OK the banks screwed a lot of people but

Macha

BroomBurner wrote: »

Case 1: OP's couple

That couple remortgaged their house to release equity, as entitled to, and would be able to manage their finances continuously were it not for the fact that they both lost their jobs. If they lost their jobs through lay-offs, etc., then why would anyone want to start laughing in their face about how they can't manage their finances? Only heartless individuals that have never experienced unemployment with mounting debt.

The bold part is where I have a problem. WHY are they entitled to?? You haven't even mentioned what they have released the equity for? Holiday? New car? There is no real distinction between this scenario and case 2.

BroomBurner wrote: »

So, while there is some merit in what the OP is saying, unfortunately they have picked on the wrong people to slag off, making him/her sound like quite a nasty individual that enjoys the downfall of others.

I agree that cases can differ in levels of personal irresponsibility but surprisingly enough, that usually is very much in line with the amount of debt people are in: I give you Case 3:

Couple in their 50s, had to emigrate in the early 1980s subsequently moving countries 5 more times in search of employment. Bought a house in Dublin with 30% of value put down as a deposit. Didn't borrow more than they knew they could pay back, despite father later being unemployed for long stretches once back in Ireland. Now no mortage on house, no drawing down of equity, no remortgaging for holidays or cars, no flat screen TVs - no nonsense!

Result? No financial mess, no burden on tax payer and no wailing at everyone else to pay for their mortgage.

Actually, here's case 4: young couple, realise they don't have enough money to buy a house so they rent. End of story.

BroomBurner

taconnol wrote: »

The bold part is where I have a problem. WHY are they entitled to?? You haven't even mentioned what they have released the equity for? Holiday? New car? There is no real distinction between this scenario and case 2.

Entitled to as it was their home, they felt that they could reasonably afford to repay the loan, they were both working, the bank didn't have a problem giving it to them. We don't even know how much was given either, it's all speculation.

For those other cases, I think I might have a couple of rubber medals around here somewhere...

Fighting Irish

the are entilted but its their problem if they can't pay back the loan

K-9

BroomBurner wrote: »

Entitled to as it was their home, they felt that they could reasonably afford to repay the loan, they were both working, the bank didn't have a problem giving it to them. We don't even know how much was given either, it's all speculation.

For those other cases, I think I might have a couple of rubber medals around here somewhere...

So, there should never be repossessions because the banks give people money?

BroomBurner

Fighting Irish wrote: »

the are entilted but its their problem if they can't pay back the loan

Do you honestly believe that they aren't worried about it?
What was the point of your using this couple as an example to make a point?
Surely your thread should really have been about people who extend themselves beyond what they could ever afford, not about people who are now extended beyond what they have because, unfortunately they've lost their jobs.
You wouldn't have anything to write about had they not lost their jobs, so why pick on them now?

Macha

BroomBurner wrote: »

Entitled to as it was their home, they felt that they could reasonably afford to repay the loan, they were both working, the bank didn't have a problem giving it to them. We don't even know how much was given either, it's all speculation.

Ok firstly, the loose lending practices of banks and other lending institutions over the past 20 years have been shocking. I have heard stories of bank managers calling people and telling them they were "underborrowed..!", leaflets through the door, credit limits raised without permission, 100% mortgages, etc. And this was all very reckless BUT nobody put a gun to these people's heads and made them take the money. To lend money, someone has to be willing to borrow it. So I don't take the fact that a bank wanted to give them the loan as any sort of indication that they should have accepted the loan.

As for it being their house, well that's the whole point really - they offered up their house as an asset/guarantee in return for cash. They were bettting that the value of their house was X and the chip they laid on the table was their house. Their choice.

They were obviously wrong in their belief that they could pay it back. That's a risk they took and it backfired. Now they pay for the consequences. Simple.

BroomBurner wrote: »

For those other cases, I think I might have a couple of rubber medals around here somewhere...

Yeah, :P I was just trying to make the point that it was perfectly possible for people not to get into financial trouble and indeed, many haven't.

Fighting Irish

BroomBurner wrote: »

Do you honestly believe that they aren't worried about it?
What was the point of your using this couple as an example to make a point?
Surely your thread should really have been about people who extend themselves beyond what they could ever afford, not about people who are now extended beyond what they have because, unfortunately they've lost their jobs.
You wouldn't have anything to write about had they not lost their jobs, so why pick on them now?

Both had full time jobs, paid off their house, remortgaged their house, lost their jobs and can't pay the mortgage so they obviously saved no money and that isn't over extending?

n rich out and out

Live for today but don't be totally stupid about it

youcrazyjesus!

fergalr wrote: »

This is not a fair thing to say to the OP. Saying people should be responsible for their finances does not equate to saying they should be let starve.

