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Scale of Irish mortgage default is unprecedented

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    #2
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    Two words come to mind. "Moral Hazard"


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    #3
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Nino Brown wrote: »
    Two words come to mind. "Moral Hazard"

    If you're using that term- unfortunately you have to come to the conclusion that a significant cadre of people- on both sides of the equation, quite simply, do not have morals, period.


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    #4
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    A very poor analysis of the figures present.
    On the basis of this rather pessimistic analysis, the banks should really be pushing people who have jobs but can’t afford their mortgages to sell up and trade down. But when you have 100,000 people in that situation – many of whom are in negative equity – that is not really a runner either.
    He appears to have completely forgotten that the data he's referencing shows over half of the arrears are actually in positive equity.


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    #5
    jmayo
    Registered Users Posts: 13,186 ✭✭✭✭jmayo


    sawdoubters wrote: »
    Scale of Irish mortgage default is unprecedented


    http://www.irishtimes.com/business/sectors/financial-services/scale-of-irish-mortgage-default-is-unprecedented-1.1676749

    I just loved some of the comments on that page.
    Good old poster boobycocks thinks all the mortgage defaulters should just start squatting and then move to UK to dump their debts on the banks.

    Except morons like him never appear to be able to join the dots far enough along to figure out the banks debts are the governments debts (i.e. the taxpayers) and/or the debts of all the other bank customers.

    If there is going to be any massive debt forgiveness and writeoffs the money has to come from somewhere and who thinks we could be seeing Cyprus part deux ?

    Surely something has to give at some stage, we can't live the rest of the century in limbo.

    I am not allowed discuss …



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    #6
    drumswan
    Closed Accounts Posts: 2,592 ✭✭✭drumswan


    jmayo wrote: »
    I just loved some of the comments on that page.
    Good old poster boobycocks thinks all the mortgage defaulters should just start squatting and then move to UK to dump their debts on the banks.

    Except morons like him never appear to be able to join the dots far enough along to figure out the banks debts are the governments debts (i.e. the taxpayers) and/or the debts of all the other bank customers.

    If there is going to be any massive debt forgiveness and writeoffs the money has to come from somewhere and who thinks we could be seeing Cyprus part deux ?

    Surely something has to give at some stage, we can't live the rest of the century in limbo.
    Its every man for himself tbh


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    #7
    The Spider
    Registered Users Posts: 1,273 ✭✭✭The Spider


    So lets see the government told people it was their patriotic duty to buy houses in the boom, Tom Parlon head of the construction federation was on the radio nonstop, as was bertie and his suicide remarks.

    All these people go out and patriotically buy houses, then the new government raises taxes, and puts condition in place so that salaries are cut, preventing people paying for the houses they patriotically bought under the previous government.

    Previous government wants to be re-elected, announces plans to cut the property tax and introduce debt forgiveness for [people underwater.

    I wonder how many votes they'd get? I'd say they'd have a huge majority in a general election....and we begin the cycle again.


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    #8
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    The_Conductor wrote: »
    If you're using that term- unfortunately you have to come to the conclusion that a significant cadre of people- on both sides of the equation, quite simply, do not have morals, period.

    They have morals, they just convince themselves the problem is somebody else's, ie. the government made me borrow the money, the banks shouldn't have loaned me the money etc. And until people are made accept the consequences of their actions the moral hazard remains.


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    #9
    Muahahaha
    Registered Users Posts: 19,656 ✭✭✭✭Muahahaha


    There's a chart over on the Pin outlining the extent of Irish mortgage defaults. I'd like to see it again but can't find it, I just remember it as being truly frightening, the numbers more than 6 months behind on their mortgage are huge. If they all go into full default it's hard to see how we can avoid a second crash.

    Unless our government has other plans for debt forgiveness, I.e. use taxpayer money to bail out 100.000 mortgages.


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    #10
    newmug
    Banned (with Prison Access) Posts: 3,571 ✭✭✭newmug


    sawdoubters wrote: »
    Scale of Irish mortgage default is unprecedented



    http://www.irishtimes.com/business/sectors/financial-services/scale-of-irish-mortgage-default-is-unprecedented-1.1676749





    In all fairness, this entire mess is not unprecedented at all. Far worse sh1t has happened to us in the past, and far worse things will happen again. Just thank God for every day that comes.


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    #11
    SpaceTime
    Closed Accounts Posts: 9,088 ✭✭✭SpaceTime


    Nino Brown wrote: »
    Two words come to mind. "Moral Hazard"

    Several other words come up too:

    Banks need to be able to add and subtract!

    They granted mortgages that were quite obviously unsustainable even under slight stress and they granted them on the basis of boom time peak incomes that were absolutely abnormal and unprecedented.


