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State intervention on mortgages - Proposal

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  • 20-03-2010 12:32pm
    #1
    Hagar
    Closed Accounts Posts: 16,793 ✭✭✭✭


    The State/Taxpayer/Homeowners seems to be bailing out all the big movers in the proerty/banks fiasco everbody except the homeowners who were suckered into taking out massive loans to pay the inflated prices. No before anyone says they didn't have to buy them please think about where they were supposed to live if they didn't. The alternative was to rent a property whose rent was indexed off the high property price anyway so wasn't going to be a cheaper alternative. A bit of a Hobson's choice there.

    Anyway what is done is done and high-horse attitudes will not solve anything. What's needed now is a solution going forward not smarty-pants "I told you so" by people who in truth were just lucky not to find themselves in the same situation. Needing a home and buying it just before the bubble took off does not make you a financial wizard so spare us all your false wisdom.

    Now I have a proposal for discussion that applies only to principle residences, not investment or rental properties. My idea is that the State sets up an independent valution body that can give a realistic current market value for any home. Then the State takes over any mortgage amount above that value leaving the owner with an effective 100% mortgage on a property worth exactly what is owed. This will end the horror for the many thousands of householders who are in a massive negative equity situation and are suffering wage cuts etc. There would be a clawback clause effective for 10 years that states "Any profit on the sale of the house above the official calculated value at the time of State intervention would be refundable to the State."

    This proposal is probably far from perfect but it is better than what the Govt have come up with so far which is precisely feck all.

    Opinions on a postcard please.


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    #2
    ilovelamp2000
    Registered Users Posts: 2,435 ✭✭✭ilovelamp2000


    If this idea ever comes to fruition I'm leaving the country. People need to pay for and learn from their own mistakes.


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    #3
    KerranJast
    Registered Users Posts: 1,829 ✭✭✭KerranJast


    Rosco1982 wrote: »
    If this goes idea ever comes to fruition I'm leaving the country. People need to pay for and learn from their own mistakes.
    This. You gambled and lost. There's no way in helll I'm bailng out the smug "renting is dead money" gang.


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    #4
    helimachoptor
    Moderators, Science, Health & Environment Moderators Posts: 21,640 Mod ✭✭✭✭helimachoptor


    Rosco1982 wrote: »
    If this idea ever comes to fruition I'm leaving the country. People need to pay for and learn from their own mistakes.
    You mean like the banks paying for their own mistakes:rolleyes:


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    #5
    Hagar
    Closed Accounts Posts: 16,793 ✭✭✭✭Hagar


    Where is the "own mistakes" and "you gambled and lost" rhetoric coming from? People get married need a home and buy one. They were not reponsible for the inflated market, the devolopers/builders/banks were.


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    #6
    IrishTonyO
    Registered Users Posts: 2,321 ✭✭✭IrishTonyO


    69 wrote: »
    Where is the "own mistakes" and "you gambled and lost" rhetoric coming from? People get married need a home and buy one. They were not reponsible for the inflated market, the devolopers/builders/banks were.

    People need a home, but they can rent instead of buy. Owning your own home is not a right, it is a luxury


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    #7
    Hagar
    Closed Accounts Posts: 16,793 ✭✭✭✭Hagar


    The rent would have been propotional to the cost of the property so would not have been any cheaper.

    I don't know about it being a right but I would certainly say owning someone else's home, as a landlord, is a luxury.


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    #8
    IrishTonyO
    Registered Users Posts: 2,321 ✭✭✭IrishTonyO


    69 wrote: »
    The rent would have been propotional to the cost of the property so would not have been any cheaper.

    I don't know about it being a right but I would certainly say owning someone else's home, as a landlord, is a luxury.

    Yes but if they rented, now they would not have a mortgage to pay and could rent a property considerable cheaper at the moment. It is a person's choice to purchase property and it is a gamble at all times. The prices could go up or down, people in Ireland seemed to think property only ever went up.


