Glut of repossessed houses could depress prices ‘by up to 25%’

Villa05

cookie1977 wrote: »

Do you not see the irony of what you say in that saddling people with debt after repossession will fuel exactly what you speak of too?

I said that those people should pay there fair share of the outstanding balance. Did I not? Debt forgiveness is not free, somebody has to pay. The question is who.

The effect on the economy is the same. It is ludicrous to place the burden of poor decision making on the backs of people who had no input in that decision. The under 35's and future generations have suffered most from this mess. Is that a sustainable course to be following, considering there is a massive pension problem on the way also.

MysticalRain

The Spider wrote: »

That's the way most economies work and always have, at least back to the 19 the century.

To a certain extent, sure. Investors and speculators have always flogged assets of one type or another. But nowhere near on the same scale as with the last couple of property and consumer debt-related bubbles funded by cheap credit. Also, if you are talking about the relatively recent past, we had a real economy based on making and producing stuff. Not one based primarily on speculation and borrowing.

The conspiracy theorist in me thinks suspects that it suited politicians in Western countries to play up the housing market to mask the problem of real wages stagnating, and manufacturing jobs being automated and outsourced. People felt richer, even though they would have been worse off than the previous generation.

The Spider

Villa05 wrote: »

I said that those people should pay there fair share of the outstanding balance. Did I not. Debt forgiveness is not free, somebody has to pay. The question is who.

The effect on the economy is the same. It is ludicrous to place, the burden of poor decision making on, the backs of people who had no input in, that decision.

And you could use the same argument for anything the taxpayer has to pay for, a lot of people have problems with drugs and need rehab, should we place the burden of their poor decision making on the backs of people who had no input in that decision?

Villa05

The Spider wrote: »

And you could use the same argument for anything the taxpayer has to pay for, a lot of people have problems with drugs and need rehab, should we place the burden of their poor decision making on the backs of people who had no input in that decision?

Well you will have no problem with debtors living on 188 euro per week plus a dodgy house in moyross for 70 euro per week if you want to make that comparison.

Villa05

More than 25,000 people who were in arrears lost their homes between April and September, according to the latest figures from the Central Bank........................

By the end of September, the banks had dealt with 47,087 customers in arrears, which resulted in 21,177 restructured mortgages and 25,910 in loss of ownership.

Loss of ownership did not mean that 25,910 homes had been repossessed over that period. Rather, it includes mortgage holders who have surrendered their properties or agreed to a voluntary sale of their homes, as well as banks issuing legal proceedings in order to repossess the homes of owners in arrears.

The latest review shows that 55% of the latest tranche of offers are for repossession or voluntary surrender; 99,189 borrowers are three months behind in repayments.

The banks said legal letters threatening repossession were issued to customers who had refused to make any engagement. However, not all would end up in repossessions.

http://www.irishexaminer.com/ireland/25000-lose-ownership-of-their-homes-in-six-months-as-banks-tackle-arrears-251251.html

With 40K 2 years or more behind in repayments, I'd give it 12 to 18 months to see a significant portion of this stock coming on the market.

Im sure voluntary sale will have a carrot and stick approach. If people agree, a portion of outstanding balance will be written off, giving regard to the person(s) current income. I'm sure the majority here would agree this would be a fair approach.

cookie1977

Yes, it would need to happen and if it is done fairly then it seems reasonable as long as the outstanding debt is not a burden

Villa05

Allsop expecting a busy new year with auctions over 2 days - 14 auction days in there calender for 2014
http://www.auction.co.uk/residential/onlineCatalogue.asp
12th & 13th February 2014 Entries invited
Thinking of selling?
26th & 27th March 2014 Entries invited
Thinking of selling?
28th & 29th May 2014 Entries invited
Thinking of selling?
16th & 17th July 2014 Entries invited
Thinking of selling?
17th & 18th September 2014 Entries invited
Thinking of selling?
29th & 30th October 2014 Entries invited
Thinking of selling?
17th & 18th December 2014 Entries invited
Thinking of selling?

Frank Lee Midere

Spiders point - continually iterated here - that banks would prefer to keep minimal repayments, or none, than have to own and the sell a house is misguided. Banks need capital at the moment. That's what recapitalisation means. If any person or organisation needs money for something immediately they sell something else. It's even more ridiculous when we are talking about people in arrears. In that case repossession replaces an "asset" earning nothing with money which can earn something.