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    #12
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    GARDAI and teachers are among the biggest group of debtors enquiring about bankruptcy, despite the adverse impact on their careers of going bust.

    Let's be honest, we all suspected this would be the case.


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    #13
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    gaius c wrote: »
    GARDAI and teachers are among the biggest group of debtors enquiring about bankruptcy, despite the adverse impact on their careers of going bust.

    Let's be honest, we all suspected this would be the case.

    How so?
    Why are you suggesting that Gardai, Teachers (and other public sector employees) are more likely than others to look at bankruptcy proceedings?
    I'm guessing most public sector employees are down at least 30% and possibly 40% in their NET take home pay- between the salary cuts, the extra public sector levies, and the virtual abolition of overtime and other payments that were once viewed by banks and other lenders as part of their core pay.

    Examining their options is prudent. Exercising them- particularly when it might destroy their career in Ireland- may not be prudent........

    The first bankruptcy was a civil servant from Social and Family and Affairs in Donegal (if my memory serves me right).


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    #14
    Muahahaha
    Registered Users Posts: 19,656 ✭✭✭✭Muahahaha


    The_Conductor wrote: »
    How so?
    Why are you suggesting that Gardai, Teachers (and other public sector employees) are more likely than others to look at bankruptcy proceedings?
    I'm guessing most public sector employees are down at least 30% and possibly 40% in their NET take home pay- between the salary cuts, the extra public sector levies, and the virtual abolition of overtime and other payments that were once viewed by banks and other lenders as part of their core pay.

    Examining their options is prudent. Exercising them- particularly when it might destroy their career in Ireland- may not be prudent........

    The first bankruptcy was a civil servant from Social and Family and Affairs in Donegal (if my memory serves me right).

    I think it is probably because back in the boom banks were absolutely throwing money at public servants with secure jobs. Like they were throwing money at everyone but civil and public servants could have been approved for multiples what others in the private sector were approved for.

    I'm not too sure about teachers but Gardai tend to have a history of property investment in Ireland. IIRC the Garda Credit Unions were telling their members that property investment was a fail safe option for their steadily increasing pay packets during the Celtic tiger years.

    Last year I dated a Gard and a prison officer. Between the two of them they were €1.6m in debt and only 34/35 years of age. I don't know what the banks were thinking but prudent lending did not come into it.


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    #15
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    SpaceTime wrote: »
    They granted mortgages that were quite obviously unsustainable even under slight stress and they granted them on the basis of boom time peak incomes that were absolutely abnormal and unprecedented.

    That's strange, they didn't give me an unaffordable mortgage. Oh that's right, they only gave them to people who asked for them.


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    #16
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,505 Mod ✭✭✭✭johnnyskeleton


    gaius c wrote: »
    A very poor analysis of the figures present.

    He appears to have completely forgotten that the data he's referencing shows over half of the arrears are actually in positive equity.

    People who are in arrears and have positive equity are exactly the type of person the banks should repossess against ie people who are asset rich but can't pay their debts and living beyond their means.

    If I said I couldn't pay my mortgage but had 10k in the bank, should the mortgage company exercise forebearance towards me? If no, then why is it different with the asset of a house?

    The banks could really fix their balance sheet with the sale of a house to repay an underperforming asset in full.


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    #17
    SpaceTime
    Closed Accounts Posts: 9,088 ✭✭✭SpaceTime


    Nino Brown wrote: »
    That's strange, they didn't give me an unaffordable mortgage. Oh that's right, they only gave them to people who asked for them.

    They basically didn't do any risk assessment.

    One thing that is ridiculous though is that they're treating investment buy to let type setups as if they are regular mortgage holders.

    Investment properties that are in arrears should be repossessed.

    They should also insist on a bit of reality. Downsizing or downscaling etc should be a requirement. I don't want to see people out on the street but I also don't want to see people waltzing off with luxury homes that they couldn't ever afford.

    There has to be a bit of sense and justice to it.


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    #18
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    SpaceTime wrote: »
    They basically didn't do any risk assessment.

    In many cases they didn't.
    However....... (and playing devils advocate here)........
    Even the most prudent of lenders wouldn't have foreseen 400,000 public sector employees having a 30-40% cut in their net pay.

    Many silly loans were given out- but so too have circumstances beyond anyone's comprehension played a large part too.

    Knock overtime and allowances off most employees, and they will hurt badly- and then compound it with paycuts and new taxes- and well- we all know what its like out there...........


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    #19
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    Muahahaha wrote: »
    I think it is probably because back in the boom banks were absolutely throwing money at public servants with secure jobs. Like they were throwing money at everyone but civil and public servants could have been approved for multiples what others in the private sector were approved for.