For my part, I like the idea of a welfare state, where even if you are totally unable to work, or are totally insolvent etc the state provides you with enough resources to get by, to satisfy your basic needs. This isn't at all incompatible with saying that people should be responsible for their finances, in the context that they shouldn't blame the bank when they cannot repay their mortgage.

Like, the banks were bad to give out more than was responsible to do so, definitely, but the people that borrowed from them can't just blame it all on the banks - they are responsible too, and that doesn't mean anyone thinks they should starve.

If someone came to me and asked me for a loan, and I gave it to them, and they later couldn't repay me, and they said it was all my fault for loaning them the money, I'd be a bit bemused. It's not the same situation with the bank, but it's worth thinking about both ways.

What about somebody who has lost their job? Or a couple who have both lost their jobs?

Should the banks take the house back or come to some agreement to allow them get back on their feet over 2/3 years?

It suits everybody, the banks, the taxpayer, the owners, the economy for people to be allowed stay in their houses in theses extraordinary times. Given the banks are now relying on the State for survival the Government should lay it down for them and TELL them what's happening.

thebman

If people can't pay the loans or even the interest then the bank should freeze both and rent the property to them until they get back on their feet. Then they can resume paying the loan.

There is probably a downside I'm not seeing though. This does however essentially give the bank temporary ownership of the property until the owners can afford to pay. They just rent it back and pay the bank their rent supplement until they get a job again.

fergalr

youcrazyjesus! wrote: »

What about somebody who has lost their job? Or a couple who have both lost their jobs?

Well, the first thing to say, is I don't think losing your job is a completely unforeseeable event, that you should never have to plan for.
Speaking generally, people that have lost their jobs in the last few months, and are now unable to pay their mortgages, clearly did not have much money set aside 'for a rainy day' as it were.

Should you really manage your finances in such a way that if you can't work for a few months, you are unable to meet your repayments?

It's an interesting question, but if it's a personal decision we allow people to make, such that they have higher potential from playing it risky (and people that took big loans and big risks on property made shedloads of money between 1995-2005), then there's a limit to how much we can insulate people from the bad times too - otherwise we just encourage crazy borrowing in future.
If we, as the state, were to totally bail out people who got caught, then next time around everyone would be more likely to borrow beyond their means on the basis that they had a safety net.

youcrazyjesus! wrote: »

Should the banks take the house back or come to some agreement to allow them get back on their feet over 2/3 years?

Yes, the banks should totally do that. (come to some agreement)

In my previous post, I even said that perhaps the government should act to financially help them out, to stop them being destitute.
However, for reasons already outlined, this would have to be done very carefully, to not cause a lot of damage, and severely disadvantage those that didn't buy in.

Look at it another way, would you compensate people that spent a lot of money on lottery tickets that didn't win? If you did, it wouldn't be fair on those that didn't buy lottery tickets. Sure the lottery tickets are worth nothing now, but they could have made the people that bought them rich.

I know the levels of risk/reward in both cases are different, but it's just illustrating why any action taken to bail out people has to be done very carefully. No more so than any sort of a 'bail out' - 'bail outs' as are currently doing the rounds are very tricky things, in my opinion.

If the government had come along in 2004 and retroactively imposed a tax on people whose homes had increased in value from 1995-2003, there would be war over the interference with the market system; so we need to be very careful bailing out those whose homes lost value.

But, in a welfare state, we definitely shouldn't see people without their basic needs.

youcrazyjesus! wrote: »

It suits everybody, the banks, the taxpayer, the owners, the economy for people to be allowed stay in their houses in theses extraordinary times. Given the banks are now relying on the State for survival the Government should lay it down for them and TELL them what's happening.

Well, that's a very broad statement.

First off, these times aren't *that* extra ordinary at one level, in that we've had cycles of boom and bust before. Now, from what I'm told, the magnitude of this one is bigger - but every man on the street, knew, during the boom, that boom and bust generally came in cycles, and that there were no everlasting booms before.


You'd have to be very careful saying everyone should be allowed stay in their houses. It's not at all clear that that benefits everybody, as you say.

For example, if everyone that bought 800k of house, and only paid off 100k of it is, by law, allowed stay in their home, regardless of their ability to make payments, what do you think that's going to do to the value of the banks who loaned out that 800k with the house as security? They now have no way of recovering it, and no way of exercising the security.

It's much too simple to say that it's better for the economy that people keep their homes.

