Writing off mortgage debt

Monty Burnz

Tigerandahalf wrote: »

I think a lot of people here are seeing the issue as black or white and that those who bought a house that was overpriced and cant pay should be punished. It is in the interets of the country that people are unshackled from their debt. We need people to be spending their money and not worrying that they are going to be turfed out on the street. What will allowing ordinary people go bankrupt achieve?

To be spending whose money? Money taxed from other people who wanted to spend it on their own stuff rather than on your house?

daltonmd

Deleted User wrote: »

If someone rents a place they cant afford surely it makes sense for people to stay in their homes until the economy has picked up etc

No? Is it different for renters?

Question:

What is Rent Supplement.

daltonmd

Monty Burnz wrote: »

To be spending whose money? Money taxed from other people who wanted to spend it on their own stuff rather than on your house?

So let me ask you monty - if the banks repossessed every home in trouble how do you see it playing out?

Monty Burnz

daltonmd wrote: »

So let me ask you monty - if the banks repossessed every home in trouble how do you see it playing out?

It depends on how many mortgages cannot be restructured - the hopeless cases. But you seem to forget that it is the loans that are the banks' assets, not the properties, so falling property prices do not necessarily entail further recapitalisations.

daltonmd

Monty Burnz wrote: »

It depends on how many mortgages cannot be restructured - the hopeless cases.

That's the big question.

Monty Burnz wrote: »

But you seem to forget that it is the loans that are the banks' assets, not the properties, so falling property prices do not necessarily entail further recapitalisations.

But if the "assets" are non performing and the collatoral on which the loans were issued, worth far less than the loan?

If the mortgage crisis continues and more and more loans become troubled or non performing then this means that the banks will need further injections from the taxpayer - that to me is inevitable.

Tigerandahalf

People bought these properties at inflated prices. Wages are decreasing and taxes/charges are going up. Thus very simply all of the mortgages are not going to be repaid in full. Some people are pissed about that but it is reality. The only question is how the debt writeoff will be shared out. Whether there are mass repossessions or not there will be debt writeoff.
The problem is how do you make people pay their fair share? Bankrupt the owner, repossess and sell the house again - you still end up with a writeoff. You then have to put up the family in rented accommodation, incurring extra costs and causing an uproar with children having to move schools perhaps, etc. If new legislation comes in the person is free again after 3/4 years.
Alternative - Keep the person in the house and appraise their situation to see if they can afford to pay, taking income etc into account and hope that as the economy gradually improves their ability to repay improves. This means that you don't have a heap of property on the market and it lessens the fallout.
However, it is very hard to manage the situation no matter what options you take. It is a lot easier for the gov to stall the process as taking any action is going to piss off a certain section of the people. You can't win.

Monty Burnz

Tigerandahalf wrote: »

People bought these properties at inflated prices. Wages are decreasing and taxes/charges are going up. Thus very simply all of the mortgages are not going to be repaid in full. Some people are pissed about that but it is reality.

Yes. Ideally it will be the people who don't pay back their mortgages and have to surrender the properties they are not paying for who are pissed off - there will be a lot fewer of them than the hundreds of thousands of people you suggest robbing to pay their mortgages.

Tigerandahalf wrote: »

The only question is how the debt writeoff will be shared out. Whether there are mass repossessions or not there will be debt writeoff. The problem is how do you make people pay their fair share? Bankrupt the owner, repossess and sell the house again - you still end up with a writeoff.

I've no particular problem with people going bust if they cannot pay their way. Let them go bankrupt and have their debt burden wiped out, allowing them a fresh start. Of course, their big assets will have to go.

Tigerandahalf wrote: »

You then have to put up the family in rented accommodation, incurring extra costs and causing an uproar with children having to move schools perhaps, etc.

Why can't they put themselves up in rented accommodation, like...oh I don't know...renters do? It's not rocket science. The country is full of empty houses as it is. There's a couple of hundred thousand of them.

Tigerandahalf wrote: »

If new legislation comes in the person is free again after 3/4 years.
Alternative - Keep the person in the house and appraise their situation to see if they can afford to pay, taking income etc into account and hope that as the economy gradually improves their ability to repay improves. This means that you don't have a heap of property on the market and it lessens the fallout.

Why would we not want property on the market? Do you think the cure is higher property prices?? That's the f*cking disease! I've a better idea: if you can't pay your mortgage, you move into a property that you CAN afford. It's fair, it's easily implemented, and it minimises messing with the market.

Tigerandahalf wrote: »

However, it is very hard to manage the situation no matter what options you take. It is a lot easier for the gov to stall the process as taking any action is going to piss off a certain section of the people. You can't win.

Well they've stalled for years already, and all their efforts to keep people in 'their' homes and prop up prices have cost us tens of billions already. Meanwhile there's another generation of people coming who may never get a chance to buy houses they CAN afford because they are being occupied by people who CAN'T afford them but are somehow allowed to stay in them.

