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Defaulting on a Buy To Let mortgage. What would happen?

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    #62
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    Snakeblood wrote: »
    But they lent to someone who can pay it back. Your friend just doesn't want to.

    Indeed. And if the potential exists that someone won't want to pay back then you are engaged in risky business. Or gambling as it is known.

    Lending money is risky business for all kinds of reasons..


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    #63
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    D3PO wrote: »
    you seem to think its the government and banks who fueled the boom. Whilst they played their part it was the greed of your friend and other borrow to let people that were the main cause.

    That doesn't appear to be the view that has emerged. Irresponsible lending practices and 'innovative' lending products designed to ensure the fire was kept burning seems to have been primary local stimulant. Behind that you have the availability of cheap money globally (hence the global nature of the meltdown). Added to that you have poor governance which allowed the banks to proceed recklessly.


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    #64
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    antiskeptic wrote: »
    Indeed. And if the potential exists that someone won't want to pay back then you are engaged in risky business. Or gambling as it is known.
    This is a hopeless line of argument. If you run a corner shop, people will come in and steal razor blades and batteries and whatever else. But I suppose it is right that these greedy corner shop people should pay for this and not the unfortunate thieves who do not want to pay, seeing as they are in a risky business (because people might not want to pay). :rolleyes:


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    #65
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    dearg lady wrote: »
    The only 'gamble' I can see from the banks point of view is whether or not the individual they loan money to can repay it, and evidently he can.

    The other gamble the bank took was whether my friend would want to repay. Since he considers them part-responsible for the state he finds himself in he doesn't want, in part to pay them back.

    I can't see where the State has gambled at all. t was a private transaction between your friend and 2 banks

    The State gambled in that it allowed a bubble to expand (because of the benefits it thought would accrue to it, the State). In allowing a bubble to expand you expose the population (and the bankers) to 'bubble mentality' or false optimism.

    It's the States job to regulate human nature to a degree, for it's own protection. This they failed to do.


    The risk for your friend is that he may lose money on his investment. He has. suck it up. You keep bringing up the morality of the situation, which is just bizarre, the only immorality would be if your friend allowed others to pay for his mistake.

    The others being the banks and the state.


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    #66
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    Monty Burnz wrote: »
    This is a hopeless line of argument. If you run a corner shop, people will come in and steal razor blades and batteries and whatever else. But I suppose it is right that these greedy corner shop people should pay for this and not the unfortunate thieves who do not want to pay, seeing as they are in a risky business (because people might not want to pay). :rolleyes:

    That's a hopeless analogy. Try one that involves giving something away in the hope of a return. Like putting a down payment on a buy-to-let for example

    :)


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    #67
    dearg lady
    Closed Accounts Posts: 2,091 ✭✭✭dearg lady


    antiskeptic wrote: »
    The other gamble the bank took was whether my friend would want to repay. Since he considers them part-responsible for the state he finds himself in he doesn't want, in part to pay them back.

    In your opinion only, Thankfully there is law in place to enforce soemone paying after they decide they just can't be bothered.

    antiskeptic wrote: »
    The State gambled in that it allowed a bubble to expand (because of the benefits it thought would accrue to it, the State). In allowing a bubble to expand you expose the population (and the bankers) to 'bubble mentality' or false optimism.

    The state gambled in a more overall sense, but on this specific deal? no!
    antiskeptic wrote: »
    It's the States job to regulate human nature to a degree, for it's own protection. This they failed to do.
    There are some instances where the state attempts to regulate human nature, they don't seem to work, they're terrible policies, and no way would I advocate further attempts to do this.

    antiskeptic wrote: »

    The others being the banks and the state.

    ie the taxpayer


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    #68
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    antiskeptic wrote: »
    That's a hopeless analogy. Try one that involves giving something away in the hope of a return. Like putting a down payment on a buy-to-let for example
    I don't think you understand how this stuff works. The bank doesn't give something away when it lends money - it gets a contract for payment in return.


