Debt Forgiveness

Xenophile · 20-04-2013 8:01pm #1

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

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

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

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

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

hmmm · 20-04-2013 9:39pm

Xenophile wrote: »

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

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

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

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

Xenophile · 21-04-2013 3:36am

Xenophile wrote: »

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

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

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

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

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

Xenophile wrote: »

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

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

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

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

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

carpejugulum · 22-04-2013 7:34pm

Xenophile wrote: »

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

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

You mistake NAMA for a magic money tree.

SBWife · 22-04-2013 7:42pm

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

Wildlife Actor · 22-04-2013 7:53pm

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

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

Xenophile · 22-04-2013 10:00pm

SBWife wrote: »

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

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

SBWife · 23-04-2013 8:00am

Xenophile wrote: »

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

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

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

Xenophile · 23-04-2013 1:34pm

SBWife wrote: »

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

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

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

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

Wildlife Actor · 23-04-2013 8:15pm

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

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

Xenophile · 23-04-2013 8:53pm

Love nor Money wrote: »

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

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

Ordinary people = Common Honest Decent People.

SBWife · 23-04-2013 8:58pm

Xenophile wrote: »

Ordinary people = Common Honest Decent People.

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

Wildlife Actor · 23-04-2013 9:58pm

Ditto Sean Quinn

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

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

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

Xenophile · 24-04-2013 9:53pm

Definition modified.

Xenophile wrote: »

Ordinary people = Common Honest Decent Hard Working People.

SBWife · 24-04-2013 10:00pm

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

gaius c · 25-04-2013 8:43am

SBWife wrote: »

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

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

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

clear thinking · 25-04-2013 10:06am

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

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

smcgiff · 25-04-2013 10:16am

clear thinking wrote: »

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

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

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

clear thinking · 25-04-2013 10:29am

smcgiff wrote: »

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

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

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

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

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

gaius c · 26-04-2013 11:05am

clear thinking wrote: »

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

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

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

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

clear thinking · 26-04-2013 11:14pm

gaius c wrote: »

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

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

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

The Corinthian · 28-04-2013 10:43am

Xenophile wrote: »

Ordinary people = Common Honest Decent Hard Working People.

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

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

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

gaius c · 28-04-2013 7:12pm

clear thinking wrote: »

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

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

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

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

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

realitykeeper · 28-04-2013 8:21pm

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

Xenophile · 28-04-2013 8:28pm

The Corinthian wrote: »

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

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

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

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

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

The Corinthian · 29-04-2013 9:43am

Xenophile wrote: »

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

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

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

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

Xenophile · 29-04-2013 12:45pm

The Corinthian wrote: »

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

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

SBWife · 29-04-2013 1:09pm

Xenophile wrote: »

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

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

lucky john · 29-04-2013 3:07pm

realitykeeper wrote: »

Why should the responsible pay for the stupid?

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

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

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

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

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

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

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

faceman · 29-04-2013 3:37pm

realitykeeper wrote: »

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

Why should the responsible pay for the stupid?

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

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

The Corinthian · 29-04-2013 3:51pm

lucky john wrote: »

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

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

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

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

faceman wrote: »

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

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

clear thinking · 29-04-2013 6:34pm

The legislation:
AND WHEREAS IN THE ACHIEVEMENT OF THE WINDING UP OF IBRC THE COMMON GOOD MAY REQUIRE PERMANENT OR TEMPORARYINTERFERENCE WITH THE RIGHTS, INCLUDING PROPERTY RIGHTS, OF PERSONS

I'm simply saying that if an inbs customer writes in and offers a repayment schedule that offers book value plus one additional euro then the liquidator has no choice but to accept the offer unless someone else offers more.

It will only apply if you are already on an agreed lower payments repayment plan.

The debt has already been writen down if you signed up to a repayment plan.

The fact that there is a mortgage is irrelevant, your property value and loan repayment cash flow will determine the value the loan is actually booked at.

gaius c · 29-04-2013 6:42pm

clear thinking wrote: »

The legislation:
AND WHEREAS IN THE ACHIEVEMENT OF THE WINDING UP OF IBRC THE COMMON GOOD MAY REQUIRE PERMANENT OR TEMPORARYINTERFERENCE WITH THE RIGHTS, INCLUDING PROPERTY RIGHTS, OF PERSONS

I'm simply saying that if an inbs customer writes in and offers a repayment schedule that offers book value plus one additional euro then the liquidator has no choice but to accept the offer unless someone else offers more.