Eoghan25

I am finding alot of comments on this that the people who bought in the boom where living it up Champagne Charlies 8 holidays year looking down there noses at everyone...realistically a huge proportion of people worst affected where first time buyers who where young there first finicial move who where naive + influenced by according leading expert economist. Most of the people that i know where staying in scrimping and saving as of there 'last chance' to get on the ladder. But ok a foolish decision you make your bed and you lie in.
But realistically we bailed out the banks because in order to have stable economy you need banking system. In order to have stable economy you also have to have a incentive to work. The incentive to work for alot of people is starting to go who are hugely in negative equity which huge proportion of the population. Why go to work if your going spend the next 15 + years working in stressful jobs trying to get to a stage where your back ready to start again. Why wouldnt a person take the view ok give up work declare bankruptcy get housed by the goverment and in 12 yrs time start again?? Lose Lose situation for the tax payer your paying to hold up the banks with bad debts and now paying for another person on the social system.

Tigerandahalf

@ Monty I take it you are a renter and are waiting hoping for a great deal. That's fine, just be careful where you pick.
Ok so a lot here are saying the banks should foreclose and sell the property. Fine, aren't we the ones who are going to have to make up the writeoff/loss on the house. And we'll have to pay for it right now if every house is repossessed and put on the market as the banks will be bust. Obviously some people want that because they want to get a house for a bargain, yet for that bargain the ordinary person is having to make up the difference in paying for the writeoff.

If people are allowed to start afresh by going bankrupt, wouldn't every homeowner do this if they were free again after 3/4 years. Since most people have no assets other than their wage and house you can't seize any other assets thus they would gladly go down this route.

Monty Burnz

Eoghan25 wrote: »

I am finding alot of comments on this that the people who bought in the boom where living it up Champagne Charlies 8 holidays year looking down there noses at everyone...realistically a huge proportion of people worst affected where first time buyers who where young there first finicial move who where naive + influenced by according leading expert economist. Most of the people that i know where staying in scrimping and saving as of there 'last chance' to get on the ladder. But ok a foolish decision you make your bed and you lie in.

Of course, many (most?) people were not motivated by greed - but they made a big mistake and as you say they need to deal with it.

Eoghan25 wrote: »

But realistically we bailed out the banks because in order to have stable economy you need banking system. In order to have stable economy you also have to have a incentive to work. The incentive to work for alot of people is starting to go who are hugely in negative equity which huge proportion of the population. Why go to work if your going spend the next 15 + years working in stressful jobs trying to get to a stage where your back ready to start again. Why wouldnt a person take the view ok give up work declare bankruptcy get housed by the goverment and in 12 yrs time start again?? Lose Lose situation for the tax payer your paying to hold up the banks with bad debts and now paying for another person on the social system.

Well bankruptcy reform will see the 12-year system go out the window - not before time. But I'm not sure if renters and the next generation of first-time buyers have an incentive to work either if people who are not paying their mortgages are occupying the houses that they should be able to afford but can't buy...

Monty Burnz

Tigerandahalf wrote: »

@ Monty I take it you are a renter and are waiting hoping for a great deal. That's fine, just be careful where you pick.
Ok so a lot here are saying the banks should foreclose and sell the property. Fine, aren't we the ones who are going to have to make up the writeoff/loss on the house. And we'll have to pay for it right now if every house is repossessed and put on the market as the banks will be bust. Obviously some people want that because they want to get a house for a bargain, yet for that bargain the ordinary person is having to make up the difference in paying for the writeoff.

I am renting but I'm not in the market at least until the medium term so I'm neutral enough on this question - but of course everybody has some manner of vested interest. My parents and family members own property.

The banks won't go bust if houses are repossessed. You are going to have to flesh out this argument if you want us to accept it - what level of repossessions are you talking about, what kind of losses are implied for the banks, to what extent losses can be mitigated by guarantors and so forth. The banks already have billions on their balance sheets to absorb the actual losses incurred. So give us some numbers to work with and we can test your claim.

Tigerandahalf wrote: »

If people are allowed to start afresh by going bankrupt, wouldn't every homeowner do this if they were free again after 3/4 years. Since most people have no assets other than their wage and house you can't seize any other assets thus they would gladly go down this route.

You can only go bankrupt if you can't pay your debts. You can't just declare bankruptcy if you don't feel like paying your debts.

Tigerandahalf

Monty there are plenty houses out there for you to buy. You just seem to want to make a killing when some lad is flogged out of his house and you can pick it up for a bargain. Who do you think is going to make up the difference? The taxpayer.

Reading through the posts here it is easy to see why it is very difficult to find a solution. When you suggest one solution another man/woman pops up and states 'that's not fair on me.'

Similarly you have the people who saved or had a nest egg and paid a large deposit down on their house so their mortgage is a lot less. Again they are crying that they are losing out while their neighbour is getting relief. Well maybe you shouldn't have put down such a large deposit. I know that logic sucks but hey no matter what is suggested someone is losing out. If the gov tackle this they will face a certain group in the election who will vote them out.

