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Debt Forgiveness
Comments
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KyussBishop wrote: »Doubtless this will attract the usual naysayers on this topic0
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I like the way you dismiss people who might disagree with your idea to wipe out consumer and business deposits above 100k as "the usual naysayers". All to bail out a select few property owners.
Notably, you have also done exactly what I've quoted, in quoting a concluding sentence while ignoring the rest of the wider arguments.0 -
On a wider point, you don't even necessarily need to eliminate deposits over 100k, as you could just as easily guarantee them when the bank becomes insolvent, by fully nationalizing it (as part of the terms on insolvency) and incorporating it as part of the public bank; all deposits could be guaranteed (backed by money creation), and all debts would be free to be adjusted by the money-creation backed government.
You could even have the money-creation backed public bank take on the non-performing debts to help restore the banks balance sheets, but then I don't see any reason why profligate banks should be given such favorable behaviour, when all depositors could be guaranteed by other means.0 -
Debt forgiveness is a fantastic thing for many people, as it means less than the whole of a debt has been compensated though the debt has been satisfied. However, it's considered taxable income and the mistake of a debt forgiveness tax break for foreclosures or short sales of homes is set to bite some taxpayers.0
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Debt forgiveness is a fantastic thing for many people, as it means less than the whole of a debt has been compensated though the debt has been satisfied. However, it's considered taxable income and the mistake of a debt forgiveness tax break for foreclosures or short sales of homes is set to bite some taxpayers.
You're wrong. The link you've provided is for the US.
This is the Irish situation.0 -
Ordinary people = Common Honest Decent People.
I think your definition is probably more along the lines of ...
Ordinary people = Common Honest Decent People who are in debt which they can't or sometimes don't want to pay back.
I just love the fact that most proponents of debt forgiveness appear to think the most important people in this country are those in massive debt.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!
Shure why not ressurect the construciton bubble while we are at it.
Why oh why do some people seem to think that everything in this economy should revolve around peoples' property ?
Oh wait, let me guess, they own property.Mod:
Cut out the hints at Social Eugenics please, this isn't a Liveline type discussion forum, thank you.
Just a fair warning that asking questions like that are specifically against the charter of the forum.
Actually the mod note about asking about if someone is involved with NAMA leads me nicely onto the point about NAMA secrecy.
Is NAMA Ireland's answer to MI5 or MI6 ?
We know it exists, we know where they are involved, we know some of the people who work there, but we are not allowed really know the stuff behind closed doors or the deals they make with persons unknown on our behalf.
And if we are lucky we might find out about it in 30 years time.KyussBishop wrote: »On a wider point, you don't even necessarily need to eliminate deposits over 100k, as you could just as easily guarantee them when the bank becomes insolvent, by fully nationalizing it (as part of the terms on insolvency) and incorporating it as part of the public bank; all deposits could be guaranteed (backed by money creation), and all debts would be free to be adjusted by the money-creation backed government.
Guaranteed with what and by whom ?
You do know we can't create money, we are part of Eurozone ?I am not allowed discuss …
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Guaranteed with what and by whom ?
You do know we can't create money, we are part of Eurozone ?
https://www.boards.ie/vbulletin/showpost.php?p=84397659&postcount=510 -
Tiresome stuff. Distressed and over-borrowed folk want us to pour petrol on the entire economy and flick a lit match onto it to relieve their own debt burden.0
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carpejugulum wrote: »Making others pay for your mistakes is the oldest trick ever.
That it is. I believe we call it "society"0 -
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RichardAnd wrote: »That it is. I believe we call it "society"
A person with a gambling problem may fall on hard times financially and we may assist them so they don't end up on the street, but we don't pay his or her gambling debts - that's ultimately their responsibility. If they are, or choose to be, declared bankrupt, that too comes with consequences that are also tied to their own decisions and actions.
On this particular subject, there appears to be quite a bit of waxing lyrical about 'society', attempting to widen the definition of what 'society' agrees to collectively share. In reality society limits how far it will cover the mistakes of others - always has, always will. And claiming otherwise frankly smacks of a mendicant chancing their arm.0 -
If someone made the big decision to hand over their house to the bank, then I'd be in favour of that being deemed to be repayment of their mortgage in full (only on the basis that all their scheduled payments, including interest, are completely up to date at the time they hand over the keys).