McDook

Myself and my wife work in two different fields that deal with repossessions. I wont say what we do.
But I can tell you that while there is some more that can be done than there used to be to get a repossession, its not a lot more and also its not worth it.

And as soon as the legal process moves on a bit and the house owner starts feeling the pressure they somehow get money together and work out a payment schedule. This can be as little as €1000 down and then and extra €10 a month on the mortgage, but the kicker is that the mortgage payments will be reduced and the house owner ends up paying even less than they used to on the mortgage. So then the repo is back to square one and it takes a LOT to even get to that point.

There will only be repos where the home owner CANT PAY A PENNY and where the asset to be repod is worth repoing - and houses just arent at the moment, and wont be until they start going up in by a lot. But then the owner will just start the merry go round again by paying a few euro off.

Repos just arent going to happen in any meaningful numbers.
NAMA, for the same reasons wont be making properties available until they can actually make it pay. And they really dont have enough residential property in Ireland to move the market anyway.

ezra_pound

Villa05 wrote: »

Allsop expecting a busy new year with auctions over 2 days - 14 auction days in there calender for 2014
http://www.auction.co.uk/residential/onlineCatalogue.asp
12th & 13th February 2014 Entries invited
Thinking of selling?
26th & 27th March 2014 Entries invited
Thinking of selling?
28th & 29th May 2014 Entries invited
Thinking of selling?
16th & 17th July 2014 Entries invited
Thinking of selling?
17th & 18th September 2014 Entries invited
Thinking of selling?
29th & 30th October 2014 Entries invited
Thinking of selling?
17th & 18th December 2014 Entries invited
Thinking of selling?

Would be relevant if this thread was discussing the UK property market.

ezra_pound

There's an allsop auction in December and one planned for February.

The Spider

McDook wrote: »

Myself and my wife work in two different fields that deal with repossessions. I wont say what we do.
But I can tell you that while there is some more that can be done than there used to be to get a repossession, its not a lot more and also its not worth it.

And as soon as the legal process moves on a bit and the house owner starts feeling the pressure they somehow get money together and work out a payment schedule. This can be as little as €1000 down and then and extra €10 a month on the mortgage, but the kicker is that the mortgage payments will be reduced and the house owner ends up paying even less than they used to on the mortgage. So then the repo is back to square one and it takes a LOT to even get to that point.

There will only be repos where the home owner CANT PAY A PENNY and where the asset to be repod is worth repoing - and houses just arent at the moment, and wont be until they start going up in by a lot. But then the owner will just start the merry go round again by paying a few euro off.

Repos just arent going to happen in any meaningful numbers.
NAMA, for the same reasons wont be making properties available until they can actually make it pay. And they really dont have enough residential property in Ireland to move the market anyway.

Thanks for that, I've been saying as much, no real repos until prices go up, and then ghe owners start paying the mortgage so no repos at all really.

Villa05

ezra_pound wrote: »

Would be relevant if this thread was discussing the UK property market.

Cheers 2nd time I have made that mistake

McDook

The Spider wrote: »

Thanks for that, I've been saying as much, no real repos until prices go up, and then ghe owners start paying the mortgage so no repos at all really.

And even if prices went up and it was worth having lots of repos sitting on the books of a bank, its very easy for someone in arrears to reset the clock on a repo for very little money. Even the kind of money you could borrow of a mate down the pub would do it.

Its only people who have absolutely nothing at all (not even a few euro) to offer the bank who will be repod.
And those are the people who usually go bankrupt in countries with a normal bankruptcy process anyway.

There are repos happening though, but not as many as people think.

riclad

I think people who are trying their best to pay ,
as much as they,can afford, or paying interest only will not be repo, ed

as many units are worth 40- 50 per cent of the mortgage .
THE bank will think hard before repossessing a house thats worth 100k,
with a 200k loan on it.
Epecially if its the family home , not a btl.
I think the bank s will concentrate on units where there.s no payments being made,
or the client has very little income to pay the loan.
I dont think politicians are that, smart ,
they were thinking of their wages,pensions, i,m alright jack.
NO matter what happens ,ill be ok.
THEY think about maybe 3 years ahead ,
we need politicians who think 10 years ahead.

People who warned of the future property bubble in 2007, were ignored ,
or told to shut up.
i think nama owns 1000,s of apartments ,
but they,ll sell them off at a slow rate.
or maybe rent them out for a few years.

The_Conductor

riclad wrote: »

People who warned of the future property bubble in 2007, were ignored ,
or told to shut up.