So what do you do?
I still think people should be left in their house. If they don't pay or can't pay they should be assessed by their bank and an appraisal of their ability to pay laid out. Legislation may be needed to force the person to pay over a certain amount of their wage/dole.

Monty Burnz

Tigerandahalf wrote: »

Monty there are plenty houses out there for you to buy. You just seem to want to make a killing when some lad is flogged out of his house and you can pick it up for a bargain.

What do you mean, 'make a killing'? Do you still have the idea that a property is a profit centre? The Celtic Bubble attitude is alive and well I see.

You, conversely, are happy to see people who never even had the chance to buy stuck in crappy rented houses paying extortionate rates of rent for the rest of their lives - is that it? Just to protect people who bought things they can't afford?

Tigerandahalf wrote: »

So what do you do?
I still think people should be left in their house.

And I think this is the most unfair solution of all - forcing renters to subsidise people to live in houses that they can never afford themselves. Ridiculous.

Tigerandahalf

If you don't like the place you are renting Monty leave the place. There are plenty other places available to rent. And why are you paying high rent?
There is undoubtedly great value out there now with certain properties. Some people are unrealistic and expecting to pick up a gem of a property for nothing. As we have seen from the fire sale auctions good properties are still in demand and can be paid for as we have seen some places selling for well above the reserve price. Crap places haven't sold as you would expect.

votecounts

This mortgage debt forgiveness idea is a joke and is one that is being peddled by the government to keep voters on side. If it was as straight forward as people buying a "home" for themselves i might have some sympathy but it was not, people got huge mortgages in the hope of making a killing down the line, ie the Kellys, etcThey gambled and they must pay up. So unless you fancy paying more taxes in to the banks so they can cover these gamblers, show this idea the door.

Monty Burnz

Tigerandahalf wrote: »

If you don't like the place you are renting Monty leave the place. There are plenty other places available to rent. And why are you paying high rent?

Because you have to pay market rent. Same as buyers of houses pay market prices. Why did bubble buyers pay so much for their houses? Why didn't they just pay less? And people who are stuck in unsuitable houses due to negative equity - why didn't they just by suitable places? :rolleyes:

Tigerandahalf wrote: »

There is undoubtedly great value out there now with certain properties. Some people are unrealistic and expecting to pick up a gem of a property for nothing. As we have seen from the fire sale auctions good properties are still in demand and can be paid for as we have seen some places selling for well above the reserve price. Crap places haven't sold as you would expect.

I don't see the value that you do. Just because prices have halved, it doesn't mean that there is value. If I offered you a Mars bar for €50 and cut it to €25, would it be good value?

Tigerandahalf

It costs so much to buy land and build a house so a property has to have a minimum value. Expecting prices to drop below a certain value is unrealistic. Just as much as prices can become overvalued they can also become undervalued.
Some people are holding out hope that they get a real bargain but if you do you have to remember who could be your neighbour? Buying a house for a knock down price may seem like a steal but if your neighbour is a nightmare it isn't much good. Similarly if an investor buys up the property next to you and you have every Tom, Dick and Harry renting it. So you have to be careful. The price isn't everything.

Monty Burnz

Tigerandahalf wrote: »

It costs so much to buy land and build a house so a property has to have a minimum value. Expecting prices to drop below a certain value is unrealistic.

This is a misconception. Things can certainly fall to below the input costs required to make them - think about it for a minute.

Tigerandahalf wrote: »

Just as much as prices can become overvalued they can also become undervalued.
Some people are holding out hope that they get a real bargain but if you do you have to remember who could be your neighbour? Buying a house for a knock down price may seem like a steal but if your neighbour is a nightmare it isn't much good. Similarly if an investor buys up the property next to you and you have every Tom, Dick and Harry renting it. So you have to be careful. The price isn't everything.

I'm not holding out for a bargain. If I needed a house today I would buy one. You've got to get out of your head this strange competitive thing where people are trying to out-do each other with property - we surely had enough of that during the bubble as people over-borrowed to outbid each other.

Tigerandahalf

It is not in my head. But it certainly is in others. All you have to do is look at the crowds who turned up for the initial fire sales of property all hoping to get a bargain.
If you look at Dublin I don't think prices will fall. They could even increase. Certainly rents will as more workers get jobs with the likes of the Technology companies announcing jobs. So buying in Dublin represents value. Prices won't go down.

daltonmd

Monty Burnz wrote: »

Yes. Ideally it will be the people who don't pay back their mortgages and have to surrender the properties they are not paying for who are pissed off - there will be a lot fewer of them than the hundreds of thousands of people you suggest robbing to pay their mortgages.

You mean paying back the banks assets don't you?

Monty Burnz wrote: »

I've no particular problem with people going bust if they cannot pay their way. Let them go bankrupt and have their debt burden wiped out, allowing them a fresh start. Of course, their big assets will have to go.

Which will happen - yet you cannot see the problems that this will cause can you? Once the bankruptcy law comes in there will be 1000's queueing up and the banks will all but collapse - of course then the government will have to inject (or rob) taxpayers again to keep them open. Same ending really isn't it?