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    #9
    silverharp
    Registered Users Posts: 17,840 ✭✭✭✭silverharp


    OP, it has no merit. A bailout of this type would be a major moral hazzard and would create plenty of opportunities for corruption. Assuming people still have their jobs the only way to get through it is to accelerate their mortgage payments and cut back on the 2nd cars, multiple holidays,€30K weddings and other avoidable costs.
    If people generally have the house they can raise a family in , there isnt really a problem, they will own them outright in 30 years or so. If couples are stuck with crappy 1 bedroom apartments, then maybe they need to start looking to their families for help or findings ways of renting the space they need and renting out their own properties.

    A belief in gender identity involves a level of faith as there is nothing tangible to prove its existence which, as something divorced from the physical body, is similar to the idea of a soul. - Colette Colfer



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    #10
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    helimachoptor wrote: »
    You mean like the banks paying for their own mistakes:rolleyes:

    they shouldnt have been given a cent or taken over via nationalization

    2 wrongs don't make a right mister :mad:


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    #11
    Hagar
    Closed Accounts Posts: 16,793 ✭✭✭✭Hagar


    Just for the record I have no axe to grind. I have no mortgage and am self employed. I'm just putting forward an idea for discussion. There are an awful lot of people out there in dire circumstances and the State should make as much effort to help them as it did to help the golden circle who caused it. IMVHO.


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    #12
    SpodoKamodo
    Registered Users Posts: 171 ✭✭SpodoKamodo


    Yeah, that sounds great. Maybe the government should pay us back all the money we overpaid in rent durIng the boom as well:rolleyes:

    the banks have taken a hit on the value on their loan books. Granted, they are receiving a definate amount from Nama, but it is still a loss. Developers are left with houses half finished and unsellable, again a loss. So why are homeowners who bought during the boom so deserving of a rescue plan where their losses would be eliminated?


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    #13
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    SpodoKamodo wrote: »
    Yeah, that sounds great. Maybe the government should pay us back all the money we overpaid in rent durIng the boom as well:rolleyes:

    the banks have taken a hit on the value on their loan books. Granted, they are receiving a definate amount from Nama, but it is still a loss. Developers are left with houses half finished and unsellable, again a loss. So why are homeowners who bought during the boom so deserving of a rescue plan where their losses would be eliminated?

    because we are swimming in money and we can bail everyone out

    @69 as self employed are you happy that your taxes are going to pay people/organizations for them making bad mistakes, while infrastructure, healthcare and public services are a shambles?

    the state is bankrupt, it wont be the government paying for any bailouts, its you and me and everyone (yes that also includes future generations) via direct and indirect taxation that will have to pay for this


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    #14
    Hagar
    Closed Accounts Posts: 16,793 ✭✭✭✭Hagar


    Nothing new there, a huge proportion of my taxes have always been wasted.


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    #15
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    69 wrote: »
    Nothing new there, a huge proportion of my taxes have always been wasted.

    so because its being wasted, alot more needs to be wasted

    yes yes i see :rolleyes:

    if any sort of "home-owner" bailout does occur, ill be on the first plane to Switzerland and make sure I never pay any direct taxes here ever again out of spite,
    seeing my hard earned money being taken away and being pissed down large holes is bad enough as it is, your idea would be "taking the piss" altogether at anyone who remained sensible and kept their head on

    this whole bailout culture has opened a pandoras box, now everyone wants their "NAMA" :mad:

    why do people want something for nothing? omg im actually getting mad thinking about it :eek:


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    #16
    Hagar
    Closed Accounts Posts: 16,793 ✭✭✭✭Hagar


    ei.sdraob wrote: »
    so because its being wasted, alot more needs to be wasted
    Wasn't that the FF Slogan? Sorry, it was "a lot done, a lot more to be done" Spooky isn't it? ;)


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    #17
    rasper
    Registered Users Posts: 795 ✭✭✭rasper


