-tested (and that testing is a bit of a joke, TBH).

    It's a system that has traditionally encouraged people to not work and live of the fat of their working neighbour - a classic example of what happens when 'moral hazard' is ignored.

    If we choose to ignore the lesson of the property bubble we condemn Ireland to another bad lesson; where acting irresponsibly is rewarded, as we may keep the spoils when it works out and shirk the consequences when it does not. That is realistically not an option any more than allowing consumption to freeze up.

    So any solution ultimately needs to both alleviate the most negative aspects of restricting economic consumption, while avoiding the fostering of culture of social and financial irresponsibility.

    So it's not just that one extreme of the debate needs to accept that this is an economic problem that may prolong Ireland's recession if not alleviated. It's also one where the other extreme needs to accept that they share some (and some more than others) of the blame for the mess they and everyone else are in.

    How would you balance these two? Or do you even feel that balance is required?


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  • #187
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    I think the numbers on depreciation are fictional. They are often based on asking price and not on what they actually sell for.

    I know a lady in Foxrock who was offerred E4 million for her house in 2008. She probably get 800k now for it according to her property developer son.

    No one is saying there shouldn't be any consequences, but the debate is around what consequences should there be?

    The facts are if the government continues to tax the blood out of people's veins, there will be no money for mortgages or anything else for that matter.

    That is where the anger should be aimed at, but sometimes I think this country is genetically destined to be subjects.

    But if you are going to condemn people for taking responsibility, start with the top down, absolutely no accountability for politicians. It's like nothing matters here for anyone.

    There should be more economics in the curriculum, starting in primary. That would be a start to this not happenning again.


  • #188
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    clairefontaine wrote: »
    No one is saying there shouldn't be any consequences, but the debate is around what consequences should there be?
    Unfortunately there's no shortage of people who are saying there shouldn't be any consequences nowadays:
    skyfall2012 wrote: »
    I feel these people who have been caught in this mess which the banks created, should get off just like the bankers did, why should they bare the brunt of this mess and bankers get off scott free and get bonuses.


  • #189
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    It doesn't help that the bankers do appear to have gotten off. And I mean APPEAR.

    We need to hear more about their consequences, if there are any.


  • #190
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    clairefontaine wrote: »
    It doesn't help that the bankers do appear to have gotten off. And I mean APPEAR.

    We need to hear more about their consequences, if there are any.
    Why? While I agree that if they have 'gotten off' any consequences that it is scandalous and must be rectified (at least for the future), if they have 'gotten off', does that justify everyone 'getting off'?

    "Johnny got away with murder, so I should be able to too!"


  • #191
    jmayo
    Registered Users, Registered Users 2 Posts: 13,227 ✭✭✭✭jmayo


    clairefontaine wrote: »
    I happen to agree with you on a lot of fronts. I saw it coming too. I never had an interest or hunger for buying a home either. It wasn't just housing, there was an across the board frenzied greed with over inflated prices on everything. I boiled this down to consumer ignorance and the Irish having no economics or fiscal education along side their school curriculums and the first time they had economic prosperity and lost the run of themselves, like a 16 year old handed a platinum credit card.

    Agree.
    clairefontaine wrote: »
    However, what I don't seeing is the dousing of shaming and blaming of people who are paying punitive universal social charges and who just wanted a roof over their heads for their families. Nor do I like seeing the citizens of this country taking out their resentments for paying out for their debts when their grievances and anger [justified imo] should be directed at a government which nationalised private debt and bailed out the banks with tax payer money. Needless to say with the universal social charge, the government isn't "borrowing" the money from its people, paying it back later with interest, it is just taking it so to lend it out at a profit to the banks who took massive risks, committed fraud and cocked it all up with no return to the people it is taking it from.

    Don't get me started on the so called establishment, the politicans, bankers, regulators, etc.
    I think somewhere along the line I got infracted for suggesting lynchings. :mad:

    As for increasing taxes...
    Ehh we needed to up taxes and make cuts not because of the banks' bailouts, but because our current budget deficit was through the roof.
    You do understand that don't you ?
    The bank bailouts/guarantee pushed us into the Troika bailout, but even without it we had to plug the gap in the budget deficit.
    clairefontaine wrote: »
    While Tom Dick or Harry might resent their neighbours for getting debt relief while they are paying the full course of their debts unaided, they might feel alot worse if a flood of home repossessions available on the market pushes their home into further negative equity.