I'm not saying I want repossessions - but I'm just saying it's a very tricky situation to not get wrong. And any break given to the people that bought does disadvantage those that did not buy - and so, when discussing a break or bail out of any sort, we have to be very careful about the magnitude of break that's given.


My posts on this thread are not about crucifying people who things haven't worked out for. Believe me, I understand their position. At the same time, I'm saying that as a society, whatever we do to help them out needs to be carefully considered, so as not to totally disadvantage those who didn't buy.

molloyjh

LoLth wrote: »

What you are saying is true but , when the woman and her husband remortgaged they could afford it. they BOTH lost their jobs! surely this counts as unforeseeable circumstances and should be taken into account by the bank ? perhaps allowing them a deferral of payments to give them time to find new employment ?

How do we know they didn't? We only know a small second-hand quote from a phone call made by someone who would obviously have a biased view of the siutation. It is very rare for Irish banks, even in this climate, to repossess because it is such a big deal here in Ireland. The domestic banks will almost always try and work something out. Its not in their interests to take the house straight away anyway as it is probably worth less now than when it was remortgaged.

At the end of the day while I do feel sorry for the couple there is a level of personal responsibility that we all must accept. We can't go around blaming anyone and everyone else for all our woes. In this case it is impossible to say what should/shouldn't happen as we don't know the details.

I would like to take issue with Darragh29s points though....

Banks as private institutions are not here for your good or mine or societies. Like any other private company they are here for the money. To say that they didn't cover our backs is ridiculous. To say that they left themselves open to bad debts in an extremely irresponsible manner would be true, but they "owe" us nothing beyond the services we pay them for.

As for the regulator, well that seems to me to be another great big bandwagon with a lot of people talking about a institution and industry they know next to nothing about.The regulators job is an extremely difficult one in our current set-up. Sure if they were there when the financial institutions were starting off and helped to form our financial system it may have been easier. But now they need to understand every element of every financial institution. Different banks do business differently and to regulate it you need to first understand it. That is nothing short of a mammoth task.

And if/when you do finally understand it you need to draft the regulations and communicate them to the banks, who then need time to update their systems/procedures to reflect new regulations. Banks don't have limitless resources so you can't just dump it all on them at once and expect everything to pan out. It needs to happen in such a way that is realistic for th banks to implement them. Regualtion of an entire industry is a slow and painful process. Sure they could have done things better and yes there were some serious cock-ups in recent times, but the fact that people don't understand the reality of what they do means that their expectations and judgements are unrealistic and flawed.

Fighting Irish

thebman wrote: »

If people can't pay the loans or even the interest then the bank should freeze both and rent the property to them until they get back on their feet. Then they can resume paying the loan.

There is probably a downside I'm not seeing though. This does however essentially give the bank temporary ownership of the property until the owners can afford to pay. They just rent it back and pay the bank their rent supplement until they get a job again.

That would be ideal for the customer, but what happens if in six months the people still aren't back on their feet, the bank then takes the house and has to sell it at a lower cost to what it could sell it for now

Darragh29

K-9 wrote: »

So, there should never be repossessions because the banks give people money?

That's one way of making sure that we NEVER end up in this situation again. Bring in legislation that means the bank cannot repossess a house if you default. That would sort out the reckless lending that has been going on in recent years. They wouldn't be so quick to throw money at people if this was the case...

K-9

Darragh29 wrote: »

That's one way of making sure that we NEVER end up in this situation again. Bring in legislation that means the bank cannot repossess a house if you default. That would sort out the reckless lending that has been going on in recent years. They wouldn't be so quick to throw money at people if this was the case...

So what happens to the defaulter?

Fighting Irish

Darragh29 wrote: »

That's one way of making sure that we NEVER end up in this situation again. Bring in legislation that means the bank cannot repossess a house if you default. That would sort out the reckless lending that has been going on in recent years. They wouldn't be so quick to throw money at people if this was the case...

lol wtf



that might solve reckless lending, but i think the problem is reckless borrowing

murphaph

It's not (directly) the bank's fault that the chick and her mate lost their jobs and it is ultimately their personal responsibility to repay a loan they took out to buy their home. Loans must be repaid folks or the system collapses into anarchy and nobody will touch us with a barge pole. It would be like living in Somalia or somewhere. People must take personal responsibility for their own debt, it is precisely because people didn't that has contributed to the situation we're in now.