It will only apply if you are already on an agreed lower payments repayment plan.

The debt has already been writen down if you signed up to a repayment plan.

The fact that there is a mortgage is irrelevant, your property value and loan repayment cash flow will determine the value the loan is actually booked at.

:rolleyes:

I just offered book value plus two euro for your house.
The sherrif will be around tomorrow to help you move out.

cosbloodymick · 29-04-2013 6:52pm

The Corinthian wrote: »

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

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

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

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

The milk of human kindness overfloweth!!

The Corinthian · 29-04-2013 7:15pm

cosbloodymick wrote: »

The milk of human kindness overfloweth!!

I'm sorry, maybe bleating "won't someone think of the children" may work better for you?

lucky john · 29-04-2013 7:26pm

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

I would think that the demographics of the one third would show a lot of pensioners and single person house holds. I also would imagine the best savers in the country.

the banks gave out around 300,000 mortgages between '05 '06 '07. The vast number of these are in negitive equity now. for sure plenty are keeping up payments(just), but 95,000 and rising are 90 days behind. http://www.centralbank.ie/press-area/press-releases/Pages/ResidentialMortgageArrearsandRepossessionsStatisticsQ42012.aspx
Thats hardly equates to a tiny part of the workforce . If say 1.5 people live in these 95,000 houses that 142,000 people.
Some working, some not but all most likley to be in the part of the population that you need spending in the country. AND they will carry this with them for years to come. Economic zombies, regardless of any future stimiluse.

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

100% agree, a wider economic stimilus would make a huge difference. But unless we do like the US and start printing money or devalue the Euro it never going to be enough. 2% of the VAT rate? 2% of the tax rate? Great but unlikely.
On the other hand the banks have been given the money to cover the mortgage write downs already. So if their hand was forced to deal with this would it not make sence?

clear thinking · 29-04-2013 7:40pm

gaius c wrote: »

:rolleyes:

I just offered book value plus two euro for your house.
The sherrif will be around tomorrow to help you move out.

Now you've got it. What do you think McKillen was offering €179m for, the original loan value? If he goes to €186m he might even get it. The tax payer has funded the rest.

Absolutely no reason why people with housing loans can't do the same.

The Corinthian · 29-04-2013 8:06pm

lucky john wrote: »

for sure plenty are keeping up payments(just), but 95,000 and rising are 90 days behind. http://www.centralbank.ie/press-area/press-releases/Pages/ResidentialMortgageArrearsandRepossessionsStatisticsQ42012.aspx
Thats hardly equates to a tiny part of the workforce . If say 1.5 people live in these 95,000 houses that 142,000 people.

Even presuming your 1.5 members of the workforce (not simply 'people') do live in these 95,000 properties, given the employed workforce is 1.848 million, that means they represent 7.6%. Pretty small, I'm afraid.

100% agree, a wider economic stimilus would make a huge difference. But unless we do like the US and start printing money or devalue the Euro it never going to be enough. 2% of the VAT rate? 2% of the tax rate? Great but unlikely.

Yet for the potential cost of such levels of debt forgiveness quite a bit could be done to alleviate taxation - even partial debt write-offs would cost us billions or tens of billions of Euro. You can do a lot of damage to tax with that.

Additionally, it would be better spread out throughout the economy, his giving more even effects, and not require the same level of costly administration as any formal mechanism of debt forgiveness.

As for where the money to do so comes from it depends ultimately either way on what we can negotiate with the EU, vis-a-vi repayments and austerity.

On the other hand the banks have been given the money to cover the mortgage write downs already. So if their hand was forced to deal with this would it not make sence?

The money is actually borrowed. If it's not been spent, then that's probably a good thing, IMHO.

Xenophile · 29-04-2013 8:21pm

Sell off State assets with the proceeds going to NAMA to help distressed mortgages. By the way I am the OP of this post if anyone might like to know just how it started out!

SBWife · 29-04-2013 8:40pm

Xenophile wrote: »

Sell off State assets with the proceeds going to NAMA to help distressed mortgages. By the way I am the OP of this post if anyone might like to know just how it started out!

Why would the proceeds go to NAMA?