    There you go again with this sh**e about protecting house prices.
    An economy does not depend on house prices.
    And negative equity is only a problem if you need to sell.

    I am not allowed discuss …



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  • #192
    jmayo
    Registered Users, Registered Users 2 Posts: 13,227 ✭✭✭✭jmayo


    hmmm wrote: »
    You want people who bought small houses they could afford, to pay more tax so that their neighbours get to continue living in bigger houses they can't afford?

    If people don't want to pay their mortgage, and are annoyed about being in negative equity, they can go bankrupt and start over. What is not fair is for them to keep their property and have someone else (who is possibly in a smaller house, or who is renting) subsidise them.

    I'm sick of this bleating about people in negative equity. The more you borrowed, and the bigger the house you bought, the more likelihood you are in negative equity. Now you're telling me that their debts are suddenly my problem and I should be paying to maintain the lifestyle they think they are entitled to?

    Amen.
    clairefontaine wrote: »
    That's fair enough but Ireland should make its bankruptcy laws more akin to the UK or the US.

    If we make our bankruptcy laws too easy then every tom, dick and mary will try and dump their debts and expect to start again next year.
    There are just too many in serious trouble to make it too easy.
    The cost would be just too high and as I and other non debt writedown fans point out someone has to take on that debt transfer. :mad:
    The Corinthian wrote: »
    ...
    But here's the thing, bubbles do not continue to grow indefinitely. Neither do they simply stop growing and stabilize. They burst. Google it if you don't believe me. And that brings us to the the single biggest presumption (a pretty safe one) eventually the bubble would burst - and let's say that would see a 20% drop in value.

    ...
    Now, I don't know when you bought (although if you've lost 60% I suspect you got in late), but this is the kind of research and analysis that many did and as it became increasingly apparent that we were dealing with an economic bubble it became increasingly apparent that the numbers didn't crunch and that the music was going to stop playing before too long.

    No one could seriously know it get this bad, but it didn't take a genius to figure out that it would still get bad. Of course, you might be forgiven had you bought in 2001 or 1999, as it became obvious much later, but then again you wouldn't have 60% of the value of your home wiped out if you had.

    One thing that stands out in what you've said is that you could never have predicted "in less than 10 yr period to have 50-60% loss, a rescission and loss of income at same time"; you're joking, seriously? A slowdown and/or collapse of the property bubble would result in an effective decimation of an industry that was universally recognised to be the single most important driver of the Irish economy at the time. Oddly, a recession isn't that difficult to expect if that happens and with it harder, at least, times and loss of income. How did you miss that? Seriously?

    All the information needed to arrive to these conclusions was online ten years ago and even if you didn't know how to use a spreadsheet to crunch your numbers, that alone should have given people to pause.

    If they choose to look, of course - and honestly I think many didn't care to.

    Ahhh FFS stop trying to bring logic into this.
    Some of the buyers during the bubble spent more time chosing the furniture and fittings, which all had to be bought immediately on yet more credit, than in actually weighing up the pros and cons of buying.

    When the price of property in places like Mayo, Roscommon, Leitrim, etc
    was what you would have paid for a house a few years before in Galway city or the outskirts of Dublin (which historically has far more employment opportunties and way better infrastructure than the above areas), then you had to be a muppet to think something wasn't wrong.

    Too many people disregarded the elephant in the room and came out with bullsh** about soft landings, how property prices had never dropped in Ireland and how we were different to every other bubble in history.

    Ryder wrote: »
    all correct, but a simplistic, retrospective analysis of a complex problem. Like it or not, people within the bubble had to live and didn't have the perspective to see the bubble that it was, and now is obvious. Looking for historical parallels in 2006 would have been a pointless exercise.....how much of history should we expect to repeat itself, and which bits?