    I personally can't see how the taxpayer can take over any more losses, I reckon it'll have to come from the bank routes such as allowing people in negative equity to trade up to family homes and extending out existing loan terms to reflect the drop in incomes .
    It is in the banks and states interests not to have thousands of home owners throw the keys and and either look to the state for accomodation or leave the country for good(yes I know debt follows but lots will take their chances on not being found or how good the bankruptcy laws are in their new country)


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    #18
    kippy
    Registered Users Posts: 18,401 ✭✭✭✭kippy


    To those saying they would leave the country if something like this ever happened.....well....ye'd want to get yer tickets ASAP (and give yerselves plenty time to get passports), the interest relief scheme and indeed the bailout of the banks etc are all doing pretty much what ye dont want to see happening already.


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    #19
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    kippy wrote: »
    To those saying they would leave the country if something like this ever happened.....well....ye'd want to get yer tickets ASAP (and give yerselves plenty time to get passports), the interest relief scheme and indeed the bailout of the banks etc are all doing pretty much what ye dont want to see happening already.

    many many threads are here about people being unhappy about any bailouts

    once again we dont need more bailouts! :mad:

    actually we cant afford any more bailouts, never mind the existing ones

    all this would do is take more money away from what little productive companies/people left and give them to the reckless, that might just be the straw that breaks the camels back


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    #20
    helimachoptor
    Moderators, Science, Health & Environment Moderators Posts: 21,640 Mod ✭✭✭✭helimachoptor


    ei.sdraob wrote: »
    they shouldnt have been given a cent or taken over via nationalization

    2 wrongs don't make a right mister :mad:


    I agree, I'm just saying the 2nd poster says people should sort out their own mistakes yet the Government bailed out the banks which has left us in a massive hole and they aren't lending. All the massive profits the banks made in the last 5-10 years, where has this money gone!!


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    #21
    Eliot Rosewater
    Registered Users Posts: 3,745 ✭✭✭Eliot Rosewater


    69 wrote: »
    the State should make as much effort to help them as it did to help the golden circle who caused it. IMVHO.

    The reason, or rationale, for bank bailout schemes is not to "help" those who are in control at the institutions. Obviously in Ireland theres also a bit of the helping ones friends mentality (such as with Anglo) but in general banks are saved to avoid a systematic financial crisis. It done for the betterment of the economy as a whole.

    "Bailing" out those people who made bad personal decisions during the boom and paying for their mortgages helps no one but the home-owner in question. It doesn't benefit the taxpayer at all, and its basically sticking up two fingers to those who were rational and smart enough to purchase carefully, or to rent.

    Buying a house is a big transaction, its a luxury as others have said, and it should be made with utmost caution. The possibility of losing your job and being unable to make payments must factor in. As we saw though, people were happy to swallow what the banks and Government told them, buy buy buy, and then when it blew up in their face blame everyone except themselves.

    One of the main reasons we are in this mess is because of a lack of personal responsibility by a vast amount of people, and the scheme you propose would only reward those who make the irresponsible choices.


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    #22
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    helimachoptor wrote: »
    I agree, I'm just saying the 2nd poster says people should sort out their own mistakes yet the Government bailed out the banks which has left us in a massive hole and they aren't lending. All the massive profits the banks made in the last 5-10 years, where has this money gone!!

    any sort of homeowner bailout wont be paid for by bankers it be paid for by you

    be careful what yee wish for


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    #23
    helimachoptor
    Moderators, Science, Health & Environment Moderators Posts: 21,640 Mod ✭✭✭✭helimachoptor


    ei.sdraob wrote: »
    any sort of homeowner bailout wont be paid for by bankers it be paid for by you

    be careful what yee wish for

    Sorry I should clarify my position, home owners shouldn't get a bailout but neither should the banks have.


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    #24
    SpodoKamodo
    Registered Users Posts: 171 ✭✭SpodoKamodo


    helimachoptor wrote: »
    I agree, I'm just saying the 2nd poster says people should sort out their own mistakes yet the Government bailed out the banks which has left us in a massive hole and they aren't lending. All the massive profits the banks made in the last 5-10 years, where has this money gone!!

