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Scale of Irish mortgage default is unprecedented
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Join Date:Posts: 30620
Why is it scarey?
Its called mortgage securitisation.
AIB and Bank of Ireland started doing this over a decade ago (2002).
I'm sure if I have a dig around I can find the letter advising one of my loans was sold off at the time.
The only thing new here- is entire books of loans, from lenders who did not traditionally securitise their loans- are being offered to the highest bidder.
Its far from a new development though.0 -
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Join Date:Posts: 30620
GoodBridge wrote: »
So- the indo think that individual people should be allowed bid on their own mortgages- and that its outrageous that they can't?
Sigh........0 -
The_Conductor wrote: »So- the indo think that individual people should be allowed bid on their own mortgages- and that its outrageous that they can't?
Sigh........
Well, it's an opinion piece so Stephen Donnelly TD thinks that. No idea if the indo as an entity has a stance on the matter!0 -
Is the 10% discount figure for fully performing mortgages an accurate figure. For Irish nationwides performing loan book that is a very good price for the state to achieve. Not sure if the figure from the article is accurate or from a delusional TD's head
Is Stephen (an elected TD) saying that a person who cant pay there mortgage of 300k can sell there house for 200k, pay the mortgagor 150k and pocket 50k for a "fresh start" to, let me guess, buy another property.
Is Stephen saying a bank will give a highly stressed person with a history of default who feels they can't adequately provide for their children a mortgageLet's take another example. Let's say you borrowed €300k, and due to job loss or wage cuts you're in arrears. You haven't taken a holiday since 2006, you can't provide for your kids as you'd like to, and you haven't slept properly in months because of the stress. John has just bought your mortgage for €150k – but you still owe him the full €300k. You can't afford the payments on €300k, but you could easily handle payments on €150k, so an Irish bank might very well give you such a mortgage. Or you could sell the house, let's say for €200k, and pay the €150k from that, with €50k in the bank to start again. In one move, you and your family get to restart your lives. As before, everyone in Ireland wins. But this Government won't let you do that. Because you're not like John.0 -
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I have a lot of respect for Stephen Donnelly but in this case I think he is way off the mark.
He is assuming that another Irish bank would provide finance to somebody who is already in arrears and has not demonstrated creditworthiness.
Big jump.
Also - the time lag and administration required for such a proposal just makes it unworkable.
Batch - discount - sell - done0 -
The_Conductor wrote: »So- the indo think that individual people should be allowed bid on their own mortgages- and that its outrageous that they can't?
Sigh........
By getting a mortgage to bid on a mortgage... Why would anyone bother paying their mortgage debt? Don't pay anything, wait for the bank to sell it off at a discount then buy the mortgage at a knock down price. Sure why stop there, don't pay the second mortgage, wait for it to be sold at a discount, wash, rinse, repeat until there is nothing left.
Saying all that, I do kind of see the point that is trying to be made. However, why should it be limited to the person with the mortgage? Maybe someone who wants to live in the area might want to bid on it? If the home owner is not meeting repayments you could arrange court proceedings to have them evicted after the requisite grace period.0 -
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Why not just do what should be done?
Repossess houses where loans aren't performing. Sell house to the highest bidder. If the current owner is able to somehow finance a new mortgage or get cash to be the highest bidder, then great, they get to stay in the property. Otherwise, they take their financing and find accommodation more reflective of their ability to repay.
Anything else is effectively tax payers funding write downs on properties that they are frozen out of bidding on themselves. This is fundamentally unfair.0 -
Iwannahurl wrote: »I recall a married couple I knew trying to get a mortgage long before the Celtic Bubble even started. With the help of an accountant friend, they were fabricating evidence to fool the bank. The charade even included faking documents and scrunching them up a bit to make them look a bit older.
This was happening for years before the bubble, only then it was just young professionals. I know many who did it with the help of older colleagues. It just became more widespread and moved to all classes during the bubble. And it was their broker rather than a partner in their firm who 'helped them out'.
as for Stephen Donnelly, he knows better than this. He is playing to the gallery. Does he really think someone in arrears of €50k has €160k under their mattress, or if they had that it would be a politically palatable solution?0 -
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Why not just do what should be done?