HOWEVER! the banks in this country are now reliant on all our money to keep them afloat. Innovative leaseback or interest deferments must be employed to give ordinary joes the very best chance to hold on to their homes, including the banks writing off a certain amount of interest (ie, reducing their profits). The banks must now operate in the national interest and not in their own interests to a certain extent, but they cannot operate as charities or nobody will deposit or buy stock in the banks!!! It's a fine balancing act but in reality of course, in most cases where someone has recently purchased a property, the debt exceeds the current value of the property it's secured upon, so the bank would lose money by repossesing and selling. If at all possible the bank will try to keep the loan going.

murphaph

Darragh29 wrote: »

That's one way of making sure that we NEVER end up in this situation again. Bring in legislation that means the bank cannot repossess a house if you default. That would sort out the reckless lending that has been going on in recent years. They wouldn't be so quick to throw money at people if this was the case...

The law already heavily favours the debtor in this country (believe me, I know). Making it illegal to repossess a house would turn us into the Zimbabwe of Europe. Who would lend anybody any money to buy a house if they knew the person didn't have to repay as there would be no no way to take the asset back? No banking system in the world operates like this. Perhaps bring in legal minimum deposits (savings, remember them anybody?) before mortgages can be drawn down, say 25% deposit minimum? Might also help keep prices down as a side benefit.

Darragh29

murphaph wrote: »

The law already heavily favours the debtor in this country (believe me, I know). Making it illegal to repossess a house would turn us into the Zimbabwe of Europe. Who would lend anybody any money to buy a house if they knew the person didn't have to repay as there would be no no way to take the asset back? No banking system in the world operates like this. Perhaps bring in legal minimum deposits (savings, remember them anybody?) before mortgages can be drawn down, say 25% deposit minimum? Might also help keep prices down as a side benefit.

I'm not saying there should not be a penalty, but a clear message should be sent to the banking system that ultimately if they lend to someone in a reckless manner, then ultimately they will lose, not the homeowner. The master of the High Court has effectively sent this message to the banks yesterday when he said that there is now an avalanche of repossessions being sought by the banks and they needn't think they can automatically rely on the High Court to deal with these applications by way of issuing a repossession order to the bank on foot of an application for one.

Sand

I dont get the OPs point.

The couple could afford the loan they took out when they had jobs.

They could not afford the loan when they both lost their jobs [OP still hasnt provided any detail on why it was their fault they lost their jobs] and had no source of income.

Does the OP consider it foolish to borrow more than you can afford to repay on the dole?

Electric Sheep

Anyone who refinances to "release equity" from their family home is a fool. That "equity" is purely theoretical until you actually sell the house for a price that covers the original purchase price plus the borrowed "equity". It's taking a big gamble with the largest investment most of us with make in our lives, and more importantly - our home.

Yes, I know the banks were pushing it. But it is also up to us to research and make our own risk analysis.

MG

Remember two or three years ago on the drivetime radio shows there would be loads of texts asking "What about personal responsibility?" on every show.

Don't hear them any more. They've been replaced with "The Government should do something" texts.

Taking personal responsibility has gone out of fashion. Now it's fashionable to say "it's the banks wot done it".

BroomBurner

As I said before, if this thread was set up to discuss personal responsibility, a notion which I believe in greatly, then why wasn't set up like that and used people that borrow beyond their means?

Instead, the OP chose to pick on people that DID borrow within their means but, due to whatever circumstances, now they are out of their depth.

Hindsight is a wonderful thing, OP. I hope you don't intend to ever buy a house, that would be too much of gamble for you, seeing as you may lose your job in the future. Better off giving your money to a landlord instead.

gurramok

Electric Sheep wrote: »

Anyone who refinances to "release equity" from their family home is a fool. That "equity" is purely theoretical until you actually sell the house for a price that covers the original purchase price plus the borrowed "equity". It's taking a big gamble with the largest investment most of us with make in our lives, and more importantly - our home.

Yes, I know the banks were pushing it. But it is also up to us to research and make our own risk analysis.

Also, the release of that equity was pushed by both parties(bank&consumer) at the most crucial part of the bubble(2003-2006) as interest rates to fund lifestyles back then were half of what they were for personal/car loans rates.

Why take out a personal loan at 9% rate when that same loan can be obtained at 3% using released equity?

And whoever posted about equity only been used to majorly fund renovations is frankly living in dreamland. Every tom dick and harry who bought a house before the peak of the house prices and released equity was primarily using that equity to fund those new cars, holidays, laser treatment etc.
You've often heard neighbours ask 'where did they get the money from for that new SUV' despite them in 'ordinary' jobs, well you know now.

Released equity is overstretching your borrowing limits depending on how big your mortgage was, its just another form of cheap credit fuelled debt.