The bank then would have the choice of putting the house up for sale, having an auction or renting it out.
Obviously there'd be lots of terms and conditions to work out, but it might offer a reasonably fair way out for a lot of people, without unjustly enriching any of those who are tactically falling behind on their loan repayments in the hope of a free windfall.0 -
The Rooster wrote: »If someone made the big decision to hand over their house to the bank, then I'd be in favour of that being deemed to be repayment of their mortgage in full (only on the basis that all their scheduled payments, including interest, are completely up to date at the time they hand over the keys).
The bank then would have the choice of putting the house up for sale, having an auction or renting it out.
Not a bad idea at all. The banks should certainly take some pain when they lent amounts of money for mortgages which were 10 or 20 times the borrowers annual income...and there were a few ( probably not many ) instances like that.0 -
The Rooster wrote: »If someone made the big decision to hand over their house to the bank, then I'd be in favour of that being deemed to be repayment of their mortgage in full (only on the basis that all their scheduled payments, including interest, are completely up to date at the time they hand over the keys).
The bank then would have the choice of putting the house up for sale, having an auction or renting it out.
Obviously there'd be lots of terms and conditions to work out, but it might offer a reasonably fair way out for a lot of people, without unjustly enriching any of those who are tactically falling behind on their loan repayments in the hope of a free windfall.
So the bank get dumped with the security that's worth a fraction of the original loan and the borrower gets away scot-free?
I don't think you've thought this through...
Mary
The bank wouldn't be taking SOME of the pain. They'd be taking ALL of it.0 -
The Rooster wrote: »If someone made the big decision to hand over their house to the bank, then I'd be in favour of that being deemed to be repayment of their mortgage in full (only on the basis that all their scheduled payments, including interest, are completely up to date at the time they hand over the keys).0
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The Rooster wrote: »If someone made the big decision to hand over their house to the bank, then I'd be in favour of that being deemed to be repayment of their mortgage in full (only on the basis that all their scheduled payments, including interest, are completely up to date at the time they hand over the keys).
The bank then would have the choice of putting the house up for sale, having an auction or renting it out.
Obviously there'd be lots of terms and conditions to work out, but it might offer a reasonably fair way out for a lot of people, without unjustly enriching any of those who are tactically falling behind on their loan repayments in the hope of a free windfall.
And leave me as taxpayer to foot the bill? I would much prefer to see my tax money going to pay nurses or provide for the homeless than letting people off who in some cases could otherwise pay their bills.
Anyone in negative equity would be mad not to avail of this.0 -
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The bank wouldn't be taking SOME of the pain. They'd be taking ALL of it.
There are instances of banks lending money during the boom where they should not have done so eg mortgages over 100% of the property value, and where the mortgage was 10 or 20 times the borrowers annual income.
The bank needs to feel some pain, otherwise the banks will make the same mistakes again....and mess up the economy on the rest of us again.0 -
Drumswans new property speculation business
1. Buy mates property for 4 times its worth
2. Hand back the keys to get out of paying the monies owed
3. Split profit with mate
4. Rinse and repeat
In fact if I just do this with all the properties in Ireland Ill have single handedly solved the financial crisis!0 -
Drumswans new property speculation business
1. Buy mates property for 4 times its worth
In other countries banks look at the valuations of property. They have a responsibility to do so here to. Because the banks behaved irresponsibly means that we have to punish banks in order for it not to happen again. Bank managers who lent more that properties were worth should have serious questions to answer. eg if there was an estate of houses and other houses there sell for 200k each, do you think a bank should advance 800k to someone to borrow one there ? Get real.0 -
So the bank get dumped with the security that's worth a fraction of the original loan and the borrower gets away scot-free?
Meanwhile the bank does not actually need to lose any money unless it sells. It can rent it out (this is done via management companies by banks in some countries) - even rent to the original owners. And then it can wait until the price climbs up again.
As a very simple example, say someone puts down a 20% deposit on a €500k home and gets a mortgage for the rest. They pay the mortgage for a few years, to the tune of €25k. Market collapse and the house is now worth 200k.
The owner loses the home and with it €125k already invested. The bank has paid €400k, of which €275k is outstanding - effectively what they've paid for the house. To break even, the bank needs only wait until the price climbs back up to that - an increase of only a further €75k. Tax payer doesn't actually need to pay anything.