One prominent economist (and a vague reference about people in general who didn't agree with talking up the property market) were told in an official speech by the Taoiseach- that people who moan about the Irish economy should commit suicide.

Source: http://www.rte.ie/news/2007/0704/90808-economy/

riclad wrote: »

i think nama owns 1000,s of apartments ,
but they,ll sell them off at a slow rate.
or maybe rent them out for a few years.

It would be helpful if NAMA did own thousands of apartments (and other dwellings), particularly in areas of high demand (esp. the greater Dublin area). The unfortunate fact however, is their portfolio is predominantly commercial in nature, and not residential.

Villa05

McDook wrote: »

Myself and my wife work in two different fields that deal with repossessions. I wont say what we do.
But I can tell you that while there is some more that can be done than there used to be to get a repossession, its not a lot more and also its not worth it.

And as soon as the legal process moves on a bit and the house owner starts feeling the pressure they somehow get money together and work out a payment schedule. This can be as little as €1000 down and then and extra €10 a month on the mortgage, but the kicker is that the mortgage payments will be reduced and the house owner ends up paying even less than they used to on the mortgage. So then the repo is back to square one and it takes a LOT to even get to that point.

There will only be repos where the home owner CANT PAY A PENNY and where the asset to be repod is worth repoing - and houses just arent at the moment, and wont be until they start going up in by a lot. But then the owner will just start the merry go round again by paying a few euro off.

Repos just arent going to happen in any meaningful numbers.
NAMA, for the same reasons wont be making properties available until they can actually make it pay. And they really dont have enough residential property in Ireland to move the market anyway.

Appreciate your post McDook

What is the situation with BTL's, Are banks happy to take the after tax rent as payment for the mortgage. Are there many cases where no payments are being made on BTL's

When you say "paying a few euro off", How much are we talking about, say the total repayments are 1k per month and the mortgage is 9 months in arrears. Is a payment of e100 per month sufficient to stall legal action.

Are you exposed to voluntary sale agreements and if so how are they working.

Are you seeing any cases of jingle mail?

Did someone here mention that AIB expected to return to profit next year :eek:

I read before that 50% of the banks mortgage loan book by value was issued between 05 and 07. If this is true and McDooks post is representative of what is happening, all Irish Banks are toast with the possible exception of BOI

This will not end well, anyone that has deposits with these banks needs there head examined

_Kaiser_

So McDook's (excellent btw) post pretty much confirms the situation. Despite the fact that these people signed up for mortgages of their own free will, there will be no real consequence to them if they can't/refuse to pay.

The ones who HAVE paid are those who didn't buy-in to the property craze of the "good times" and who behaved responsibly.

Well I can tell you one thing - when Property Bubble 2.0 rolls around (as it inevitably will seeing as we've learned nothing, and penalised no-one responsible), this time I'll be taking the "pre-approved" 110% mortgages, loans, credit cards and anything else because it clearly makes no difference in the end analysis.. I'll still end up paying for them anyway (as I have this time).

But I'll also be telling my children to get their "free" education and get the hell out of this backwards, corrupt, morally bankrupt failed state before the bubble bursts again.

McDook

Banks will take anything they can get.
In some (a lot) of cases yes even an extra €100 a month does the trick.
They are even freezing the interest, so the person actually ends up paying even less than they were before.

The bank cant really take the house because some money is better than none. And taking the house and selling it (on an kind of scale) at this point is self defeating. they are doing it in some cases.

When you can get some blood from the stone you take the bood and leave the stone to bleed.
When there is no blood left in the stone then you might as well take the stone.
This will happen when the stones on their own arent worth the effort, as now. Im sure in the future if property prices rise by another 30 or 40% then it will become economical to take the the house. That might be a long way away though.

There are cases of jingle mail alright. Or more like "dissapearing home owners". But 99% of it is where someone from another country just went home and said "enough, try chasing me to pakistan or australia if you want". There are some cases where people from Ireland emigrated and never told the bank. In these cases the banks can and are repossessing, but again its a long process.

I've seen voluntary sales actually being sold to friends or relatives, or even people who i know are vulture investors. All at knock down prices. The public will never get to bid on these as the sale is done privately. there are also investors who the banks know who are buying the few repos nearly even before the repo happens.

The BTLs ive seen in arrears are all people who can afford to pay, but who have decided that they are going to go behind for a few months on purpose. Kind of like a tenant using their last their deposit as their last months rent.