Repossess houses where loans aren't performing. Sell house to the highest bidder. If the current owner is able to somehow finance a new mortgage or get cash to be the highest bidder, then great, they get to stay in the property. Otherwise, they take their financing and find accommodation more reflective of their ability to repay.
Anything else is effectively tax payers funding write downs on properties that they are frozen out of bidding on themselves. This is fundamentally unfair.
But this way the uneducated masses will listen to the gubberment when they blame some faceless investment fund for repossessions over the coming years.
This is a non-story to the masses now and Noonan knows it.0 -
The more scary issue coming of late is that the Government are selling off mortgages to foreign investors.
Stephen Donnelly is again, on the forefront of asking the real questions of a potentially disastrous situation, and being stonewalled by the Taoiseach and Noonan.
Yeah stephen donnelly the guy who seems to spend an inordinate amount of his time looking for ways to take care of the huge amount of mortgage debt out there.
Funny a lot of the time it involves debt being written off in some fashion and that usually means someone else carries the cost.
I guess a lot of his friends and peers bought overpriced crud in the likes of Charlesland, Greystones his stomping ground.GoodBridge wrote: »Well, it's an opinion piece so Stephen Donnelly TD thinks that. No idea if the indo as an entity has a stance on the matter!I have a lot of respect for Stephen Donnelly but in this case I think he is way off the mark.
See above.
So far all I see or hear of mr donnelly is him coing up with ways to alleviate the debts of mortgage holders in trouble.
So far I think most of those mean other people cough up.
Thanks, but no thanks stephen.I am not allowed discuss …
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The more scary issue coming of late is that the Government are selling off mortgages to foreign investors.
Stephen Donnelly is again, on the forefront of asking the real questions of a potentially disastrous situation, and being stonewalled by the Taoiseach and Noonan.
The Government are splitting mortages into two categories, performing and non -performing, and selling them off in bundles. Without allowing the actual mortgage holders apply to bid for it.
The issue arrives here with mortgages in arrears. The mortgage might have been originally drawn up for 300k, and will be sold for let's say 240k. So there is a writedown there of 60k. But when it's sold to foreign investors, they will seek the full 300k repayment. Hence making 60k profit.
I'd imagine this is something financial and asset managers will jump on. Because they operate foreign, they won't be bound by some of the rules and laws here, and will be able to turn screws into mortgage holders as they recoup the full 300k, potentially ending in eviction and repossession. Asset manager now holds a property, that's price will likely rise in the coming years as supply fails to meet demand.
An example of the REALLY poor performing mortgages, might be a 300k mortgage being sold off at 160k. A bit writedown. But again once taken by the foreign investor, they will continue to seek the full 300k, potentially earning more profits for their clients.
Instead of the sensible thing, allowing in cases for mortgage holders to bid and have an option on the firesale mortgages.
Imagine a family struggling with a 300k mortgage, getting the opportunity to essentially restructure to have it at 160k. It makes perfect sense, however not to Noonan, who feels the only option is to bulk sell to foreign investors, as its "efficient and will make the sales faster".
This is what happens when you provide the task of rebuilding the economy, to former teachers and people with no experience....
Isn't it appalling when folk are actually expected to pay back what they owe...:rolleyes:0 -
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Isn't it appalling when folk are actually expected to pay back what they owe...:rolleyes:
I think the issue is that Irish banks are taking a loss (for which the Irish taxpayer picks up the tab), whilst wealthy foreign investors reap the profit.
Meanwhile the original borrower (probably Irish) is still on the hook for the full amount they borrowed and Irish people who want to buy somewhere to live have to pay inflated prices due to a lack of supply.0 -
It's more than that.
The Irish taxpayer also picks up the tab for repaying bondholders in full (bank guarantee etc) and for the 60% writedown on the loans taken over by NAMA (aka bailout for developers).0 -
Read his post again. He wants people with bad credit and an arrears history to be able to bid on their own mortgages. Where are they going to get the finance to do that?stevedublin wrote: »I think the issue is that Irish banks are taking a loss (for which the Irish taxpayer picks up the tab), whilst wealthy foreign investors reap the profit.