Certainly it will decrease margins for the banks, rather than an actual loss, but in fairness while many people took irresponsible mortgages out, they couldn't have were it not for the banks that gave them - so I don't have any ethical objections there.
What I do object to is where I hear suggested how debts should be 'forgiven' and the owner should keep the house - that is scot-free and a total abdication on the part of those who gambled during the bubble.0 -
maryishere wrote: »stop right there. No bank will lend property for 4 times its worth. If it does, it deserves to get burnt and the manager(s) concerned fired.0
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The Corinthian wrote: »The borrower hasn't exactly gotten off scot-free; to begin with whatever payments or deposit already paid into the house are lost. Additionally, their credit rating would be shot and would take years to recover, if ever.
Meanwhile the bank does not actually need to lose any money unless it sells. It can rent it out (this is done via management companies by banks in some countries) - even rent to the original owners. And then it can wait until the price climbs up again.
As a very simple example, say someone puts down a 20% deposit on a €500k home and gets a mortgage for the rest. They pay the mortgage for a few years, to the tune of €25k. Market collapse and the house is now worth 200k.
The owner loses the home and with it €125k already invested. The bank has paid €400k, of which €275k is outstanding - effectively what they've paid for the house. To break even, the bank needs only wait until the price climbs back up to that - an increase of only a further €75k. Tax payer doesn't actually need to pay anything.
Certainly it will decrease margins for the banks, rather than an actual loss, but in fairness while many people took irresponsible mortgages out, they couldn't have were it not for the banks that gave them - so I don't have any ethical objections there.
What I do object to is where I hear suggested how debts should be 'forgiven' and the owner should keep the house - that is scot-free and a total abdication on the part of those who gambled during the bubble.
Your numbers are wrong.
Mortgage is 400k
25k paid off the mortgage.
Outstanding mortgage is 375k
House is now worth 200k
Maybe 30-40 years to get back up to 375k if house is in rural location.
Owner is losing 125k, taxpayer is losing 175k.0 -
Your numbers are wrong.Maybe 30-40 years to get back up to 375k if house is in rural location.Owner is losing 125k, taxpayer is losing 175k.0
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The Corinthian wrote: »The borrower hasn't exactly gotten off scot-free; to begin with whatever payments or deposit already paid into the house are lost. Additionally, their credit rating would be shot and would take years to recover, if ever.
Also, the payments and deposit are not "lost". They got shelter and a home, just like renters do when they "lose" their rental payments.Meanwhile the bank does not actually need to lose any money unless it sells. It can rent it out (this is done via management companies by banks in some countries) - even rent to the original owners. And then it can wait until the price climbs up again.
And right now, they are losing money hand over fist. They need capital, not bricks & mortar.As a very simple example, say someone puts down a 20% deposit on a €500k home and gets a mortgage for the rest. They pay the mortgage for a few years, to the tune of €25k. Market collapse and the house is now worth 200k.
The owner loses the home and with it €125k already invested. The bank has paid €400k, of which €275k is outstanding - effectively what they've paid for the house. To break even, the bank needs only wait until the price climbs back up to that - an increase of only a further €75k. Tax payer doesn't actually need to pay anything.Certainly it will decrease margins for the banks, rather than an actual loss, but in fairness while many people took irresponsible mortgages out, they couldn't have were it not for the banks that gave them - so I don't have any ethical objections there.What I do object to is where I hear suggested how debts should be 'forgiven' and the owner should keep the house - that is scot-free and a total abdication on the part of those who gambled during the bubble.
1. People who can pay, should be made to pay up. If that means losing a foreign holiday or two, so be it. If they really won't pay then, treat them as you would any recalitrant creditor and hang them out to dry in the courts. If they really really don't like the idea of paying for the full 35 years, then sell the house and pay off the smaller balance separately.
2. People who cannot pay should go through the PIP process. They lose their house (or houses in the case of our insolvent BTL's). They then live within the spending guidelines for the assigned period and are discharged without their debt.
Less than 8% of all households are in arrears. There is absolutely no reason why the other 92% of households should be paying for that 8% to have free or subsidised accommodation.0 -
You are aware that the banks themselves have to pay their own obligations?And right now, they are losing money hand over fist.