    Do a bit of research and you will see that it wasn't rocket science and one did not need to be a trained economist to notice what was going on.
    And even though you may consider it retrospective analysis and being wise in hindsight, some of us did spot the gigantic bubble.

    If you trawl back through the famous thread about the bubble bursting in Accomodation and Property forum you will find some arguing strenously that it was a ponzi scheme and they were being lambasted by the bullish outlook of the proeprty cheerleaders, a lot of whom were just ordinary buyers.
    Ryder wrote: »
    Yes, the data, was out there that this was a cyclical event, with a beginning and end. Should the average buyer been able to interpret this? I mean there is plenty of publically available information about healthcare...are doctors no longer responsible for mistreatment, engineers for poor design?

    Do you seriously now argue that people should not be responsible for making informed decisions ?
    Ryder wrote: »
    Simplistic analyses do nothing to solve a real problem, and perpetuate the narrative that this is all the individuals mistake thereby guilting them into a debt harness with no gain.....i really think that the majority will see throught that and these insolvency plans will fail

    Ehhh hello what about a bit of personal responsibilty ?

    It is ironic you speak of guilting peope into things when you want to make others eqaully guilty for the mistakes of some. :rolleyes:

    I am not allowed discuss …



  • #193
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    The Corinthian wrote: »
    Why? While I agree that if they have 'gotten off' any consequences that it is scandalous and must be rectified (at least for the future), if they have 'gotten off', does that justify everyone 'getting off'?

    "Johnny got away with murder, so I should be able to too!"

    Well, if you set the precedent you set the precedent. Otherwise it's chaos.

    I would like to see Ahern and McCreevy in shared council housing on the dole. That to me would be a fitting consequence.


  • #194
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    jmayo wrote: »
    Agree.



    Don't get me started on the so called establishment, the politicans, bankers, regulators, etc.
    I think somewhere along the line I got infracted for suggesting lynchings. :mad:

    As for increasing taxes...
    Ehh we needed to up taxes and make cuts not because of the banks' bailouts, but because our current budget deficit was through the roof.
    You do understand that don't you ?
    The bank bailouts/guarantee pushed us into the Troika bailout, but even without it we had to plug the gap in the budget deficit.



    There you go again with this sh**e about protecting house prices.
    An economy does not depend on house prices.
    And negative equity is only a problem if you need to sell.

    Look, it's not the negative equity I have a problem with. It's the taxes and the USC that make it hard to impossible for people to pay what is left of their mortgages.

    What I see, not necessarily here on this discussion, is a lot of begrudgery of " if we can pay ours without help than why should others get any help." Well I'll tell you why you might want them to get some help and that is if they default then your house price value may potentially fall even further. Do I mean subsidy by "help" not necessarily, but what I do mean is lay of the taxes and wacky charges because they are inhibiting people's ability to pay for things. Yeah yeah yeah, the government needed the money, well hey, who doesn't need the money? Does that mean you can stick your fingers into people's paychecks and just take what amount you need, when you need it? Of course it does, because deep down we are a nation of serfs.

    Some people did not see all the punitive charges coming. Would you give the victims of 911 a lecture on the risks of air travel?

    In future I would appreciate a less condescending tone and not refer to what I say as "****e."


  • #195
    jmayo
    Registered Users, Registered Users 2 Posts: 13,227 ✭✭✭✭jmayo


    clairefontaine wrote: »
    Look, it's not the negative equity I have a problem with. It's the taxes and the USC that make it hard to impossible for people to pay what is left of their mortgages.

    What I see, not necessarily here on this discussion, is a lot of begrudgery of " if we can pay ours without help than why should others get any help."

    What do you mean by help ?
    What about people who are renting?
    Should they be penalised to keep mortgage holders who are in trouble in a home that they cannot afford ?
    Should renters help keep property at inflated prices so that they themselves will have to pay even more for a property than it should be worth ?
    Should people who are scrimping so that they are paying their mortgage be penalised so that those that aren't get to keep their property ?
    clairefontaine wrote: »
    Well I'll tell you why you might want them to get some help and that is if they default then your house price value may potentially fall even further.