Apart from a small number of IBRC mortgages no individual mortgages loans were transferred to NAMA. The loans transferred were those over a certain size made to developers. In the main the distressed mortgage debt assets remain at the banks.

Xenophile · 29-04-2013 9:20pm

SBWife wrote: »

Why would the proceeds go to NAMA?

Let NAMA now buy distressed private mortgages which may even be repayable by the next generation.

SBWife · 29-04-2013 9:44pm

Xenophile wrote: »

Let NAMA now buy distressed private mortgages which may even be repayable by the next generation.

So you want to increase the size of NAMA and extend its lifespan beyond 2018?
Do you work for them?

Xenophile · 29-04-2013 11:06pm

SBWife wrote: »

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

Try bringing this form of credit to Paddy Power to place a bet on a horse!

Xenophile · 29-04-2013 11:08pm

SBWife wrote: »

So you want to increase the size of NAMA and extend its lifespan beyond 2018?
Do you work for them?

Yes to first question and no to the second question.

K-9 · 29-04-2013 11:09pm

The Corinthian wrote: »

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

Mod:
Cut out the hints at Social Eugenics please, this isn't a Liveline type discussion forum, thank you.

SBWife wrote:

So you want to increase the size of NAMA and extend its lifespan beyond 2018?
Do you work for them?

Just a fair warning that asking questions like that are specifically against the charter of the forum.

gaius c · 29-04-2013 11:33pm

clear thinking wrote: »

Now you've got it. What do you think McKillen was offering €179m for, the original loan value? If he goes to €186m he might even get it. The tax payer has funded the rest.

Absolutely no reason why people with housing loans can't do the same.

You're the one not getting it. The bank will go for public sale on the open market in order to maximise the return for it's owners, which is them. Your notion that the bank might give you a preferential deal on the house you can't afford is fanciful stuff.

clear thinking · 30-04-2013 7:58am

gaius c wrote: »

You're the one not getting it. The bank will go for public sale on the open market in order to maximise the return for it's owners, which is them. Your notion that the bank might give you a preferential deal on the house you can't afford is fanciful stuff.

The owner is the minister of finance. Open market means open: if the SL is flogging the loans to the highest bidder - and there won't be many - there is nothing to stop the mortgagee bidding too. The SL would have to accept the highest offer.

I'dd agree that it is a long shot, but not fanciful. Restructured loans are already written down in a banks books, the borrower know what he/she's paying so working out the value of the loan is not too difficult.

Most of these ibrc/inbs mortgages will end up in NAMA and managed by some agency, while its a long shot if i was an inbs customer i would make the effort at least to try to get the the loan value transferring across to the new creditor written down to its book value.

Surely that is better than doing nothing.

As for fanciful, debt forgiveness is very quickly going to be a reality with the new insolvency laws and the banks will be realisieng losses big time. have a read of todays FT for a good summary of it.

lucky john · 30-04-2013 8:32am

As I said I totally agree with a general tax stimulus to the economy. But every cent of that would be extra borrowing and either stop us closings the deficit or widen it more. Its a different thread really after that.

The money is actually borrowed. If it's not been spent, then that's probably a good thing, IMHO.[/quote]at.

Yes the money HAS been actually borrowed and for this actual reason. Lifting the boot from the neck of 7%+ the working population will be a one off cost and depending on how its done may be recovered over a time.
To be honest we are forgetting the human cost of the present predicament people find themselves in. Its like life in the Joy with little hope of release. Even a murderers get a shorter sentence.
Its not an economic point but the stress, illness and unfortunately suicide associated with this does have a cost.

gaius c · 30-04-2013 9:02am

clear thinking wrote: »

The owner is the minister of finance. Open market means open: if the SL is flogging the loans to the highest bidder - and there won't be many - there is nothing to stop the mortgagee bidding too. The SL would have to accept the highest offer.

I'dd agree that it is a long shot, but not fanciful. Restructured loans are already written down in a banks books, the borrower know what he/she's paying so working out the value of the loan is not too difficult.

Most of these ibrc/inbs mortgages will end up in NAMA and managed by some agency, while its a long shot if i was an inbs customer i would make the effort at least to try to get the the loan value transferring across to the new creditor written down to its book value.

Surely that is better than doing nothing.