    I'm not too sure about teachers but Gardai tend to have a history of property investment in Ireland. IIRC the Garda Credit Unions were telling their members that property investment was a fail safe option for their steadily increasing pay packets during the Celtic tiger years.

    Last year I dated a Gard and a prison officer. Between the two of them they were €1.6m in debt and only 34/35 years of age. I don't know what the banks were thinking but prudent lending did not come into it.

    This. There was (and still is to some extent) serious group think amongst guards and teachers as to the virtues of property for investment.


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    #20
    gaius c
    Registered Users Posts: 3,528 ✭✭✭gaius c


    johnnyskeleton wrote: »
    People who are in arrears and have positive equity are exactly the type of person the banks should repossess against ie people who are asset rich but can't pay their debts and living beyond their means.

    If I said I couldn't pay my mortgage but had 10k in the bank, should the mortgage company exercise forebearance towards me? If no, then why is it different with the asset of a house?

    The banks could really fix their balance sheet with the sale of a house to repay an underperforming asset in full.

    The suspicion/speculation is that even moving on these will add enough supply to the market that prices would drop thus creating a new batch of NE arrears.


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    #21
    Balmed Out
    Registered Users Posts: 4,716 ✭✭✭Balmed Out


    gaius c wrote: »
    This. There was (and still is to some extent) serious group think amongst guards and teachers as to the virtues of property for investment.

    Anecdotes abound of guards buying a home wherever stationed and using it as a buy to let afterwards but I'm not aware of or heard of any teachers doing the same


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    #22
    strandroad
    Closed Accounts Posts: 4,676 ✭✭✭strandroad


    Balmed Out wrote: »
    Anecdotes abound of guards buying a home wherever stationed and using it as a buy to let afterwards but I'm not aware of or heard of any teachers doing the same

    Anyone renting in Dublin for a while would have come across a Garda landlord or two I think. More often than not with multiple properties.


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    #23
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Perhaps I've underestimated the prevalence of these Garda/Teacher landlords- if so, I'm sorry, I don't have a lot of sympathy- repossess the properties, sell them- and if the person decides bankruptcy is a means to clear their debts- so be it- but I don't think it should be at a cost to them of their jobs- and if there are rules about bankrupts not being eligible to be a serving teacher or Garda- these rules should surely be looked at- as there is little to be gained from tossing them onto the dole queue.


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    #24
    OMD
    Registered Users Posts: 2,458 ✭✭✭OMD


    We should put some figures on the extent of the arrears. Excluding the buy to let market:
    The average person in arrears has arrears of €15,000.
    For those in arrears less than 6 months the average amount of that arrears is a little over €2,400
    For those over 6 months in arrears the average arrears is €24,500

    Total arrears is €2.2 billion. To put that in context, in the last year overall mortgage debt reduced by €2.7 billion.


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    #25
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    When you dissect the figures like that- it rapidly becomes obvious- there are two very different approaches needed for the two different groups. In which case- aside from a reluctance on the part of lenders to crystalise their losses- why the hell are we not chasing the BTL arrears?


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    #26
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    The_Conductor wrote: »
    When you dissect the figures like that- it rapidly becomes obvious- there are two very different approaches needed for the two different groups. In which case- aside from a reluctance on the part of lenders to crystalise their losses- why the hell are we not chasing the BTL arrears?

    They are now, the banks are appointing receivers to BTL properties all over the place. Repossession is complicated, but receivership seems to be a lot more straight forward.


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    #27
    jmayo
    Registered Users Posts: 13,186 ✭✭✭✭jmayo


    The Spider wrote: »
    So lets see the government told people it was their patriotic duty to buy houses in the boom, Tom Parlon head of the construction federation was on the radio nonstop, as was bertie and his suicide remarks.

    I don't ever recall anyone saying it was your patriotic duty to buy property.
    And what type of adult believes a word from a politican, nevermind a lying backstabbing two faced gimp ?
    Oh yeah those who are bloody gullible and/or greedy.
    The Spider wrote: »
    All these people go out and patriotically buy houses, then the new government raises taxes, and puts condition in place so that salaries are cut, preventing people paying for the houses they patriotically bought under the previous government.

    What are you on about ?
    What is this cr** about patriotically buying houses ??
    Are you trying to say that people who bought property at silly prices were somehow more patriotic than those who had the cop on to know it was a bloody massive bubble ?

    For every much put upon first time buyer that we always hear about looking for a family HOME, there was some eejit wantabee landlord, someone who thought they should have a Southfork sytle house with stables.
    A lot of people bought houses out of greed and also keeping up the with Jones.
    Except the Jones often were buying the lifestyle with some ones elses money as well.