Monty Burnz wrote: »

Why can't they put themselves up in rented accommodation, like...oh I don't know...renters do? It's not rocket science. The country is full of empty houses as it is. There's a couple of hundred thousand of them.

Which is a fine solution - no-one said it wasnt but their debt is still wiped and the taxpayer still pays.

Monty Burnz wrote: »

Why would we not want property on the market? Do you think the cure is higher property prices?? That's the f*cking disease! I've a better idea: if you can't pay your mortgage, you move into a property that you CAN afford. It's fair, it's easily implemented, and it minimises messing with the market.

But what if the property you are in is now worth 150k (instead of 300k) and they can afford that? What then?

Monty Burnz wrote: »

Well they've stalled for years already, and all their efforts to keep people in 'their' homes and prop up prices have cost us tens of billions already. Meanwhile there's another generation of people coming who may never get a chance to buy houses they CAN afford because they are being occupied by people who CAN'T afford them but are somehow allowed to stay in them.

They've been propped up to save the banks - not the taxpayer - always rememeber that.

CamperMan

at the end of the day, people signed on the dotted line for the finance, and they should pay for it.... not the tax payer!

daltonmd

Monty Burnz wrote: »

The banks won't go bust if houses are repossessed. You are going to have to flesh out this argument if you want us to accept it - what level of repossessions are you talking about, what kind of losses are implied for the banks, to what extent losses can be mitigated by guarantors and so forth. The banks already have billions on their balance sheets to absorb the actual losses incurred. So give us some numbers to work with and we can test your claim.

Why don't you give us your numbers?

Monty Burnz

Tigerandahalf wrote: »

It is not in my head. But it certainly is in others. All you have to do is look at the crowds who turned up for the initial fire sales of property all hoping to get a bargain.
If you look at Dublin I don't think prices will fall. They could even increase. Certainly rents will as more workers get jobs with the likes of the Technology companies announcing jobs. So buying in Dublin represents value. Prices won't go down.

I don't mean to be rude, but do you have any track record on making predictions about future property price movements? Did you get it right before?

If I search your posts, I won't find previous incorrect predictions along these lines?

Monty Burnz

daltonmd wrote: »

Why don't you give us your numbers?

Because I'm not the one making the claim. If I do sit down to work them out myself, it would be a few hours worth of work and I'm not sure that the effort would be appreciated here.

Monty Burnz

daltonmd wrote: »

Which is a fine solution - no-one said it wasnt but their debt is still wiped and the taxpayer still pays.

Sorry not to address all your points, I'm doing a few things here - but I'll pick you up on this one: how much does 'keeping people in their :rolleyes: homes' cost us over the next 20 years? Are we pretending that this isn't also costing us billions?

Unrealistic

Tigerandahalf wrote: »

@ Monty I take it you are a renter and are waiting hoping for a great deal. That's fine, just be careful where you pick.
Ok so a lot here are saying the banks should foreclose and sell the property. Fine, aren't we the ones who are going to have to make up the writeoff/loss on the house. And we'll have to pay for it right now if every house is repossessed and put on the market as the banks will be bust. Obviously some people want that because they want to get a house for a bargain, yet for that bargain the ordinary person is having to make up the difference in paying for the writeoff.

I'm an owner rather than a renter and I would still argue along the same line as Monty, not because I want to pick up a bargain, but because it is the right thing to do. If there are two possible options; 1) just give mortgage holders a gift and write off part of their outstanding debt while leaving them in the house and 2) implement a proper insolvency procedure that has debt written off only after assets have been liquidated; then it is pretty clear which option is going to cost the average tax payer less. If the solution involves losing the house then only those who are really need to avail of it will avail of it. If it's a handout then every Tom, Dick and Harry will be lobbying their TD to get included on the list.

Tigerandahalf wrote: »

If people are allowed to start afresh by going bankrupt, wouldn't every homeowner do this if they were free again after 3/4 years. Since most people have no assets other than their wage and house you can't seize any other assets thus they would gladly go down this route.

What do you mean you can't seize any other assets? The way this works in the UK you lose your house and you lose any car worth over £1,500 and you live a pretty frugal life for a year or two before getting to start again from zero. We'll know more about how the Irish version will work when the bill is published (very soon) but early predictions are that it's implementation could lead to 30,000 repossessions in cases where mortgages are unsustainable.

Tigerandahalf

If you go after assets you are going to create a whole new problem. Some people who have businesses or farms would have a lot more to lose than someone who has even the TV on direct debit. The car wouldn't even be an asset as it is on a HP agreement.

Monty Burnz

Tigerandahalf wrote: »

If you go after assets you are going to create a whole new problem. Some people who have businesses or farms would have a lot more to lose than someone who has even the TV on direct debit. The car wouldn't even be an asset as it is on a HP agreement.

Are you suggesting that bankruptcy as in the UK can't work? Because it works in the UK...