There is no lack of habitable units in this country, even in Dublin. The number of transactions is artificially small and this is distorting the market. It's called "foreclosure stuffing" but it's never happened anywhere else on such a scale as it's happened here.Meanwhile the original borrower (probably Irish) is still on the hook for the full amount they borrowed and Irish people who want to buy somewhere to live have to pay inflated prices due to a lack of supply.0 -
The_Conductor wrote: »So- the indo think that individual people should be allowed bid on their own mortgages- and that its outrageous that they can't?
Sigh........
Why not?
The issue here isn't solely arrears or bad mortages. There are plenty of good mortgages, ones that have been paid on time with no fuss being sold of in firesale.
There are PLENTY of healthy financially sound couples, families or individuals, who would happily buyout their mortgage, if they had a chance to buy it for these sort of prices.
The secondary, and most important issue, is that the mortgages are being sold off at a writedown. So in an example 300k going down to 220k. That is bank acknowledging "ok we can't get the full amount for this" Yet when the actual homeowners are trying to negotiate with the banks for debt writedown, it's flat line refused.
So it's a good argument for making the wealthier wealthier, while the poorer get poorer. It's a pretty black and white example. Mortgage wrote down by 80k, yet not to the homeowner who still needs to pay the entire 300k back.
I'm not one for normally pouring out sympathy for people in financial stress, cause while there are genuine instances and circumstances, there are just as much of people living beyond their means. But as someone who worked in private banking and asset management, this is $$$$$ for foreign investors, but it should have been examined as how to help Irish people first.
We will writedown the debt to entice a foreign investment to buy it out, but not for our own people to give them a breather. sorry, doesn't add up for me.0 -
Is the 10% discount figure for fully performing mortgages an accurate figure. For Irish nationwides performing loan book that is a very good price for the state to achieve. Not sure if the figure from the article is accurate or from a delusional TD's head
Is Stephen (an elected TD) saying that a person who cant pay there mortgage of 300k can sell there house for 200k, pay the mortgagor 150k and pocket 50k for a "fresh start" to, let me guess, buy another property.
Is Stephen saying a bank will give a highly stressed person with a history of default who feels they can't adequately provide for their children a mortgage
He has stated any attempts he has made to get facts and figures has been blocked by Noonan with bolloxolgy relating to confidentiality. But the fact remains the government are selling off large quantities of mortgages, the good the bad and the ugly, at slashed prices to essentially get them out of their hands ASAP.
The point he is making that if the mortgages are going to be written down for foreign investors, why not for the actual home owners themselves?0 -
Why not?
The issue here isn't solely arrears or bad mortages. There are plenty of good mortgages, ones that have been paid on time with no fuss being sold of in firesale.
There are PLENTY of healthy financially sound couples, families or individuals, who would happily buyout their mortgage, if they had a chance to buy it for these sort of prices.
The secondary, and most important issue, is that the mortgages are being sold off at a writedown. So in an example 300k going down to 220k. That is bank acknowledging "ok we can't get the full amount for this" Yet when the actual homeowners are trying to negotiate with the banks for debt writedown, it's flat line refused.
So it's a good argument for making the wealthier wealthier, while the poorer get poorer. It's a pretty black and white example. Mortgage wrote down by 80k, yet not to the homeowner who still needs to pay the entire 300k back.
I'm not one for normally pouring out sympathy for people in financial stress, cause while there are genuine instances and circumstances, there are just as much of people living beyond their means. But as someone who worked in private banking and asset management, this is $$$$$ for foreign investors, but it should have been examined as how to help Irish people first.
We will writedown the debt to entice a foreign investment to buy it out, but not for our own people to give them a breather. sorry, doesn't add up for me.
You're talking about trackers right?
Just because folk are getting a sweet deal on an interest rate much lower than standard variables doesn't mean they are automatically entitled to buy out their loans with a write off included too. If the bank sells a tracker mortgage onto another institution at a rate the other institution can make a profit from that's their business. The person with the loan continues to pay back their mortgage at the agreed rate. What exactly is the problem there?
As to your secondary yet more important issue, being in arrears AND negotiating a writedown on your bad debt but keeping the asset the loan is secured against is called "having your cake and eating it too".
If you want to lose the debt, you must also lose the asset. Otherwise it's just socialisation of losses and privatisation of profits.0 -
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Iwannahurl wrote: »What sticks in people's craw is that socialisation of losses and privatisation of profits is deemed OK for banks, bondholders, developers etc but not for ordinary homeowners struggling to make ends meet.