If a bank lends money to someone who can never repay it - say its 20 times annual income, as sometimes (albeit not often ) was the case ....should not the bank concerned pay for its mistakes? If not the bank personnell concerned? The imprudent, sloppy bank is being bailed out now the same as well managed banks / the executives enjoy the same pay and perks / nobody has faced the chop.0 -
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So? They signed a contract with the bank to borrow money and the bank kept up their end so why should the borrower be allowed to wriggle out of that contract when they still have the ability to pay.Also, the payments and deposit are not "lost". They got shelter and a home, just like renters do when they "lose" their rental payments.You are aware that the banks themselves have to pay their own obligations?
And right now, they are losing money hand over fist. They need capital, not bricks & mortar.Take a look at Japan and let us know how the waiting game has played out for them and while you're at it, could you let us know how the banks are supposed to roll over their loans while they take in "rent" that's lower than the mortgage repayments that are required for them to be able to refinance?Right now, the banks have negative margins. AIB reported €3.6 billion losses back in March.1. People who can pay, should be made to pay up. If that means losing a foreign holiday or two, so be it. If they really won't pay then, treat them as you would any recalitrant creditor and hang them out to dry in the courts. If they really really don't like the idea of paying for the full 35 years, then sell the house and pay off the smaller balance separately.2. People who cannot pay should go through the PIP process. They lose their house (or houses in the case of our insolvent BTL's). They then live within the spending guidelines for the assigned period and are discharged without their debt.Less than 8% of all households are in arrears. There is absolutely no reason why the other 92% of households should be paying for that 8% to have free or subsidised accommodation.0 -
The Rooster wrote: »If someone made the big decision to hand over their house to the bank, then I'd be in favour of that being deemed to be repayment of their mortgage in full (only on the basis that all their scheduled payments, including interest, are completely up to date at the time they hand over the keys).
The bank then would have the choice of putting the house up for sale, having an auction or renting it out.
Obviously there'd be lots of terms and conditions to work out, but it might offer a reasonably fair way out for a lot of people, without unjustly enriching any of those who are tactically falling behind on their loan repayments in the hope of a free windfall.
Percent of mortgages in negative equity, 30th June 2012:
AIB: 55% (€41bn total mortgages)
BOI: 59% (€28bn total mortgages)
PTSB: 65% (€25bn total mortgages)
That's quite a big capital hole you'd instantly create in the banks. Guess who would have to fill this? Fair mightn't be the best word to describe such a scheme.0 -
That's quite a big capital hole you'd instantly create in the banks. Guess who would have to fill this? Fair mightn't be the best word to describe such a scheme.
AIB: €24.6bn
BOI: €16.8bn
PTSB: €15.0bn
Now let's assume that a further 5% has been paid off the total amount:
AIB: €22.6bn
BOI: €15.4bn
PTSB: €12.8bn
While still large, it's nowhere as bad as before. Yet I'd go further and if we only cover those (apparently 8%) who cannot pay, as opposed to those who can, but don't want to:
AIB: €1.8bn
BOI: €1.2bn
PTSB: €1.0bn
Hardly the end of the world for the banks and they get to keep the properties to rent now and sell later, if they please.0 -
Percent of mortgages in negative equity, 30th June 2012:
AIB: 55% (€41bn total mortgages)
BOI: 59% (€28bn total mortgages)
PTSB: 65% (€25bn total mortgages)
That's quite a big capital hole you'd instantly create in the banks. Guess who would have to fill this? Fair mightn't be the best word to describe such a scheme.
But is a lot of that debt written off already (i.e. the difference between loan value and house value) - so in many cases the bank P&L has already been hit? In such cases the bank would therefore not be hit with extra losses.
The intention is that it wouldnt be an easy thing to do or something would do lightly. It would have to be some kind of a black mark against the borrower. While not as bad as a normal default, but for example if you've done a "hand back the keys default where otherwise all your scheduled payments are up to date - if you were to get a future mortgage you'd need to be putting up, say, 50% of the house value, in order to get a new mortgage.