MysticalRain

Tigerandahalf wrote: »

It is not in my head. But it certainly is in others. All you have to do is look at the crowds who turned up for the initial fire sales of property all hoping to get a bargain.
If you look at Dublin I don't think prices will fall. They could even increase. Certainly rents will as more workers get jobs with the likes of the Technology companies announcing jobs. So buying in Dublin represents value. Prices won't go down.

You really don't get it, do you? What many people in this country still don't realize is that properties prices still have a long way to go before the reach something approaching a normal market value.

They tech sector is doing well at the moment, sure. But tech workers represent a relatively small proportion of the over all workforce. it's not like the construction sector at it's peak where about 25% workforce was making a living from in it.

Tigerandahalf

While FG are in gov assets being targeted will be unlikely. FG are a farmers and small business party.

Tigerandahalf

MysticalRain wrote: »

Tigerandahalf wrote: »

It is not in my head. But it certainly is in others. All you have to do is look at the crowds who turned up for the initial fire sales of property all hoping to get a bargain.
If you look at Dublin I don't think prices will fall. They could even increase. Certainly rents will as more workers get jobs with the likes of the Technology companies announcing jobs. So buying in Dublin represents value. Prices won't go down.

You really don't get it, do you? What many people in this country still don't realize is that properties prices still have a long way to go before the reach something approaching a normal market value.

They tech sector is doing well at the moment, sure. But tech workers represent a relatively small proportion of the over all workforce. it's not like the construction sector at it's peak where about 25% workforce was making a living from in it.

Why do you think prices will fall by much more in Dublin. Many workers have seen no paycuts and some have had increases. I dont see prices falling much in Dublin if at all. Maybe poor apartments will but decent houses in good locations are unlikely to because buyers know they are good value and likely to increase in the medium term.

Monty Burnz

Tigerandahalf wrote: »

While FG are in gov assets being targeted will be unlikely. FG are a farmers and small business party.

It's not a question of 'targeting assets'. If you go bankrupt, you have to surrender valuable assets that you have. It's as simple as that. You can't have bankruptcy without it - how would that work?

Monty Burnz

Tigerandahalf wrote: »

Why do you think prices will fall by much more in Dublin. Many workers have seen no paycuts and some have had increases. I dont see prices falling much in Dublin if at all. Maybe poor apartments will but decent houses in good locations are unlikely to because buyers know they are good value and likely to increase in the medium term.

How are they good value? You realise that we are facing another (at least) 4 austerity budgets where another 16 billion odd euro will be cut from public spending, a cut of 30% or more?

MysticalRain

Tigerandahalf wrote: »

Why do you think prices will fall by much more in Dublin. Many workers have seen no paycuts and some have had increases. I dont see prices falling much in Dublin if at all. Maybe poor apartments will but decent houses in good locations are unlikely to because buyers know they are good value and likely to increase in the medium term.

What you apparently consider "good value" is still to over-priced to many people. So long as the economic circumstances of this country continue to deteriorate, house prices will continue to drop in parallel with it.

Only is small handful of people in this country have not suffered any pay cut. A few may have had pay raises recently. But they are still a long ways off earning the kind of salary they obtained during the Celtic Tiger years.

There are about a million struggling to make ends meet, another 400,000 plus on the dole. At least another 100,000 who will be emigrating in the next few years. Plus the looming spector of a double dip recession, or further Euro zone crisis. The money just doesn't exist to pay over the odds for all these houses you are talking about.

_Kaiser_

OK my own view on this...


- Under no circumstances should anyone be "let off" a financial agreement they made of their own free will. No one dragged these people off the streets and forced them to sign mortgage agreements. Equally stupid is "the government made me do it" argument. These people were adults and had things not hit the fan, do you think they wouldn't be cashing in now??


- I have every sympathy for people who are (genuinely) struggling and certainly their creditors should be legally forced to negotiate realistic and manageable payment terms.. but that's it! If it takes them the rest of their lives to pay it, that's what they do!


- Equally they shouldn't be allowed stay in the house as tenants either. Sure why WOULD they pay the mortgage then? Have it repossessed and get it cheap(er) at the going rental rate.. with the added benefit that your landlord then presumably becomes responsible for maintenance etc - win win!
That'd be like me not being able to pay my car loan and the bank taking the car back.. but still letting me drive it to work and home every day??!


- I didn't buy a house/apartment - not because I'm some sort of Nostradamus-like economic god who could foresee the coming crisis, because sure.. I'd like to own a house too. The difference is I have always applied 3 criteria to this:

1. Something I can afford without crippling myself with monthly repayments

2. Somewhere I WANT to live (near friends/family, facilities, work etc) - not just because the bank will give me a mortgage.
I never saw the point in paying hundreds of thousands for a paper-thin shoe box apartment, or a similarly shoddily built semi-D with 300 like it in the middle of nowhere that it takes me 4 hours a day to get to/from.

3. I'll buy when the above 2 are true and when I'm good and ready. Like many others I too got the "rent is dead money" and "property ladder" crap from friends, but I don't have the particularly Irish need that I must own my own land/house I guess!