1. Who here is "OK" with what you've described?
2. Does the fact that somebody is getting a free lunch make it okay for others to demand a free lunch too until eventually it's only the saps who don't have brass necks paying for it all?0 -
Isn't it appalling when folk are actually expected to pay back what they owe...:rolleyes:
This is part of the problem in Ireland. A condescending, dismissive attitude when it comes to dealing with people in financial struggles.
The bank owns just as much accountability, dangling carrots to prospective home owners, with lacks checks and due diligence, and offering just about anyone credit. And in a lot of cases mortgages in excess of 90% (which is ****ing mental).
As for comments about Donnelly, I'm not even in his constituency, but I wish he was my local TD. He is pro-active, experienced in the world of finance and economics from private life
He has hit this topic relatively hard and just gets stonewalled by the Government. This is a topic the Government promised to tackle, and have failed.
He's been active in a RANGE of topics and issues, always speaks from reason and REAL experience.0 -
The issue arrives here with mortgages in arrears. The mortgage might have been originally drawn up for 300k, and will be sold for let's say 240k. So there is a writedown there of 60k. But when it's sold to foreign investors, they will seek the full 300k repayment. Hence making 60k profit.
Sounds like the government don't have the stones to deal with the repossessions problem themselves, so are passing the bad debts on to "debt collectors" aka foreign investors to avoid getting their own hands dirty.0 -
Nope, Government refuses to provide any details on the matter, so nobody knows the specifics. Could just as easily be normal mortgages with healthy owners financially.You're talking about trackers right?As to your secondary yet more important issue, being in arrears AND negotiating a writedown on your bad debt but keeping the asset the loan is secured against is called "having your cake and eating it too".
So we just turf tens of thousands of families out of their houses? I suppose it will solve the problem of supply vs demand in the current market right?
In a situation like this when it's isolated incidents its easy to make that sort of statement. When your in a country that has a 40% rate of mortgages lapsing in arrears ( figure I heard on radio yesterday), it becomes a bit more of a problem that need's to be addressed with providing options.
I'm not saying give everyone a writedown. There is a number of options. But you can't turf tens of thousands of families, individuals etc out of the road.
It's easy for us to sit on our lovely high horse and say how if someone bought something on spec, and can't afford it, they loose it. Most of the time it's the case, and I'd have little sympathy. But there is a slightly more grave situation here, that I feel a lot of people seem to fail to realise.0 -
Sounds like the government don't have the stones to deal with the repossessions problem themselves, so are passing the bad debts on to "debt collectors" aka foreign investors to avoid getting their own hands dirty.
As a foreign investor, they will not be bound by a large portion of legislation that the banks are here.
A foreign investor can initiate a number of proceedings. It can even initiate a situation where it will re-posses the house, sell it, and if there is balance, continue to pursue that individual for the balance.
The issue to be addressed in the whole debate on debt is to provide a light at the end of the tunnel. you can't walk around your life with debt around your neck, you just can't.
It's different if you spunked your fortune on a stock that sank. We are talking about people who bought homes for their family, and over the course of time circumstances changed for the worse. They didn't take a calculated risk. There wasn't a massive ROI at the end of some deal. This was buying a home. And in a lot of cases income being slashed or loosing employment entirely.
Solutions need to be providing SOLUTIONS. Firesaling mortgages to foreign investors is the Government washing its hands of the problem.
Can't say I'm surprised they've been a total failure in my eyes anyway, with a complete lack of decision making and decisiveness.0 -
You're ducking and weaving on this one. You tried to make out that you were talking about "some" mortgages not in arrears but from the bit below, you are clearly talking about arrears. Blow away some of the smokescreen and be clearer please.Nope, Government refuses to provide any details on the matter, so nobody knows the specifics. Could just as easily be normal mortgages with healthy owners financially.
So we just turf tens of thousands of families out of their houses? I suppose it will solve the problem of supply vs demand in the current market right?In a situation like this when it's isolated incidents its easy to make that sort of statement. When your in a country that has a 40% rate of mortgages lapsing in arrears ( figure I heard on radio yesterday), it becomes a bit more of a problem that need's to be addressed with providing options.
I'm not saying give everyone a writedown. There is a number of options. But you can't turf tens of thousands of families, individuals etc out of the road.