Some people are great at playing the system and know that when you owe the bank a lot, then the bank has to play ball with you.

The banks will be fine. Dont shed a tear for them. They are all playing the long game and dont really care what happens at the moment. A little prod to get people paying something is all they wanted. And they got it.

The are not interested in seizing assets and holding them. The other option is seizing and dumping them on the market, killing the market. They wont do that either. A trickle is what they want and a rising market. The higher prices go the more they can recover in future.

Listen to what the politicians say about repos. They are playing both sides of the coin. Its just lip service. "We want to punish those who got it into this mess" then "Noone will be turfed out of their home". Everyone will hear what they want to hear and the politicians will provide soundbites for all.

In my opinion its not going to get any worse than it is already and repos will be managed with a rising market. They wont be executed in such a way that they kill the market. Noone will repo something they make a worse loss on. And the term "mini bubble" i keep hearing, means nothing. I reckon we've been to the bottom and now prices are on the up, in Dublin anyway. And not just south dublin as everyone keeps saying. Its all over Dublin. Apartments are rising too. Its seems obvious to me, but I may be wrong. Who knows until it happens one way or the other. These are the things that are only obvious after the fact.

Villa05

Fairly grim reading,

Are the foreign banks operating in the same way?

When you say sold to relatives/friends. Is that the customer or the bank doing the selling to their buddies

Spider, Cookie, Are you comfortable paying higher interest rates to fund this.

I think everyone should stop paying there mortgage, whats the point. Let the country burn

gaius c

So no repos and banks limp on, massaging their figures, unable to make new lending and somehow prices are supposed to continue rising with no new lending?

It's the new "soft landing" logical fallacy.

McDook

Villa05 wrote: »

Fairly grim reading,

Are the foreign banks operating in the same way?

When you say sold to relatives/friends. Is that the customer or the bank doing the selling to their buddies

Spider, Cookie, Are you comfortable paying higher interest rates to fund this.

I think everyone should stop paying there mortgage, whats the point. Let the country burn

Foreign banks are exactly the same. They want valuable assets. Flooding the market with loss making property wont do at all.


The vendor is the person who owns the house., They get bids for the house (accepting only those from family or whoever) and the bank says yes or no. The bank dont really have any control. If they refuse the bids then the person just stays in the house and says "we tried, but the bank blocked the sale". Back to square one again with the bank looking like the bad guy.

Anyone who wants can go into arrears with their mortgage. The ONLY consequences are that they will probably never get a loan again and a few letters that they can just ignore. When it gets more serious, which might take years, start paying again and no consequences at all.

The banks arent limping. Its all smoke and mirrors. Watch when new entrants come into the market. The public are poised to start borrowing. All thats needed is some new bank to enter giving money at nice rates (and a few points higher for good measure, since the market is primed to pay over the odds in rates) and then the rest have to follow or die. And they wont be let die.

cookie1977

Thanks McDook for your input. To be honest none of this surprises me in anyway. I've argued before that the banks and the government should be going after those that can pay wont pay. And what the banks are doing does make enormous sense for their own self interest. Whether they are state owned or not they are out to make as much profit as possible.

Does it bother me to hear this? Honestly no. I'm carrying on with my life the best way I can and nothing of what I hear now will change my mind on how I do that. But that's due to my morals/upbringing. I dont believe I'm the only one out there like this and I would again love to see some sort of complete analysis of of those in arrears and more pressure applied to the banks to solve them.

who_ru

McDook wrote: »

Myself and my wife work in two different fields that deal with repossessions. I wont say what we do.
But I can tell you that while there is some more that can be done than there used to be to get a repossession, its not a lot more and also its not worth it.

And as soon as the legal process moves on a bit and the house owner starts feeling the pressure they somehow get money together and work out a payment schedule. This can be as little as €1000 down and then and extra €10 a month on the mortgage, but the kicker is that the mortgage payments will be reduced and the house owner ends up paying even less than they used to on the mortgage. So then the repo is back to square one and it takes a LOT to even get to that point.

There will only be repos where the home owner CANT PAY A PENNY and where the asset to be repod is worth repoing - and houses just arent at the moment, and wont be until they start going up in by a lot. But then the owner will just start the merry go round again by paying a few euro off.