Fighting Irish

Fighting Irish wrote: »

you and you alone should be responsible for your finances

Example:
Some chick on newstalk this morning was giving out about banks because she re-mortgaged her house a few years back and now her and the husband have lost their jobs and the bank wants to take the house in 6 months or something and its the banks fault?

I know this isn't directly related to the OP's post, but its worth noting that the banks (Ulster Bank isn't the only one) are only in it for themselves. We're their reason for existing, but they're out to cause as many problems as possible for us, to be as unhelpful as possible, and to cost us as much as possible while we are with them.

We HAVE to be responsible for our finances simply because the banks are not our friends. They're out to get whatever profit they possibly can off us, and if we're screwed its not their problem.

I've had a number of bank accounts with Ulster Bank for over three decades, and they've consistently hit me for fees that shouldn't be applied to my bank accounts. Only for that i check my accounts I would have paid them quite a bit of money over the years.

But its really over the last two years that its really gotten really bad. I went traveling, and asked them to place a block on my account, and to remove my overdraft facility. They confirmed it with me, and then 6 months later while i was completely out of contact, they started posting letters of demand for payment to my address. They had continued to deduct from my bank account even though the facility had been canceled. So I rang them from China, tried to fix the problem since their records showed no stopping of the facility. I paid the due amount, and again requested that it be cancelled. They assured me that it was canceled, and off i went. I told them i would be out of contact by post and gave them an email address and asked if they would send me notifications of problems. Of course we will, they said. 1 month later, I received a call from my parents who had collected my mail, and they told me there was a final demand for outstanding money, and that my name was to be listed as a bad debtor...

I managed to fix it once more, and it was only because i paid a solicitor to close the bank accounts, that this didn't happen again. They wouldn't allow me to close the accounts over the phone or by post. I had to come in person. I left one bank account open a current account which my mortgage payments go through. Know what happened? They closed that bank account without notifying me, and my mortgage repayments bounced back to my tenants accounts for 1 month. And even then they demanded fees off me.

I hate the lot of them. Greedy bastards.

gurramok

Deleted User wrote:

We HAVE to be responsible for our finances simply because the banks are not our friends. They're out to get whatever profit they possibly can off us, and if we're screwed its not their problem.

Well said. That should be on every child's curriculum in the schools right now to warn the next generation.

Senna

Deleted User wrote: »

I've had a number of bank accounts with Ulster Bank for over three decades, and they've consistently hit me for fees that shouldn't be applied to my bank accounts. Only for that i check my accounts I would have paid them quite a bit of money over the years.

Why didn't you change from them in the 3 decades that they were mischarging your accounts?

There is/was no shortage of banks and most were giving incentives to change. There is not much point complaining on here after the fact, while during your time with UB you knew they were making mistakes.

keystone

Fighting Irish wrote: »

you and you alone should be responsible for your finances

Example:
Some chick on newstalk this morning was giving out about banks because she re-mortgaged her house a few years back and now her and the husband have lost their jobs and the bank wants to take the house in 6 months or something and its the banks fault?

I haven't read the thread fully.......tell me if they should have gotten a mortgage.......?????

Banks gave money for nothing......i.e. to people who couldn't afford it.........surely that isn't right.....the personal responsibility argument is bull if the bank was wrong to offer the credit.

I await the abuse I may get and to be honest I wont read it.......it means nothing to me........

woodseb

Darragh29 wrote: »

That's one way of making sure that we NEVER end up in this situation again. Bring in legislation that means the bank cannot repossess a house if you default. That would sort out the reckless lending that has been going on in recent years. They wouldn't be so quick to throw money at people if this was the case...

that's one of the most ridicolous statements i've read on here...and i think you've answered why in the last sentence. Do you extend your sentiments to developers aswell seeing as the banks threw money at them too?

everybody need to take blame for this the borrowers and the lenders, the banks should stress test the loans more for bad times and borrowers should also act responsibly and not borrow beyond their means. Both parties were taking a bet on house prices. It should also be noted that there was widespread use of misinformation in mortgage applications from borrowers such as inflating salaries and borrowing for the deposit elsewhere

K-9

keystone wrote: »

I await the abuse I may get and to be honest I wont read it.......it means nothing to me........

YEP, people did that with Mortgage contracts.

DARKIZE

Darragh29 wrote: »

HORSE SH*T. We, the people paying the excessive banking charges, the insane mortgages, the stupid interest rates, are the people who have been paying for this, not the shareholders or the TD's.

Stupid in what way ? Credit has probably never been so cheap as it was in the last 10 years, and that fuelled the property prices and mortgage debt in the country. Yes by all means, government and the banking industry have a huge mismanagement case to answer, but you can't absolve people entirely of responsibility for their own financial affairs.