It's easy for us to sit on our lovely high horse and say how if someone bought something on spec, and can't afford it, they loose it. Most of the time it's the case, and I'd have little sympathy. But there is a slightly more grave situation here, that I feel a lot of people seem to fail to realise.
Eh I think you need to apply a filter to whatever radio station you're listening to. PPR arrears is 18-19% and BTL arrears is 27%. A large portion of households own their own home and by themselves households renting outnumber those in arrears so overall arrears actually comprise approx 10% of all households. Not all of those will require eviction so can we spare the famine comparisons please?
Firstly, there's a lot of options:
1. They can pay their mortgage. There are certainly some folk either choosing not to pay them or "prioritising" other more important expenses such as foreign holidays. Look at that chancer turning up in court with five figure sums in back pocket cash trying to prevent repossession of his BTL apartment in Dublin CC.
2. If they can't pay but can pay a lesser amount, then extend the term.
3. If that doesn't work, then repossession is looking more likely but isn't a foregone conclusion.
People have no problem accepting the notion that tenants who can't afford to rent must move. I don't see why it should be any different from folk who can't afford their mortgage.0 -
So we just turf tens of thousands of families out of their houses? I suppose it will solve the problem of supply vs demand in the current market right?
My personal solution is if you are six months or more in arrears, or your arrears have been ongoing for more than nine months - no point dragging at five months behind forever - that the property is repossessed. The owner now becomes a tenant at market rate, with the security of a lease for twelve months providing they can pay the relevant market rate. If they can't pay the market rate, they need to cut their cloth accordingly and move to lower rental.
After twelve months, the house goes on the market... The benefit of the 12 month lease is it gives them time to plan ahead.
The debt remains for the now former owner to pay off, with the expectation that the payments cannot exceed a reasonable portion of their salary (I suggest 10c in the euro over and above salaries of €18,000 to give basic income level), perhaps with a time limitation of seven years. The alternative is allowing the former owners to go bankrupt.
Either way, they no longer own the house.
This ensures that people are not rewarded/do not benefit excessively from financial mismanagement.
I don't want indebted servitude til death, but I see no reason why they should benefit to my detriment when I was prudent.0 -
Iwannahurl wrote: »What sticks in people's craw is that socialisation of losses and privatisation of profits is deemed OK for banks, bondholders, developers etc but not for ordinary homeowners struggling to make ends meet.
Can I ask you who exactly are THE BANKS ?
Would it be the owners, i.e. the shareholders, who saw the value of their shares wiped out ?
Would it be the employees ?
Would it be the executives ?
Would it be the buildings themselves ?
Or would it be the current owners, as in the current and future taxpayers of this state, some of whom acted very prudently despite the continous lambasting during the madness of our bubble ?
BTW I didn't agree with the bank gaurantee for every bank before you ask or make any other comments.This is part of the problem in Ireland. A condescending, dismissive attitude when it comes to dealing with people in financial struggles.
And you know what a lot of other people think the problem with Ireland is ?
It is that some people think they are owed or entitled to something from others.The bank owns just as much accountability, dangling carrots to prospective home owners, with lacks checks and due diligence, and offering just about anyone credit. And in a lot of cases mortgages in excess of 90% (which is ****ing mental).
That is fine, but who are the banks nowadays ?
Will you punish the current owners, i.e. the taxpayers, for the sins of the previous executives and staff ?As for comments about Donnelly, I'm not even in his constituency, but I wish he was my local TD. He is pro-active, experienced in the world of finance and economics from private life
He has hit this topic relatively hard and just gets stonewalled by the Government. This is a topic the Government promised to tackle, and have failed.
He's been active in a RANGE of topics and issues, always speaks from reason and REAL experience.
I see why you are such a fan, as he has spent much of his time looking for those prudent to cover other peoples' debts.Nope, Government refuses to provide any details on the matter, so nobody knows the specifics. Could just as easily be normal mortgages with healthy owners financially.
So we just turf tens of thousands of families out of their houses? I suppose it will solve the problem of supply vs demand in the current market right?
Yes lets get the old pictures of the famine and landlord evictions out.
Oh wait a minute shure isn't it all right to turf out tenants since they don't "own" their homes and don't have mortgages. :rolleyes:I am not allowed discuss …
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