- What about everyone else? I have a loan (not a car loan but a loan nonetheless) that I've had trouble paying over the last few years due to unemployment/redundancy and changed personal circumstances.
Sure, I'd love someone to "write it off" too (and if mortgage holders get theirs written off then why not me?) but ultimately I took responsibility.. I swallowed my pride, called the bank, was upfront and honest about it all, and rearranged the terms (and to their credit they were very good about it).
It wasn't very nice for the oul self-esteem but I got on with it and when I got a new job and things improved a bit, I called them back and offered to pay a bit more.. not the same amount as originally no, but what I can realistically manage given my new circumstances.


As I say, I don't think myself anything special or "better" than anyone else because of this, but I really do think sometimes that I must have been the only one who was taught basic right and wrong, and that you pay your debts and live with the consequences of your decisions - it's called being an adult!

earlyevening

Monty Burnz wrote: »

How are they good value? You realise that we are facing another (at least) 4 austerity budgets where another 16 billion odd euro will be cut from public spending, a cut of 30% or more?

You seem to be thinking there'll be absolutely no growth in the economy in the next 4 years (very pessimistic) or no tax increases. Surely not.

It wont be all cuts to get to the 3% target.

Monty Burnz

earlyevening wrote: »

You seem to be thinking there'll be absolutely no growth in the economy in the next 4 years (very pessimistic) or no tax increases. Surely not.

It wont be all cuts to get to the 3% target.

I don't expect much (any?) growth, but yeah - of course there will be tax rises. The point was about money being taken out of the economy, and I was trying to keep things simple...

woodoo

Its starting to look like people are acting the goat in terms of repaying what they owe in the hope of some sort of mass debt forgiveness.

http://www.rte.ie/news/2012/0424/bank-of-ireland-indicates-more-job-losses-possible.html

He said that growing arrears in the bank's buy-to-let mortgage book is ''problematic''. He said that 500 staff are now working on arrears cases. He also said the bank is appointing rent receivers to landlords who hoard rent and do not give it to the bank.

I'd say that is the tip of the iceberg too. People just stopping paying in the hope that they will get some debt relief. I think they need to punish these sort of people severely if they can prove it.

hmmm

Tigerandahalf wrote: »

If you go after assets you are going to create a whole new problem. Some people who have businesses or farms would have a lot more to lose than someone who has even the TV on direct debit. The car wouldn't even be an asset as it is on a HP agreement.

So under your plan we're going to write off mortgage debt, allow the person to remain in their home and also retain all their assets? E.g. that couple in Killiney will live in their mansion, retain all their other properties and the taxpayer pays off their mortgages.

You've also mentioned several times that one of the problems in repossessing houses is that it may cause property prices in the local area to fall. Why do you think we should give two figs about that?

hmmm

woodoo wrote: »

People just stopping paying in the hope that they will get some debt relief. I think they need to punish these sort of people severely if they can prove it.

I think it's not even that. We have a government that keeps telling people "you won't lose your family home", so why would anyone make an effort to pay their mortgage? Just pay enough to keep the bank ticking over, ignore the odd letter asking for full repayment and enjoy the cheap housing. Ideally too you'd have a few investment properties, so you can enjoy threatening your tenants with eviction if they are a day late on rent.

Monty Burnz

hmmm wrote: »

I think it's not even that. We have a government that keeps telling people "you won't lose your family home", so why would anyone make an effort to pay their mortgage? Just pay enough to keep the bank ticking over, ignore the odd letter asking for full repayment and enjoy the cheap housing. Ideally too you'd have a few investment properties, so you can enjoy threatening your tenants with eviction if they are a day late on rent.

Crazy, crazy situation. I wonder how long they can keep all the plates spinning?

Tigerandahalf

hmmm wrote: »

Tigerandahalf wrote: »

If you go after assets you are going to create a whole new problem. Some people who have businesses or farms would have a lot more to lose than someone who has even the TV on direct debit. The car wouldn't even be an asset as it is on a HP agreement.

So under your plan we're going to write off mortgage debt, allow the person to remain in their home and also retain all their assets? E.g. that couple in Killiney will live in their mansion, retain all their other properties and the taxpayer pays off their mortgages.

You've also mentioned several times that one of the problems in repossessing houses is that it may cause property prices in the local area to fall. Why do you think we should give two figs about that?

You need to read the thread. I am only referring to people in a single primary residence. Not landlords.

Monty Burnz

Tigerandahalf wrote: »

You need to read the thread. I am only referring to people in a single primary residence. Not landlords.

What about renters who can't afford to pay their rent anymore?

jmayo

Tigerandahalf wrote: »

While FG are in gov assets being targeted will be unlikely. FG are a farmers and small business party.

And you think that the farmers and small business want to pay more tax, suffer more cuts so that some people who refuse to now pay the mortgages that they shoudl not have taken out can stay in their homes ?