    You have been pedalling a line in this thread about preventing house price drops.
    Can't you get it through your head that the property market needs to find it's own level without being interferred with ?
    House prices should have been allowed find their own level and then buyers would buy and the market would return to some semblance of normality.
    BTW by normality I mean level of transactions not bubble prices. !!
    clairefontaine wrote: »
    Do I mean subsidy by "help" not necessarily, but what I do mean is lay of the taxes and wacky charges because they are inhibiting people's ability to pay for things.

    FFS you sound like a few public servants who have been on complaining they shouldn't have pay cuts because their outgoings are so high.
    Your taxes should not be set by your outgoings, but the other damm way around.
    Likewise peoples' salaries are not determined on how much they spend.

    If the government "lays off the taxes and whacky charges" then where do you suggest they find the money for current expenditure.

    Please tell me you are suggesting massive cuts?
    Oh wait you wouldn't suggest paycuts (the vast majority of health/education budget) or cuts in social welfare since that would interfere with peoples' ability to pay their mortgages. :rolleyes:
    clairefontaine wrote: »
    Yeah yeah yeah, the government needed the money, well hey, who doesn't need the money? Does that mean you can stick your fingers into people's paychecks and just take what amount you need, when you need it? Of course it does, because deep down we are a nation of serfs.

    Some people did not see all the punitive charges coming. Would you give the victims of 911 a lecture on the risks of air travel?

    In future I would appreciate a less condescending tone and not refer to what I say as "****e."

    People may not have seen the massive decrease in salaries or increase in taxes, but I bet a lot of the ones in trouble would be that way even if none of the above had happened but interest rates had drastically increased.
    Some people borrowed the max with the least amount of leeway for anything negative happening.

    And please now stop trying to compare people who overborrowed during a bubble to those misfortunates who happened to have been on a plane highjacked by nutjobs intend on driving it into a skyscraper or the poor souls who just happened to have been working in those skyscrapers.
    I won't mention the s word. ;)

    You do seem to believe that our only problem has been the bank bailout and appear to have totally forgotten about the budget problems and how it has meant we have had to up taxes, cut expenditure, etc.

    Even if we never had a bailout we would have had a massive problem with current budget.
    And yes it was all linked to our bloody bubble.

    I am not allowed discuss …



  • #196
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    Ok Jmayo, you don't need to speak to me like that. I am not your daughter or younger sibling you are babysitting.

    I am not advocating anything, I am illustrating natural consequences to policy already in place.

    If you are happy with the status quo, fine.


  • #197
    Ryder
    Registered Users, Registered Users 2 Posts: 992 ✭✭✭Ryder


    clairefontaine wrote: »
    Ok Jmayo, you don't need to speak to me like that. I am not your daughter or younger sibling you are babysitting.

    I am not advocating anything, I am illustrating natural consequences to policy already in place.

    If you are happy with the status quo, fine.


    its a waste of time responding. peoples views are too entrenched, with the reality - that these debts arent going to be repaid - is ignored. eventually it will become undeniable. personally, i think thats its pointless expecting ireland to solve this. the government needs every bit of income it can get, and as per your example, will rob peter to pay paul. any solution needs to be pan eu.


  • #198
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    Ryder wrote: »
    its a waste of time responding. peoples views are too entrenched, with the reality - that these debts arent going to be repaid - is ignored. eventually it will become undeniable. personally, i think thats its pointless expecting ireland to solve this. the government needs every bit of income it can get, and as per your example, will rob peter to pay paul. any solution needs to be pan eu.

    It reminds me of the denial that was ago go during the bubble. And now you have the same people in current denial scolding those who were in denial previously.