Repos just arent going to happen in any meaningful numbers.
NAMA, for the same reasons wont be making properties available until they can actually make it pay. And they really dont have enough residential property in Ireland to move the market anyway.

so although everyone said that those who bought during the boom were unlucky, in actual fact the were lucky after all, as years of non payment on a mortgage (regardless of ability to pay) can be righted by an extra tenner a month and a loan of a couple of quid from a guy down the pub. Then back to years of no payments, meet the guy in the pub again, get an even lower interest rate again, perhaps a negative rate this time, a 30% or 40% write down thrown in, burn all unsecured loans like credit union etc, and carry on until your home is yours.

Sounds great doesn't it!

Zamboni

In other words...a massive house of cards built upon the hope that the idiots that are actually paying their mortgages don't cop on en masse and strategically default.

The Spider

So based on McDooks informed posts, we'll have no massive repossessions, the banks will hold back until prices are rising, which is what is happening at the moment. I've said all this however I tip my hat to McDook who has confirmed not so much what I suspected but rather what I expected.

That's it bottom was last year, maybe the tail end of 2011, you won't see drops going forward for the foreseeable, supply will be tightened up until all those assets are worth the loans taken out on them.

MythicalMadMan

The Spider wrote: »

So based on McDooks informed posts, we'll have no massive repossessions, the banks will hold back until prices are rising, which is what is happening at the moment. I've said all this however I tip my hat to McDook who has confirmed not so much what I suspected but rather what I expected.

That's it bottom was last year, maybe the tail end of 2011, you won't see drops going forward for the foreseeable, supply will be tightened up until all those assets are worth the loans taken out on them.

When you refer to this bottom you predicted are you talking about Ireland, Irish cities, dublin or scd

McDook

And the good news is that life will go on.
People will give out about banks, politicians and so on.
Politicians and banks will say they are doing this and that.

And the market will slowly but surely move on.

If anyone was in the UK in the 80's it was like the end of the world.
It was also the end of the world there a few years ago.
And guess what. The world didnt end and life continued.

While it may sicken some of us to see people getting away without paying their debts, its nothing different to what goes on all over the world for hundreds of years. Ireland has some of the harshest bankruptcy laws in the world. So its not surprising to me that people are trying to bite back instead of going bankrupt.

When you go bankrupt you should be stripped of what you have at the moment of bankruptcy and have a short period of reflection and then the counter goes back to zero. But here the counter goes to minus hundreds of thousands. Thats never going to work as far as i can see.


Anyway, as I said before, just get on with your life and dont worry about other peoples problems. Better off concentrating on your own life tbh. And in 10 years everybody will have forgotten there ever was a housing crash, or an economic tsunami for that matter.

who_ru

The Spider wrote: »

So based on McDooks informed posts, we'll have no massive repossessions, the banks will hold back until prices are rising, which is what is happening at the moment. I've said all this however I tip my hat to McDook who has confirmed not so much what I suspected but rather what I expected.

That's it bottom was last year, maybe the tail end of 2011, you won't see drops going forward for the foreseeable, supply will be tightened up until all those assets are worth the loans taken out on them.

Without any increase in credit supply of course. You say supply will be tightened up, so will banks be able to prevent vendors not in negative equity from selling their homes too?

who_ru

McDook wrote: »

And the good news is that life will go on.
People will give out about banks, politicians and so on.
Politicians and banks will say they are doing this and that.

And the market will slowly but surely move on.

If anyone was in the UK in the 80's it was like the end of the world.
It was also the end of the world there a few years ago.
And guess what. The world didnt end and life continued.

While it may sicken some of us to see people getting away without paying their debts, its nothing different to what goes on all over the world for hundreds of years. Ireland has some of the harshest bankruptcy laws in the world. So its not surprising to me that people are trying to bite back instead of going bankrupt.

When you go bankrupt you should be stripped of what you have at the moment of bankruptcy and have a short period of reflection and then the counter goes back to zero. But here the counter goes to minus hundreds of thousands. Thats never going to work as far as i can see.


Anyway, as I said before, just get on with your life and dont worry about other peoples problems. Better off concentrating on your own life tbh. And in 10 years everybody will have forgotten there ever was a housing crash, or an economic tsunami for that matter.

outstanding economic analysis there. Basically societies should ignore the past, hope it all works out okay somehow, allow all mistakes to happen again, ignore the plight of others.
I mean look at the German economic miracle of the post war era. After the hyperinflation of the 1920s that saw mass unemployment and worthless currency they decided to do it all again the same way, er but no they didn't, inflation to this day is a no go area, they built their economy on productive output, efficiency etc. But here in plucky Ireland sure with the troika gone begorra we'll bounce all that property back up again wha!