I don't profess to being a banking expert, I'm not saying this is the answer, but perhaps a starting point to a solution. Thankfully I'm not in negative equity myself, but I can imagine that giving up your home would be a horrible thing to have to do, but might be better than the situation some people find themselves in - and the banks took on the risk in giving the loans, they got "expert valuers" to value the properties - some risks you win on, some you lose on.0 -
Percent of mortgages in negative equity, 30th June 2012:
AIB: 55% (€41bn total mortgages)
BOI: 59% (€28bn total mortgages)
PTSB: 65% (€25bn total mortgages)
That's quite a big capital hole you'd instantly create in the banks. Guess who would have to fill this? Fair mightn't be the best word to describe such a scheme.
How big do you think the hole would be?
If they tried to sell the property at once, then yes there'd be a massive hole in the balance sheets.
If however they used the model proposed by The Corinthian, it'd be a different story. The rental income would greatly reduce the losses.
The average mortgage is supposedly for about 300k. For arguments sakes I'll assume that an average of 20k in capital has been repaid, so the outstanding capital cost would be 280k. The average property price is now approx 170k, leaving an average 110k gap between market price and cost (approx 1/3).
In the case of a repossession/walk away and the bank sells at the market rate, there is a 1/3 loss, but only if the bank sells.
The alternative proposed by The Corinthian would have the banks rent out the properties in order to recoup some of this 1/3 loss. Take a 4 bed house in Galway City, the rent would be approx €800p.m. That give an annual rent of 9,600. That rental figure is important because it's about €100 less than the approximate cost of a €180k mortgage over 30 years (80% ltv deposit). All else being equal, the banks could make back their €110k hole over about 15 years (allowing for maintenance costs, occupancy etc) and sell the property then at market rates.
A of what will happen depends greatly on the legal situation (getting repossession sorted is a big stumbling block), but also what the banks have the stomach to do (will they repossess and become landlords) and what if anything they are willing to take in losses.0 -
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The Corinthian wrote: »
Now let's assume that a further 5% has been paid off the total amount:
AIB: €22.6bn
BOI: €15.4bn
PTSB: €12.8bn
While still large, it's nowhere as bad as before. Yet I'd go further and if we only cover those (apparently 8%) who cannot pay, as opposed to those who can, but don't want to:
AIB: €1.8bn
BOI: €1.2bn
PTSB: €1.0bn
Hardly the end of the world for the banks and they get to keep the properties to rent now and sell later, if they please.
So €22.6bn + €15.4bn + €12.8bn = €50.8bn is not as bad as before?
I'm not sure the relevance of the 8% or where this is coming from. 22% of owner-occupier mortgages are in arrears by value, and 18% by number of accounts. That's mortgages of €24.8bn in arrears. (Central Bank data)
About 70% of mortgages in arrears are also in negative equity - so €17bn.
Whatever way you look at it - if there is a general scheme to simply write-off negative equity or cases of arrears+negative equity, there will be a significant capital hole to be filled... by public money.0 -
The Rooster wrote: »But is a lot of that debt written off already (i.e. the difference between loan value and house value) - so in many cases the bank P&L has already been hit? In such cases the bank would therefore not be hit with extra losses.
That's the problem - the banks have not taken any hit for mortgages that are in negative equity. Once borrowers are up to date with their payments, the banks carry the full value of the mortgage on their books, i.e. they expect to get fully repaid. They have been recapitalised for the estimated amount of mortgages that will default (and only up to end-2013), mortgages in negative equity are irrelevant for capital purposes once they are being repaid. Once there is any kind of mass crystallisation of negative equity, the banks would be forced to take the capital hit up front that would greatly exceed their existing capital buffers.0 -
So €22.6bn + €15.4bn + €12.8bn = €50.8bn is not as bad as before?I'm not sure the relevance of the 8% or where this is coming from. 22% of owner-occupier mortgages are in arrears by value, and 18% by number of accounts. That's mortgages of €24.8bn in arrears. (Central Bank data)
Anyhow, personally I would be against some insane amnesty for anyone who's in negative equity and would only consider those genuinely unable to pay. Don't mistake what I'm suggesting for a get out of jail card.Whatever way you look at it - if there is a general scheme to simply write-off negative equity or cases of arrears+negative equity, there will be a significant capital hole to be filled... by public money.
As an aside, I'd rather the banks took on the properties than the government for another reason; how long before some bright spark decides rather than make rental income from those properties they can be used to house an antisocial family?0 -
Mary
Why are you responding to points that I am not making?