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    #69
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    antiskeptic wrote: »
    The issue isn't legal responsibility, it's moral responsibility. When it comes to legal responsibility you engage in a game and you attempt to win it by whatever legal means are open to you.

    As for moral responsibility? The total would be 170 split 70 my mate / 100 to Bank & State.

    The State have their own culpability in allowing a situation to arise where the Banks could lend recklessly. Then there is the State taking over the responsibility that used to belong to the Bank. Which is the States affair, not my mates.

    just no

    whatever about the crazy argument for the state to help home owners there is no way in hell that the state is responsible to investors


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    #70
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    dearg lady wrote: »
    In your opinion only, Thankfully there is law in place to enforce soemone paying after they decide they just can't be bothered.

    That's going back to the legal side of things (perhaps there are means whereby one can legally dodge the bullet to an extent - eg: by transferring assets out of your name prior to defaulting).

    I was speaking on the moral side of things.



    The state gambled in a more overall sense, but on this specific deal? no!

    When it gambled on the whole it gambled on the constituent parts.

    The drink driver didn't intend to knock that that specific person but the moral law holds him culpable for his overall risk taking.


    There are some instances where the state attempts to regulate human nature, they don't seem to work, they're terrible policies, and no way would I advocate further attempts to do this.

    Be that as it may, the State sets itself up in that role. It regulates our behaviour in all kinds of ways for the protection of ourselves and others. And having set itself up in that role it pays the price for it's failure in that regard.
    ie the taxpayer

    ..who voted for a system of government that operates as it does and takes the decisions that it does.


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    #71
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    Tigger wrote: »
    whatever about the crazy argument for the state to help home owners there is no way in hell that the state is responsible to investors

    Not responsible. Part-responsible. It failed in the duty it had to protect consumers from rampant bankers (and themselves). It is only the State that could regulate bank practices and it failed to do so.

    Why would you see it as having no responsibility at all?


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    #72
    James.
    Closed Accounts Posts: 144 ✭✭James.


    if the price of property had gone up would your friend share the profits with me ?

    no, of course not.

    so why should i have to help him pay for the losses ?


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    #73
    dearg lady
    Closed Accounts Posts: 2,091 ✭✭✭dearg lady


    antiskeptic wrote: »
    That's going back to the legal side of things (perhaps there are means whereby one can legally dodge the bullet to an extent - eg: by transferring assets out of your name prior to defaulting).

    I was speaking on the moral side of things.






    When it gambled on the whole it gambled on the constituent parts.

    The drink driver didn't intend to knock that that specific person but the moral law holds him culpable for his overall risk taking.





    Be that as it may, the State sets itself up in that role. It regulates our behaviour in all kinds of ways for the protection of ourselves and others. And having set itself up in that role it pays the price for it's failure in that regard.



    ..who voted for a system of government that operates as it does and takes the decisions that it does.


    This seems tto be going in circles, and I don't think there's anything more that I can add that I haven't already said.

    My personal opinion is that as your friend can make repayments he should continue to do so.
    I don't know if there is a legal loophole to get him out of it, but I really hope not.


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    #74
    antiskeptic
    Registered Users Posts: 9,555 ✭✭✭antiskeptic


    James. wrote: »
    if the price of property had gone up would your friend share the profits with me ?

    By way of taxes and capital gain yes. Just like the banks would have shared some of their gain with you by ways of taxes.

    ..so why should i have to help him pay for the losses ?

    a) because the banks should share in his loss on account of their dodgy practices and your government, in it's wisdom decided to take over bank losses transferring the onus from the private sector to you.

    b) because your government assisted in the losses occurring.


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    #75
    Ray Palmer
    Registered Users Posts: 8,394 ✭✭✭Ray Palmer


    antiskeptic wrote: »
    I'm supposing his view to be that he borrowed money from a private sector bank and that his dealings are with a private sector bank. That the taxpayer (or State, on the taxpayers behalf) decided to undergird the banks is the taxpayers affair.

    Regarding the morality of the situation?