    There was a major mindset at play.
    "Shure hasn't Willie's house down the road doubled in value so it is time to get on the ladder, hasn't Mary got two investment properties already that have doubled in value, hasn't uncle Jimmy just remortgaged to add 1000 sq metres of decking with a hot tub, hasn't someones sister wice removed remortgaged twice to buy pads in Bulgaria and Cape Verde whereever the hell that is. "
    There was a lot of sheer lunacy about.
    The Spider wrote: »
    Previous government wants to be re-elected, announces plans to cut the property tax and introduce debt forgiveness for [people underwater.

    I wonder how many votes they'd get? I'd say they'd have a huge majority in a general election....and we begin the cycle again.

    Dream on boy.
    No matter how much you wish for it, we can't begin the cycle again.
    We cannot create another bubble to get us out of the current fallout form the last one.
    We have lost multiple banks, the foreign ones are trying to get out and the indegenous ones are sucking at the teat of the taxpayer.
    Oh and there is no source of cheap credit world wide willing to give money to the Irish.
    SpaceTime wrote: »
    Several other words come up too:

    Banks need to be able to add and subtract!

    So do some borrowers.
    gaius c wrote: »
    GARDAI and teachers are among the biggest group of debtors enquiring about bankruptcy, despite the adverse impact on their careers of going bust.

    Let's be honest, we all suspected this would be the case.

    Shure the Gards had to buy more property seen that the taxi business was deregulated.

    I am not allowed discuss …



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    #28
    on_my_oe
    Registered Users Posts: 991 ✭✭✭on_my_oe


    We had nine apartments repossessed in our block, eight of which were BTLs; four have gone on the market. They were sold for 28% of their boom time price. The developer had a further 20 apartments not sold, and these are in Nama... None of these have appeared on the market (as yet).

    So it does appear the BTLs are being repossessed... But those in negative equity, whether squatting or genuine, are being largely left alone.

    Part of me is frustrated that I'm paying rent, scrimping for a deposit, yet there are people who are not paying their mortgage living in a house I would (potentially, based on location) like to the opportunity to buy!


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    #29
    SpaceTime
    Closed Accounts Posts: 9,088 ✭✭✭SpaceTime


    The_Conductor wrote: »
    Perhaps I've underestimated the prevalence of these Garda/Teacher landlords- if so, I'm sorry, I don't have a lot of sympathy- repossess the properties, sell them- and if the person decides bankruptcy is a means to clear their debts- so be it- but I don't think it should be at a cost to them of their jobs- and if there are rules about bankrupts not being eligible to be a serving teacher or Garda- these rules should surely be looked at- as there is little to be gained from tossing them onto the dole queue.

    No issue about bankrupt teachers.
    It only applies to TDs and Gardai. The logic was that they could be 'bought' too easily.
    However, maybe that no longer makes sense with modern bankruptcy. In the days that was legislated for, bankrupts were often absolutely destroyed by the system with 12+ years and possibly even debtors prison.

    At one stage you were put in the debtors' house and if you wanted to go out to work or do business you had to leave a family member in jail as a deposit to ensure you returned!

    In a modern sense, I would prefer to see a bankrupt garda with the possibly of rebuilding their life after a couple of years than a hopelessly insolvent Garda trying to hide their situation for fear of losing their job.

    I think the current situation leaves people more open to blackmail and influence than just letting them use normal debt relief tools in an open way.


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    #30
    GavMan
    Registered Users Posts: 1,919 ✭✭✭GavMan


    The_Conductor wrote: »
    In many cases they didn't.
    However....... (and playing devils advocate here)........
    Even the most prudent of lenders wouldn't have foreseen 400,000 public sector employees having a 30-40% cut in their net pay.

    Many silly loans were given out- but so too have circumstances beyond anyone's comprehension played a large part too.

    Knock overtime and allowances off most employees, and they will hurt badly- and then compound it with paycuts and new taxes- and well- we all know what its like out there...........


    30-40%...really? I've an SIL who is a civil servant and its nothing like that. Not sure of her grade but somewhere mid level.


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    #31
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    GavMan wrote: »
    30-40%...really? I've an SIL who is a civil servant and its nothing like that. Not sure of her grade but somewhere mid level.

    I was going by an actual cut of 20-25% and then the removal of allowances, overtime and other payments- that were common place (and it would appear counted towards the multiples that lenders were willing to allow to Gardai etc). On top of that- where pension contributions, outside of the ordinary PRSI deductions for any employee- were not the norm in the public sector- now there is the levy towards pensions- and meanwhile the fund builtup to fund public sector pensions and PRSI pensions- has been depleted bailing out the banks- so thats gones......

    All a mess, come what may.


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