    A failed banking system helps no one. And regarding your point re: banks not lending, this is not true. Banks are lending, and I think it's a good thing that they are not giving out loans to every tom, dick and harry that turns up at their door. It was that practice that got us here in the first place


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    #25
    ei.sdraob
    Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    helimachoptor wrote: »
    Sorry I should clarify my position, home owners shouldn't get a bailout but neither should the banks have.

    agree :)

    some people think that because the banks got bailed out now everyone else can be bailed out using that bottomless pit of money we have


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    #26
    helimachoptor
    Moderators, Science, Health & Environment Moderators Posts: 21,640 Mod ✭✭✭✭helimachoptor


    SpodoKamodo wrote: »
    A failed banking system helps no one. And regarding your point re: banks not lending, this is not true. Banks are lending, and I think it's a good thing that they are not giving out loans to every tom, dick and harry that turns up at their door. It was that practice that got us here in the first place

    They are not lending at all, a friend of mine was left his house when his mother died, it's a nice house in a nice area. He's got a pretty steady job earning 35-40k. He wanted to extend the house and do a few bits with it. His only debt is a car loan with about 2k left on it but that can be gone in a couple of months if it was an issue. He applied for 70k.. turned down by AIB,BOI, PTSB and NIB i think, 50k... same again, he asked could he release equity in his house, told no.

    Off he went to the credit union. In my view banks have go to the other extreme of 2 years ago, not lending at all.


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    #27
    changes
    Closed Accounts Posts: 959 ✭✭✭changes


    I understand where your coming from OP. Although i wouldn't be comfortable with the idea of bailing out anyone, banker, developer or people in negative equity.

    The rules of capitalism as i understood them growing up have been stretched quite a bit during this finincial crisis out of a nessessity to avoid the whole western economic system from collapsing.

    The precedent has been set by the bank bailouts and what appears to be the big property dealers getting an easy exit strategy from their mistakes.

    I think anyone who loses their house now and ends up in debt should be at the governments door looking for social housing until they are on their feet again. Its the least the government could do for bluffing thousands of young people into jumping on the ladder (and they did).

    As the OP said its down to luck really, the people who happened to be at the age where they were moving out of home and needed a house ended up buying at the top of the boom. They were no different to any other irish generation who wanted a roof over their head the irish way (i.e. not renting from some gob****e who wouldn't fix anything and could turf you out on a whim).


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    #28
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭SLUSK


    If you bought a house an now cannot afford to pay the mortgage you have to sell the house and start renting. Why should others bail you out?


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    #29
    danbohan
    Closed Accounts Posts: 1,914 ✭✭✭danbohan


    Rosco1982 wrote: »
    If this idea ever comes to fruition I'm leaving the country. People need to pay for and learn from their own mistakes.
    hear hear !!, where do these guys get their ideas , and this is supposed to be our brightest generation !


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    #30
    baalthor
    Registered Users Posts: 1,241 ✭✭✭baalthor


    OP, your proposal goes even further than NAMA in that it pays everyone's mortgage whether they are in financial difficulty or not. NAMA is restricted to banks that are actually in trouble.

    Do you have any idea how much your proposal would cost?


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    #31
    BurnsCarpenter
    Registered Users Posts: 551 ✭✭✭BurnsCarpenter


    Another article about this in the Sunday Independent.

    http://www.independent.ie/opinion/analysis/the-banks-have-nama-but-who-is-there-to-help-homeowners-like-us-2106184.html

    Edit: this as well - http://www.independent.ie/opinion/analysis/this-blight-on-all-of-our-futures-must-be-tackled-2106181.html

    Looks like it's becoming a campaign. Seeing as the Sindo normally tends towards the right, I can only assume this position is purely down to Brendan O'Connor and others being directly affected.

    I take no pleasure in seeing people in negative equity - I have friends in the same boat - but it takes some nerve to argue that you that you deserve to be bailed out.


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