  • #199
    coolshannagh28
    Registered Users, Registered Users 2 Posts: 1,491 ✭✭✭coolshannagh28


    Ryder wrote: »
    its a waste of time responding. peoples views are too entrenched, with the reality - that these debts arent going to be repaid - is ignored. eventually it will become undeniable. personally, i think thats its pointless expecting ireland to solve this. the government needs every bit of income it can get, and as per your example, will rob peter to pay paul. any solution needs to be pan eu.
    Agree 100 % with this any rational investor allows for a 30% maybe slightly higher fall in their portfolio ,in Ireland assets have fallen by 60 % plus this is wipeout territory and the arrears numbers reflect this . When the government ran with the EU solution and loaded the losses on the taxpayer and bet on world growth instead of structural reform as the solution they made the wrong call . Our economy is in a spiral and debt both public and private is going to sink us . These debts are not going to be paid regardless of the moral hazard handwringing so we may as well get on with the writedowns or bankruptcy or whatever because the next bailout will be to cover these losses like it or not.


  • #200
    skafish
    Registered Users, Registered Users 2 Posts: 392 ✭✭skafish


    clairefontaine wrote: »
    The USC is not funding any services other than loans to the banks.

    People are still paying PAYE, and PRSI too, now property tax also, plus their own bin charges, plus higher sales taxes and taxes at the pump, solid fuel taxes and carbon taxes. Plus you have to buy your own books for school, plus voluntary contributions, plus you have to pay the fire department if you call them out for a fire, plus poop tax, plus water tax coming up.

    It is not paying for services. People are paying taxes as well as private money for services.

    Right. They have no money from their over priced stamp duty, gained from their over prices houses, so they are stealing it from paychecks to float the banks.

    Whatever the reasons are for it, it still leaves people will less money to pay their mortgages.

    While I agree with a lot of your post, I have to ask, who else should pay the mortgages these people have run up?

    A large proportion of homeowners are in negative equity. Most of us struggle to keep up with repayments from time to time, or more often.

    However, if we are forced to pay other peoples way as well, it will force a lot of people currently just about coping into default.

    And make no mistake, these mortgages will be repaid in full. The only question is who will pay them.

    As I see it, and have already posted, there is no simple solution.

    However, I for one will not be able to cope with increased taxes, and would be very pi**ed off if I'm asked to pay for other peoples mistakes. Its bad enough that I have neighbors on SW with a higher standard of living than I can afford for my family, paid for by my taxes.
    I didn't put a gun to the heads of the muppets who didn't bother to consider the chances of things not continuing as per the boom. as far as i know, neither did anybody else. They are, or were, supposedly mature adults, aware of the consequences of their actions. Basically, they got themselves into the mess, I don't see why I should be expected to bail them out financially.


  • #201
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    skafish wrote: »
    While I agree with a lot of your post, I have to ask, who else should pay the mortgages these people have run up?

    A large proportion of homeowners are in negative equity. Most of us struggle to keep up with repayments from time to time, or more often.

    However, if we are forced to pay other peoples way as well, it will force a lot of people currently just about coping into default.

    And make no mistake, these mortgages will be repaid in full. The only question is who will pay them.

    As I see it, and have already posted, there is no simple solution.

    However, I for one will not be able to cope with increased taxes, and would be very pi**ed off if I'm asked to pay for other peoples mistakes. Its bad enough that I have neighbors on SW with a higher standard of living than I can afford for my family, paid for by my taxes.
    I didn't put a gun to the heads of the muppets who didn't bother to consider the chances of things not continuing as per the boom. as far as i know, neither did anybody else. They are, or were, supposedly mature adults, aware of the consequences of their actions. Basically, they got themselves into the mess, I don't see why I should be expected to bail them out financially.

    That is my point. They cant cope with the increased taxes which is why they cant pay.

    How much more taxes and charges can you take before you cant afford your home? If you suddenly had an extra 200 taken from you every month should you expect a lecture from the holier than thous on this board giving you a spanking and talking to you like you are a 5 year old about how you should have seen it coming?

    No I would not think the mortgages should be subsidized through taxes. The banks took the risks too, the banks should take some of the slack.

    And if you are worried about negative equity, if they lose their homes your value will most likely drop, unless their are foreigners to buy up the land, foreigners with money .... if I were the government or banks with reposessed assets to sell I'd be looking to Saudi or China. Is that who you'd like to see buy up the property of your evicted neighbors?


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  • #202
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    clairefontaine wrote: »
    Well, if you set the precedent you set the precedent. Otherwise it's chaos.
    What precedent exactly?