    As outlined in my OP, there are a number of parties involved in blowing up the bubble wherein this state of affairs came about:

    1) My Mate

    2) The Banks

    3) The State

    4) The Other Vested Interests.

    None of the others took out a mortgage in your friends name using his assets as security. He did it to himself at worst they allowed him do it the whole time warning him of risks.

    While you think it is fair enough for him to try and wriggle out of it you'll be hard pushed to see anybody agree with that. It was an investment which failed why should anybody cover his gamble other than him? Cos they let him seem to be your defense. It was foolish everybody knew investement in property had become high risk when he bought. The bank secured it against an asset so they wouldn't lose.


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    #76
    dearg lady
    Closed Accounts Posts: 2,091 ✭✭✭dearg lady


    antiskeptic wrote: »
    By way of taxes and capital gain yes. Just like the banks would have shared some of their gain with you by ways of taxes.
    ok, I'm back, I find this a very interesting point. I still don't agree but I can see where you're coming from. Now, even if it were the case that losses were to be shared on this basis, ie profit 100,000, CGT to taxpayer pool 25,000, then the loss to be shared to the paxpayer would 25%of the 180,000 ie 45,000.
    So how would you explain the much higher hit your friend wants the taxpayer(bank+state) to take?


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    #77
    James.
    Closed Accounts Posts: 144 ✭✭James.


    so basically your friend wants to make a bet where he cant lose ?

    if the price goes up he makes a nice profit but if the price goes down he doesnt lose ?

    thats not the way gambling or investing works.

    you have to be willing to accept the loss if the investment doesnt work, thats the risk you take, thats the deal you signed up for


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    #78
    JazzyJ
    Registered Users Posts: 683 ✭✭✭JazzyJ


    antiskeptic wrote: »
    I was just chatting to him now to clarify details. Turns out he went to the bank and when they asked how much he was bringing to the party he said "nothing - I've not got a penny" (he'd laid a 5 grand deposit down with the developer at that stage)

    The woman in the bank balked a bit and said the max they could offer was 191k and that he'd have to find the rest elsewhere whereupon he took out a top up mortgage on his house (after being given the name of "the right person to talk to" in his own mortgage company by his accountant). He gets the top up mortgage, heads back to the primary lender and they okay the 191K.

    Poor selling indeed!

    So if I'm reading this right the most the bank would give him was 191k, and he got the other 70k from somewhere else (supposedly for an extension!) Did either lender know about the other? Presumably the latter didn't!

    Not really poor selling - more like manipulation of the lenders to get mortgages above their means.

    No sympathy here.


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    #79
    Monty Burnz
    Closed Accounts Posts: 12,455 ✭✭✭✭Monty Burnz


    antiskeptic wrote: »
    By way of taxes and capital gain yes.
    Again, nonsense. Capital gains tax is charged at 25% of profit. I doubt that your buddy, full of high morals, would have happily given away 100% of any profits on his property gamble. :rolleyes:


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    #80
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    antiskeptic wrote: »
    Not responsible. Part-responsible. It failed in the duty it had to protect consumers from rampant bankers (and themselves). It is only the State that could regulate bank practices and it failed to do so.

    Why would you see it as having no responsibility at all?

    because there is no clause or cause in modern soceity for investors to be protected


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    #81
    nhunter100
    Closed Accounts Posts: 4,990 ✭✭✭nhunter100


    Tigger wrote: »
    antiskeptic wrote: »
    Not responsible. Part-responsible. It failed in the duty it had to protect consumers from rampant bankers (and themselves). It is only the State that could regulate bank practices and it failed to do so.

    Why would you see it as having no responsibility at all?

    because there is no clause or cause in modern soceity for investors to be protected
    Your friend made a gamble sadly for him it did not work out,but I don't see after reading some of your posts why he feels he is not liable for his debts but the state ie the taxpayer is more cupable than him.Both gim and you need to cop on and address his problem and it is his problem not the state or the already put upon taxpayer.If he placed a bet in a book makers and lost would he expect the state to cover his loss,doubt it somehow so why does he feel this gamble is different


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