Fact is that the following warnings were blared all over the radio and TV re mortgage products.WARNING: YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP PAYMENTS ON A MORTGAGE OR ANY OTHER LOAN SECURED ON IT.WARNING: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit in the future.
Rooster
You're making a common error. "Writing down" is not the same as "writing off". One is an accounting exercise. The other is debt relief and it should only be applied to people who simply cannot repay their debt even after the security has been sold off.0 -
So €22.6bn + €15.4bn + €12.8bn = €50.8bn is not as bad as before?
I'm not sure the relevance of the 8% or where this is coming from. 22% of owner-occupier mortgages are in arrears by value, and 18% by number of accounts. That's mortgages of €24.8bn in arrears. (Central Bank data)
About 70% of mortgages in arrears are also in negative equity - so €17bn.
Whatever way you look at it - if there is a general scheme to simply write-off negative equity or cases of arrears+negative equity, there will be a significant capital hole to be filled... by public money.
About a third of households have no mortgage at all and there's approx 300k households renting. PPR households in arrears number a third of all the households renting and as you're probably aware, if you fall into arrears while renting, you get evicted. Why should one class of household be allowed to stay in houses (or keep their BTL's) on the cheap while their tenants pay full whack?0 -
antoobrien wrote: »How big do you think the hole would be?
If they tried to sell the property at once, then yes there'd be a massive hole in the balance sheets.
If however they used the model proposed by The Corinthian, it'd be a different story. The rental income would greatly reduce the losses.
The average mortgage is supposedly for about 300k. For arguments sakes I'll assume that an average of 20k in capital has been repaid, so the outstanding capital cost would be 280k. The average property price is now approx 170k, leaving an average 110k gap between market price and cost (approx 1/3).
In the case of a repossession/walk away and the bank sells at the market rate, there is a 1/3 loss, but only if the bank sells.
The alternative proposed by The Corinthian would have the banks rent out the properties in order to recoup some of this 1/3 loss. Take a 4 bed house in Galway City, the rent would be approx €800p.m. That give an annual rent of 9,600. That rental figure is important because it's about €100 less than the approximate cost of a €180k mortgage over 30 years (80% ltv deposit). All else being equal, the banks could make back their €110k hole over about 15 years (allowing for maintenance costs, occupancy etc) and sell the property then at market rates.
A of what will happen depends greatly on the legal situation (getting repossession sorted is a big stumbling block), but also what the banks have the stomach to do (will they repossess and become landlords) and what if anything they are willing to take in losses.
Quite a few assumptions in there! The average mortgage size is only €140k for example, not €300k. But averages don't matter anyway. There is huge correlation between size of mortgage, whether the mortgage is in arrears, whether the mortgage is in negative equity and other factors like year of origination. These aren't independent.
But the key in your example is that once the asset is transferred to the bank through a repossession/walk away, the bank must take an immediate write-down of capital, regardless of whether they sell, rent, future property prices, etc. €110k in your example. Once a mortgage is performing, there is no capital impact of the negative equity. If a write-off of negative equity scheme is introduced - the banks won't have sufficient capital. It simply comes down to capital rules.0 -
About a third of households have no mortgage at all and there's approx 300k households renting. PPR households in arrears number a third of all the households renting and as you're probably aware, if you fall into arrears while renting, you get evicted. Why should one class of household be allowed to stay in houses (or keep their BTL's) on the cheap while their tenants pay full whack?
I still don't get the relevance of 8% to what I was saying, but so be it. I didn't mention anything about renters, I was talking about the amount of negative equity in the system.0 -
The Corinthian wrote: »Well the only difference between what I've suggested and that is the PIP spending guidelines and, potentially who ultimately pays the difference. What I'm suggesting leaves the bank to take the hit (nationalization notwithstanding) and, AFAIK, via the PIP process it's tax payer who pays.
I don't mean to be rude by just zeroing in on one part of your post but I don't quite get what you mean here?
The way PIP works is:
1. Person applies.
2. Person approved.
3. House and any other valuable assets repossessed and sold.
4. Outstanding debt looked at. If it can be re-structured, fine. If not, then the debtor pays what they can, i.e. salary minus spending guidelines.
5. If they earn less than the spending guidelines (have you seen them? They are quite generous), then they are effectively off scot-free and will be discharged from PIP once the period is up.