As for fanciful, debt forgiveness is very quickly going to be a reality with the new insolvency laws and the banks will be realisieng losses big time. have a read of todays FT for a good summary of it.

How is the insolvent mortgagee going to bid? They are insolvent remember.

lucky john wrote: »

Yes the money HAS been actually borrowed and for this actual reason. Lifting the boot from the neck of 7%+ the working population will be a one off cost and depending on how its done may be recovered over a time.
To be honest we are forgetting the human cost of the present predicament people find themselves in. Its like life in the Joy with little hope of release. Even a murderers get a shorter sentence.
Its not an economic point but the stress, illness and unfortunately suicide associated with this does have a cost.

Four times as many households renting as there are households in arrears. How does having them bear the cost of bailing out their own landlords help the wider economy?

The Corinthian · 30-04-2013 9:14am

K-9 wrote: »

Mod:
Cut out the hints at Social Eugenics please, this isn't a Liveline type discussion forum, thank you.

Apologies, however promoting social eugenics was not my intention. I was simply underlining, using black humour, how stupid it was to overstretch oneself to such levels during a boom period ignoring the inevitability that circumstances would become worse not better in the real World.

lucky john wrote: »

As I said I totally agree with a general tax stimulus to the economy. But every cent of that would be extra borrowing and either stop us closings the deficit or widen it more. Its a different thread really after that.

And, as I pointed out, either option would require spending; either of money borrowed that we've thankfully not yet spent or from some other source.

And, as I also pointed out, tax cuts and spending designed to stimulate the economy would be significantly more efficient, both in effect and in cost.

Yes the money HAS been actually borrowed and for this actual reason.

But not spent, as I've repeatedly pointed out. Which is better; repaying a debt you've spent or one you have not?

Lifting the boot from the neck of 7%+ the working population will be a one off cost and depending on how its done may be recovered over a time.

As would not doing so and instead concentrating on improving the economy (which alleviating the debt of only 7% of the population will not do).

To be honest we are forgetting the human cost of the present predicament people find themselves in. Its like life in the Joy with little hope of release. Even a murderers get a shorter sentence.

And back we go to appeals to emotion.

Its not an economic point but the stress, illness and unfortunately suicide associated with this does have a cost.

So does borrowing, especially when done so irresponsibly.

Look, I do believe that some equity for debt deal (not debt forgiveness) by the government will have to be carried out in the worst of cases. I also believe that the banks should ultimately shell out to a degree as one cannot argue that borrowers borrowed irresponsibly without accepting that lenders lent so too.

However - and this was my principle point - arguing that somehow debt forgiveness for those with crippling mortgages will help the economy is a BS justification. It won't and if we're going to spend money to help the economy there are far better ways to do so.

KyussBishop · 30-04-2013 11:22am

I haven't followed the whole discussion, but worth noting that Ireland alone (while still in the Euro) can't engage in debt forgiveness, due to the financial instability it would cause.

We would need the help of Europe to engage in that while in the Euro, and that isn't likely to become politically possible; would probably need use of monetary policy, to engage in a debt jubilee (one of many such methods available for alleviating debt), and probably more flexibility with cutting the size of mortgage balances (especially as seeing there are uninvestigated indications, of in some cases, banks fraudulently pumping house prices; only fair they take a hit on the principle they inflated).

The latter kind of debt relief would probably lead to irrecoverable balance sheet problems with some banks, which is probably best resolved by enacting depositor insurance, and burning everyone above €100,000, and winding down the banks (this would have to be implemented using monetary policy, not the ridiculously punitive way it was done in Cyprus); it'd be best to return private banks to full reserve then, and provide a public bank which is the only one capable of utilizing money creation (since money creation really should be under public control).

Note that much of this involves usage of money creation, so don't draw conclusions from the described policies above, as if they would be done with debt - that would effectively be a completely different situation and set of policies.

Again, none of this is possible with Ireland acting alone (not while within the Euro), and none of it is likely to become politically possible within Europe (even if it is economically possible); we'll probably see the end of the Euro first, at which point, regaining control over monetary policy makes it all possible.

Doubtless this will attract the usual naysayers on this topic (where the wider argument gets ignored, to nitpick rhetorically at concluding sentences like this), but it's one of the main viable wide-scale ways of engaging in debt forgiveness, while maintaining economic stability.

Debt Forgiveness

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