    The banks were bailed out to essentially stop a collapse of the Irish banking system - remember there were more than a few people worried about whether even their money would be safe in the bank at the time. As a result, one major bank became nationalized and another semi-nationalized; the bank owners (the shareholders) ended up badly burnt as a result.

    If we follow that precedent, some people (enough to stop any 'collapse') in negative equity may get bailed out, but they'll lose some or all of their property and the problem with this is that you'll get those same people screaming that this is unfair, even though they're being treated the same as the banks.

    There was a thread here perhaps a year ago, where one option - of the government/bank buying the negative equity - was suggested, and many of the home owners posting began to baulk at the idea when it was pointed out that the government/bank would be buying a percentage of the home at current and not bubble prices.

    For me, this is one of the biggest issues, also highlighted by the reaction recently to the proposed personal insolvency bill; those most likely to benefit from such measures are not those who bought prudently back in 2001, but more likely those who got 100% mortgages in 2006, over-stretching themselves and who still feel they are blameless and should not have to suffer any consequences.

    And lest we forget, this was the kind of mentality that was not unusual back then.
    clairefontaine wrote: »
    That is my point. They cant cope with the increased taxes which is why they cant pay.
    Yet others, also in negative equity, can still pay; so you really have to ask why. Honestly, around that time I came across so many people who were literally getting mortgages that I thought were dangerously high. And this was during a boom period, with low inflation and interest rates. In many cases, any increase in inflation, drop in income, or even a modest increase in tax alone would have pushed them over the edge.

    But ultimately, this thread is about negative equity and the bottom line is that negative equity alone is not the end of the World. It only comes into play if you want to sell and liquidate your assets (typically because you can't afford to pay) or sell and upgrade and can no longer afford to pay.


  • #203
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    That makes a fair amount of sense.

    Id imagine if you want to move it becomes a problem or in a divorce settlement [You take it! No YOU take it!! Eh eh YOU TAKE IT!! lol]

    Yes good question why can some afford their tax hikes and other cannot? maybe some USC hikes are a lot bigger than others?

    I had heard a lot of people falling for the peer pressure when they were all being told rent is just throwing money down the drain. Isn't the idea of home ownership that you wont be paying rent our outputs in retirement? But when you looked at the mortgages people were taking it it looked like it was defeating the purpose of that.

    Maybe accept that common sense is not that common. But also accept that there are see saw affects to everything, and one might consider what widespread reposessions might cost EVERYONE in the end.


  • #204
    SBWife
    Registered Users, Registered Users 2 Posts: 1,287 ✭✭✭SBWife


    Some can afford to continue to pay because they didn't over stretch themselves in the same way as others. There's a personal budgeting rule of thumb which says you shouldn't be spending more than 1/3 of your income on housing, if a person followed this when they purchased, even having to pay the full 7% USC wouldn't make the mortgage unpayable. They might save less, replace their car less frequently, or go on fewer holidays, but for the more prudent the USC wouldn't make the difference between paying and not being able to pay the mortgage. That's not to say that some of these people are not in trouble but for the most part you're adding a large collapse in gross income as well as the higher taxation rates.

    All this talk about the USC fails to consider the interest rate environment, mortgage payers have continued to benefit from low interest rates, if we were to see a return to 7 or 8% variable rates. The whole issue of affordability would take on another dimension.


  • #205
    cson
    Registered Users, Registered Users 2 Posts: 14,573 ✭✭✭✭cson


    clairefontaine wrote: »
    if I were the government or banks with reposessed assets to sell I'd be looking to Saudi or China. Is that who you'd like to see buy up the property of your evicted neighbors?

    What difference does it make who buys it so long as they buy it at the market rate?

    That's a borderline xenophobic comment there imo.


  • #206
    jmayo
    Registered Users, Registered Users 2 Posts: 13,227 ✭✭✭✭jmayo


    clairefontaine wrote: »
    Ok Jmayo, you don't need to speak to me like that. I am not your daughter or younger sibling you are babysitting.

    I am not advocating anything, I am illustrating natural consequences to policy already in place.

    If you are happy with the status quo, fine.