Sure, they lose their home (or homes in the case of BTL's-I suspect we're going to see a lot more of this than people realise) but they also lose the debt and move on with life.0 -
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The Corinthian wrote: »How much of the reported losses by the banks over the last few years have been accounting write-offs? That's not public money.
If the banks require more capital because of some sort of negative equity write-off scheme, or escalating arrears, Basle III regulations, or any other scenario... it will be public money. (Where do you think it will come from?) Probably from the Irish state, or possibly from some ESM-type vehicle. The only exception is a small amount of private capital that BOI could raise (and probably will later in the year).0 -
I don't mean to be rude by just zeroing in on one part of your post but I don't quite get what you mean here?
The way PIP works is:
1. Person applies.
2. Person approved.
3. House and any other valuable assets repossessed and sold.
4. Outstanding debt looked at. If it can be re-structured, fine. If not, then the debtor pays what they can, i.e. salary minus spending guidelines.
5. If they earn less than the spending guidelines (have you seen them? They are quite generous), then they are effectively off scot-free and will be discharged from PIP once the period is up.
Sure, they lose their home (or homes in the case of BTL's-I suspect we're going to see a lot more of this than people realise) but they also lose the debt and move on with life.
They don't lose their home though. The family home is protected with the debt potentially reduced based on ability to pay. Other assets are sold.0 -
5. If they earn less than the spending guidelines (have you seen them? They are quite generous), then they are effectively off scot-free and will be discharged from PIP once the period is up.
My understanding was that PIP meant the government would cover the debts, while what I proposed was that the bank would be taking the, quite manageable, hit. If this was wrong, then fair enough.If the banks require more capital because of some sort of negative equity write-off scheme, or escalating arrears, Basle III regulations, or any other scenario... it will be public money.
If you've been following the maths in the last few posts, you'll find that they can easily cover it. Your 'if' scenario is no longer really very realistic.They don't lose their home though. The family home is protected with the debt potentially reduced based on ability to pay. Other assets are sold.
I think I'll go buy myself a home I can't afford so I can get it for free too, through this scheme.0 -
They don't lose their home though. The family home is protected with the debt potentially reduced based on ability to pay. Other assets are sold.
There's some nicey nice language surrounding the bill but all assets on are the table. They have to be or else it will be a defaulters charter.
If it's a case that a household are in arrears and there's neg equity, sell the house first to reduce the overall debt and then look at whether the household can afford to repay the outstanding debt after providing their own needs (shelter, food, etc). If they genuinely can't repay (A), then fair enough but if they are misrepresenting their own position or are using the money they don't pay the bank to maintain lifestyle (B), then they should really be jailed for fraud.
There's a lot more of option B than people realise. Look at Brendan Kelly in Dalkey. Look at Caroline Lennon-Nally with her €100 a week "grooming expenses". Look at the folk Pat Kenny has on his show like Geoff Scargill with his 5 BTL's all on interest only and "waiting for a deal". And dare I say it, look at Pat Kenny himself and all the great & good of our society who mortgaged themselves to the hilt during the bubble.0 -
The Corinthian wrote: »I've not read the PIP guidelines, but had been led to believe them draconian. Of course, I was led to believe that from people posting here, so more fool me, I suppose.
Such as posters incorrectly laying out the 5 steps of PIP based on what they think they should be, including repossession of the family home, rather than what they actually are. :rolleyes:
Banks can only report losses when there has been an impairment event specific to an account that suggests they will not be fully repaid, such as an account going to arrears - a loss provision is then made, basically an estimate of how much they will likely loose on that account. So the losses to date in the banks have occured when there has been such impairments on specific mortgages. There is already question marks over whether there is sufficient capital to withstand future losses, with mortgage arrears the key risk, without any new debt write-offd based on negative equity rather than borrowers ability to repay. How you can say the questionable maths in this thread shows that the banks have sufficient capital to "easily" afford such a scheme is beyond me.0 -
Banks can only report losses when there has been an impairment event specific to an account that suggests they will not be fully repaid, such as an account going to arrears - a loss provision is then made, basically an estimate of how much they will likely loose on that account.How you can say the questionable maths in this thread shows that the banks have sufficient capital to "easily" afford such a scheme is beyond me.0
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