Tigerandahalf wrote: »

Why do you think prices will fall by much more in Dublin. Many workers have seen no paycuts and some have had increases. I dont see prices falling much in Dublin if at all. Maybe poor apartments will but decent houses in good locations are unlikely to because buyers know they are good value and likely to increase in the medium term.

Yeah, just ignore all economic reality :rolleyes:
Good value ???
Oh yeah in comparison to what they were in 2006/2007. :rolleyes:

Kaiser2000 wrote: »

OK my own view on this...

- Under no circumstances should anyone be "let off" a financial agreement they made of their own free will. No one dragged these people off the streets and forced them to sign mortgage agreements. Equally stupid is "the government made me do it" argument. These people were adults and had things not hit the fan, do you think they wouldn't be cashing in now??

- I have every sympathy for people who are (genuinely) struggling and certainly their creditors should be legally forced to negotiate realistic and manageable payment terms.. but that's it! If it takes them the rest of their lives to pay it, that's what they do!

- Equally they shouldn't be allowed stay in the house as tenants either. Sure why WOULD they pay the mortgage then? Have it repossessed and get it cheap(er) at the going rental rate.. with the added benefit that your landlord then presumably becomes responsible for maintenance etc - win win!
That'd be like me not being able to pay my car loan and the bank taking the car back.. but still letting me drive it to work and home every day??!

- I didn't buy a house/apartment - not because I'm some sort of Nostradamus-like economic god who could foresee the coming crisis, because sure.. I'd like to own a house too. The difference is I have always applied 3 criteria to this:

1. Something I can afford without crippling myself with monthly repayments

2. Somewhere I WANT to live (near friends/family, facilities, work etc) - not just because the bank will give me a mortgage.
I never saw the point in paying hundreds of thousands for a paper-thin shoe box apartment, or a similarly shoddily built semi-D with 300 like it in the middle of nowhere that it takes me 4 hours a day to get to/from.

3. I'll buy when the above 2 are true and when I'm good and ready. Like many others I too got the "rent is dead money" and "property ladder" crap from friends, but I don't have the particularly Irish need that I must own my own land/house I guess!

- What about everyone else? I have a loan (not a car loan but a loan nonetheless) that I've had trouble paying over the last few years due to unemployment/redundancy and changed personal circumstances.
Sure, I'd love someone to "write it off" too (and if mortgage holders get theirs written off then why not me?) but ultimately I took responsibility.. I swallowed my pride, called the bank, was upfront and honest about it all, and rearranged the terms (and to their credit they were very good about it).
It wasn't very nice for the oul self-esteem but I got on with it and when I got a new job and things improved a bit, I called them back and offered to pay a bit more.. not the same amount as originally no, but what I can realistically manage given my new circumstances.

As I say, I don't think myself anything special or "better" than anyone else because of this, but I really do think sometimes that I must have been the only one who was taught basic right and wrong, and that you pay your debts and live with the consequences of your decisions - it's called being an adult!

Excellent post.
Pity more people didn't have your ideas instead of furnishing their lifestyles, often lavish beyond their means, with borrowed money.

woodoo wrote: »

Its starting to look like people are acting the goat in terms of repaying what they owe in the hope of some sort of mass debt forgiveness.

http://www.rte.ie/news/2012/0424/bank-of-ireland-indicates-more-job-losses-possible.html

He said that growing arrears in the bank's buy-to-let mortgage book is ''problematic''. He said that 500 staff are now working on arrears cases. He also said the bank is appointing rent receivers to landlords who hoard rent and do not give it to the bank.

I'd say that is the tip of the iceberg too. People just stopping paying in the hope that they will get some debt relief. I think they need to punish these sort of people severely if they can prove it.

I have heard of similar case with properties in NAMA where they reckoned landlord was pocketing money on the QT and a property management company had to be put in to manage the properties.

I just love the fact that certain posters believe that people deserve to have their mortgages basically paidoff courtesy of the taxpayers.

How do they think this will wash with people who didn't overborrow when they see the neighbours who lived the live of Riley getting a bailout, all the while they pay increased taxes and suffer more cuts ?

And just to hammer one myth about how people are unlucky and only borrowed what they could repay at the time.
A lot of people in trouble were involved in the building trade, they borrowed and spent massive amounts all based on the crazy earnings that they had during the construction bubble.
These people should never have borrowed as much as they did.
Anyone could see those earnings were unsustainable and an aberation in the grand scheme of things.

daltonmd

Monty Burnz wrote: »

Because I'm not the one making the claim. If I do sit down to work them out myself, it would be a few hours worth of work and I'm not sure that the effort would be appreciated here.

In fairness Monty you are - "Yes. Ideally it will be the people who don't pay back their mortgages and have to surrender the properties they are not paying for who are pissed off - there will be a lot fewer of them than the hundreds of thousands of people you suggest robbing to pay their mortgages."

If this problem was a small one and the mortgages unsustainable with no reasonable hope now, or in the future, for those few people to repay their debt then these should be sorted (BTLs first in my opinion).

But I believe that the problem is huge - otherwise why aren't the banks more pro active?