    If you think I am happy with the status quo then you have never read my posts.
    And just because I am unhappy with the way things are, doesn't mean I want to bailout another tranche of people who often made reckless financial decisions or have decided that they deserve to get a bailout because their decisions didn't work out to their original plans.

    I like a little thing called personal responsibility and I detest people who have a sense of entitlement.
    I don't want to see people left in penury while they try and pay off property they cannot afford and probably should never have bought in the first place.
    The simple solution is they lose the property, maybe they suffer bankruptcy for a few years and they move on.
    Under no circumstances should they get to hang on to their property at the expense of other people.
    But a hell of a lot of the proponents of bailouts expect that they can hang onto their property.
    That is what I mean by a fooking sense of entitlement.

    If people have paid off big chunk or have wherewithal to pay then there is an accommodation reached with their lender where the repayments are strecthed out over longer time, switch to interest only, repayments parked, etc.

    And under absolutely under no circumstances should anyone be bailed out of their negative equity.
    It is as ludicrous an idea as bailing out Eircom shareholders, etc.

    BTW I am not trying to be your babysitter or big brother, just challenge your proposals to sign me and my family up to take on other peoples' debts.
    Ryder wrote: »
    its a waste of time responding. peoples views are too entrenched, with the reality - that these debts arent going to be repaid - is ignored. eventually it will become undeniable. personally, i think thats its pointless expecting ireland to solve this. the government needs every bit of income it can get, and as per your example, will rob peter to pay paul. any solution needs to be pan eu.

    And your idea is to basically rob me to pay for some paul down the road who can no longer afford the property he bought during a bubble.
    Thanks for that.

    Your one noteworthy point is that there is indeed a pan EU and more correctly pan Eurozone issue going on here.

    The debts are not going to just disappear.
    Someone somewhere will lose and I can't see many people around Europe or the world willing to take a hit so that the Irish who overspend on property get to stay in it.
    Can you ?

    I am not allowed discuss …



  • #207
    The Corinthian
    Closed Accounts Posts: 19,777 ✭✭✭✭The Corinthian


    clairefontaine wrote: »
    Yes good question why can some afford their tax hikes and other cannot? maybe some USC hikes are a lot bigger than others?
    My take on it is that negative equity, while undesirable, is not in itself a killer; indeed, if trading up you can actually be better off now when trading up as the negative equity on a larger property is more likely and accordingly a greater amount than one on a smaller one.

    The problem arises when you can't keep up with payments and in this regard. If you can't afford the payments for what you have now, you certainly won't be able to afford to trade up and take advantage there, and trading down or liquidating may also be impossible.
    I had heard a lot of people falling for the peer pressure when they were all being told rent is just throwing money down the drain. Isn't the idea of home ownership that you wont be paying rent our outputs in retirement? But when you looked at the mortgages people were taking it it looked like it was defeating the purpose of that.
    Problem was many didn't look that closely; as I said earlier, back in 2004 I looked and realized that the rent I was going to be paying the next few years, waiting for the bubble to burst, would be more than likely less than the actual drop in prices. And I know I wasn't the only one who figured this out.

    Being reminded of this is not something that many who did not like to hear, but I think it important because as long as many of them continue to portray themselves as blameless victims, we're unlikely to find an equitable solution; or worse still we'll end up was a bad solution.
    Maybe accept that common sense is not that common. But also accept that there are see saw affects to everything, and one might consider what widespread reposessions might cost EVERYONE in the end.
    No matter what happens there's going to be a cost to everyone in the end. Spending money just to prop up prices is probably going to do more harm than good though, IMHO.


  • #208
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    The borrowers weren't the only ones who took the risks though, so did the lenders, and let's not forget the role mortgage brokers and real estate dealers played in all of this. The lawyers backed them up too. Where are their consequences? I personally know of two people, locally who put down deposits on land. The same land was then sold to someone else, the realtor took the deposit [having not informed them it was non refundable] as well as commission for the sale to who he ended up selling it too. The local solicitor who deals with land transfers told both these people there was no legal comeback at all. The two people I know ended up losing a lot of money because of it. I have no doubt this is on the tip of the fraud iceberg.

    No one is saying that [or at least I am not] that tax payers should prop up struggling mortgage holders, but what I am saying is they don't bear sole accountability here. My impression, and maybe it's the wrong one, that those wagging their fingers at them are suggesting they should bear the full brunt of the consequences.

    And don't or didn't all mortgage holders get mortgage relief? Even the ones who are able to pay them? How is that not using the tax payer to prop up prices? Rent allowance? Doesn't that also prop up prices?

    Do you not feel that the lenders and the brokers should share some of the accountability?


  • #209
    cson
    Registered Users, Registered Users 2 Posts: 14,573 ✭✭✭✭cson


    clairefontaine wrote: »
    The borrowers weren't the only ones who took the risks though, so did the lenders, and let's not forget the role mortgage brokers and real estate dealers played in all of this. The lawyers backed them up too. Where are their consequences? I personally know of two people, locally who put down deposits on land. The same land was then sold to someone else, the realtor took the deposit [having not informed them it was non refundable] as well as commission for the sale to who he ended up selling it too. The local solicitor who deals with land transfers told both these people there was no legal comeback at all. The two people I know ended up losing a lot of money because of it. I have no doubt this is on the tip of the fraud iceberg.

    I don't think you can even attempt to use that as a generic example of evidence of fraud across the board. Thats a very specific case with a specific set of circumstances.

    clairefontaine wrote: »
    No one is saying that [or at least I am not] that tax payers should prop up struggling mortgage holders, but what I am saying is they don't bear sole accountability here. My impression, and maybe it's the wrong one, that those wagging their fingers at them are suggesting they should bear the full brunt of the consequences.

    And don't or didn't all mortgage holders get mortgage relief? Even the ones who are able to pay them? How is that not using the tax payer to prop up prices? Rent allowance? Doesn't that also prop up prices?

    Do you not feel that the lenders and the brokers should share some of the accountability?

    I think what those wagging the finger as you put it are suggesting is, quite simply, they do not want to pick up the tab for the mistakes of others.


  • #210
    clairefontaine
    Closed Accounts Posts: 4,390 ✭✭✭clairefontaine


    SBWife wrote: »
    Some can afford to continue to pay because they didn't over stretch themselves in the same way as others. There's a personal budgeting rule of thumb which says you shouldn't be spending more than 1/3 of your income on housing, if a person followed this when they purchased, even having to pay the full 7% USC wouldn't make the mortgage unpayable. They might save less, replace their car less frequently, or go on fewer holidays, but for the more prudent the USC wouldn't make the difference between paying and not being able to pay the mortgage. That's not to say that some of these people are not in trouble but for the most part you're adding a large collapse in gross income as well as the higher taxation rates.

    All this talk about the USC fails to consider the interest rate environment, mortgage payers have continued to benefit from low interest rates, if we were to see a return to 7 or 8% variable rates. The whole issue of affordability would take on another dimension.

    I remember quoting that 33% rule to someone and they laughed in my face.

    At the same time I also remember my aunt getting promoted and getting less take home pay because she got launched into the higher tax bracket. I don't know what someone does in that situation, turn down their promotion?

    Negative equity would not bother me but the threat of losing a family home would. PEople say, it's not a problem unless you want to move? Well I would think then that is a serious problem. Otherwise you are trapped and stuck right? I'd like to know I can move if I need to.


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  • #211
    cson
    Registered Users, Registered Users 2 Posts: 14,573 ✭✭✭✭cson


    clairefontaine wrote: »
    I remember quoting that 33% rule to someone and they laughed in my face.

    At the same time I also remember my aunt getting promoted and getting less take home pay because she got launched into the higher tax bracket. I don't know what someone does in that situation, turn down their promotion?

    That situation, quite frankly, is an impossibility.
    clairefontaine wrote: »
    Negative equity would not bother me but the threat of losing a family home would. PEople say, it's not a problem unless you want to move? Well I would think then that is a serious problem. Otherwise you are trapped and stuck right? I'd like to know I can move if I need to.

    To be honest if you're of a nomadic disposition then you shouldn't be buying property.


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