If pay is decreasing and disposable income being obliterated then how can these people repay? As each year passes more and more people are getting into trouble, many will "choose" default and bankruptcy and then we will see the true extent of the problem. The question will then be - will the banks renegotiate and will the homowners accept it or choose start again.

daltonmd

jmayo wrote: »

I just love the fact that certain posters believe that people deserve to have their mortgages basically paidoff courtesy of the taxpayers.
.

Who is saying that? This is the same old drum that you bang time and time again. As soon as you hear "restructure" you take this leap and ignore what people are saying.

This isn;t a choice and in time you will see that it has to be done.

Monty Burnz

daltonmd wrote: »

In fairness Monty you are - "Yes. Ideally it will be the people who don't pay back their mortgages and have to surrender the properties they are not paying for who are pissed off - there will be a lot fewer of them than the hundreds of thousands of people you suggest robbing to pay their mortgages."

I'm stating that there are fewer people who would have properties repossessed than there are taxpayers. In fairness, I thought this would be an uncontroversial claim.

daltonmd

Monty Burnz wrote: »

I'm stating that there are fewer people who would have properties repossessed than there are taxpayers. In fairness, I thought this would be an uncontroversial claim.

Sorry I misread the post - my point is that it's not a small problem, it's a big one and it's not only about how many repossessions there may be but the abount of people in trouble, and by trouble I mean that they are struggling to repay and will eventually end uo with unsustainable mortgages.

On the point of the taxpayer - some in trouble are also taxpayers.

Monty Burnz

daltonmd wrote: »

On the point of the taxpayer - some in trouble are also taxpayers.

Ironically, the tax rises intended to prop up property prices (to pay for NAMA, bank rescues etc.) may well push some of those it is supposed to 'benefit' over the edge.

moycullen14

Can we all just agree that people were stupid? Yes, they borrowed at insane levels and this was mad and they were thick, economically illiterate and they should be punished severely. Good, now that's out of the way, what do we do?

First of all, it must be accepted that a) the problem is huge and b) there are a lot of different problem types out there.

1: The massively overmortgaged PPR
This is the guy who owes 500K on a property worth 200K and can't service the debt. He can't sell it - because that would crystallise an unsecured debt to the bank that will never be paid off and he can't (maybe won't) pay the mortgage.
So the easiest thing to do is stop paying any of the mortgage - the bank are unlikely to get a repossession order.

2: The Buy to let Investor
Maybe a much bigger problem than is imagined because the properties are far less sellable and there is much less of an emotional attachment by the owner.
Almost every BTL property out there that was purchased with a mortgage over the last 10 years is probably not producing enough to pay interest, never mind capital at the moment. NPPR, Household charges and changes to tax means that expenses are only going up, rent is coming/has come down and, especially with apartments, they are virtually unsellable. These two are linked because in a lot of cases, BTLs were purchased with equity release from 1: above.

If you are in this situation, what do you do? You have a level of debt that's unsustainable and that is unlikely to change. You don't give a monkeys about the BTL - it's hassle, produces nothing and probably never will. It's simple, really, you say f**k the bank, keep the rent and use it to pay down other debts. What can the bank do? Well, first they must repossess the flat (probably in Co. Leitrim) and try and sell it. While they do that they have to manage it, find tenants, etc, because they can't sell it. Why? Well, no-one has any money and the banks mortgage department won't give out any mortgages on apartments outside of the main urban areas (pity they didn't have this policy 10 years ago!). Anyway, eventually the property is sold for 10K to a local, 'prudent' businessman who packs 4 non-nationals unto it a 200 a month making it a 20% yield for him. Now the bank come after our friend - who's delighted he's shot of the hassle - and tries to get the 150K shortfall off him. We have our day in court, judgement mortgage secured on main property - his only asset. Repossession not granted because of a) negative equity and b) wife and 4 kids in family home. Your man now decides 'F**k it, they have a judgement on my PPR, I'll never see a penny from it, I'm going to stop paying the mortgage. Net result? He has now defaulted on every loan he has and is planning 2 weeks in Santa Ponza to celebrate.

You play these things through and the result is always, judgements, days out in court and a flood of non PPR repossessions that nobody wants. The banks end up with far more non performing loans on their books and become huge property managers. Thee is NO OTHER ALTERNATIVE BECAUSE THERE IS NOT ENOUGH MONEY OUT THERE TO PAY BACK THE DEBTS - IT'S A GIANT PONZI SCHEME'

Proof, if proof were needed, that this is what's happening is the bank's inactivity. Bank's will always operate in their own self-interest. The reason they are not chasing defaulters is that it would only make a bad situation worse. The problem is that it is only delaying the inevitable. The day is coming - very soon - where hugely indebted mortgage holders realise that they would be better off telling the banks to go to hell.

You see the person with the whip hand in the current situation is not the bank, it's the mortgage holder - because there are so many of them that are desperate. And that, my friends, is what the banks fear most.

If it's not too far-fetched a comparison, look at what happened to the Cathol;ic Church when people stopped fearing it?