Borrow €400k from AIB and only pay back €250k

OldNotWIse

yosser hughes wrote: »

Why should the local authority house them? They both have jobs. They can rent. Let someone who can pay a mortgage move in to their house.

Thats what I dont understand. How can they both still have their jobs and have got themselves into such a mess? Plenty of people have had their wages slashed and still manage to make ends meet.

jay0109

D3PO wrote: »

There should of course be clawbacks on future value of the asset no doubt. I dont believe there isnt despite what was apparantly claimed on Morning Ireland today ...

Hall has made it very clear a few times today...the only condition attached to this deal is that the couple continue to pay Cap + Int. He expressley made it clear there would be no future clawback by AIB...be it that the house value increased or the couple got promotions/wage increases etc

fliball123

D3PO wrote: »

Your right however its also pointless for people to post purely based on the emotive nature of the topic.

If people were actually to take a step back and consider the situation then there could be a reasonable debate on the merits and or demerits of what occured.

lets make one thing clear those of us advocating that the debt should remain with the mortgage holder is not emotive..It is financial..We borrowed 9 billion this year, 12 billion in 20012, and 15 in 2011...alot of that was stuffed into the banks..this money has to be paid back by future and current tax payers..so it is purely financial

OldNotWIse

D3PO wrote: »

Ah here now that age old argument trotted out. They are the professionals its their fault.

You dont need to be a financial whizz to know

I get X amount of money every month.

If I subtract x for heating, y for food, z for the mortgage do i have enough to live on assuming something bad could happen to my circumstances.

Subtraction is learnt in first class in primary school and common sense is a life skill theres no traning in financial services needed to have a bit of cop on.

And of course is these same people making this argument did so with fudged financials provided how can they honestly say it. "Bank didnt stress test me right" ok I gave them Bullsh1t data to use but still .....

Indeed. I posted this in a different thread re a different bailout:

But if you had [borrowed], it would have been the banks fault for giving you the money to do it right? Because you are not an adult capable of making your own decisions and if the bank offers you free money you have to take it because otherwise they will come in the night and insert it rectally, in coins. You just had no choice in the matter!

D3PO

FirstBass wrote: »

I'm not sure your doomsday scenario is accurate. The number of houses in the country will remain the same, so there will be places for people to live.

But in principle I like the sound of this solution. The economy needs to be re-set.

The alternative that we are getting is to pretend that 2006 was normal. We have written a cheque for the full cost of the bubble, the national debt is climbing by a billion a month, our cost of living is shooting up again and our competitiveness is being destroyed. We're driving young people away.

We simply can't cover all the losses from the bubble, so it's going to crash at some point. How much extra is it going to cost to fix residential mortgage debt and SME debt? It's NAMA for everyone!

When we hit 200% debt to GNP will you still think all of this is a good idea?

Firstly its not a doomsday scenario I suggested that somebody woudl need to cost and chart the consequences which nobody has done.

re housing your rigth the same number of dwellings exist but that doesnt mean an additional housing shortage cannot exist.

Take those renting many sharing. House price collapses and now the 2,3 or 4 people who shared the same dwelling can now all afford to buy. There are now 2,3,4 people buying up the stock and only 1 rental property availbale in return.

That constricts supply further.

I dont believe we will hit 200% debt to GDP if we do its goodnight Irene !!

So far our budgetry strategy re debt to GDP is on course as it stands I feel pretty confident we can get out of this mess if managed right. If Debt to GDP and our budgetry position beging to deteriote again quite simply were Fu(ked and will end up defaulting as a nation.

No doubt about it.

that said the signs are positive, tax returns are increasing, those im employment (as opposed to unemployment numbers which I think is important) are increasing.

Banks are getting to grips with their balance sheets slowly

The counrites budgetry strategy is on course.

Its not a bed of roses were in but its sure as hell not a bed of thorns right now either.

D3PO

fliball123 wrote: »

lets make one thing clear those of us advocating that the debt should remain with the mortgage holder is not emotive..It is financial..We borrowed 9 billion this year, 12 billion in 20012, and 15 in 2011...alot of that was stuffed into the banks..this money has to be paid back by future and current tax payers..so it is purely financial

but that sthe point its not financial.

Liek ive said a few times now. Couple enters a PIA or declares bankruptcy the bank ends up worse off. So how then is it financial ?

yosser hughes

Michael54321 wrote: »

If they don't get debt written off and the house is sold then they would still have to make payments on the negative equitity which would prevent them from renting, so the local authority would have to house them. Either way the tax payer looses

No, if they went for bankruptcy they could have their debt written down but lose the house.
Or a debt for equity scenario. What has happened here is the worst kind of solution. No transparency, no penalty
They have effectively paid NO penalty in the current scenario.
I can live with debt write down but there has to be a penalty.

mjv2ydratu679c

D3PO wrote: »

I think we have hit the crest of the wave, thats not to say that there may not be another move by banks to increase rates as a direct impact.

Some people win and many lose yes and I agree with your point re moral hazard but Ive yet to see somebody provide a costed valid alterantive.

Repo 80 - 100 thousand homes ?
How long will that take ?
How much will that cost ?
What impact will that have to the overall economy ?
What damange will it do to our international standing ?
What will you do with the 80 - 100 thousand families ?
What social housing provisions woudl need to be put in place to manage it ?

etc etc etc.

People dont seem to think of the overall picture. You canot isolate the arrears crisis and expect that the situation shuld be dealt with in a silo.

Actions cause reactions.

Debt for equity swap - write off 33% of loan take 33% equity in house. No need for messy re-posession - fairest solution all round but this being Ireland and with the taxpayer having loads of money to throw around ............

smcgiff

Ayla Most Sequel wrote: »

Debt for equity swap - write off 33% of loan take 33% equity in house. No need for messy re-posession - fairest solution all round but this being Ireland and with the taxpayer having loads of money to throw around ............

I'd agree with this in principal.

The only thing I can think against it is if the couple threatened to go bankrupt and the bank would get nothing. It looks like they were represented well.

fliball123

D3PO wrote: »

but that sthe point its not financial.

Liek ive said a few times now. Couple enters a PIA or declares bankruptcy the bank ends up worse off. So how then is it financial ?

I said its not emotive..it is financial if this couple lose everything they sure as hell wont make the same mistake again..If you let them off you can not be sure that they will do the exact same thing again when times are better. There has to be some punitive measures put in place in order for people to think of the consequences before signing on the dotted line..As far as I can see now no contract or mortgage contract is worth a sh1t

GreeBo

Why wouldnt the bank just extend the term of the loan (or make it interest only, or some combination) to allow them still maintain the debt?

That would ease the day to day burden of the family without just removing a chunk of their debt forever more?

OldNotWIse

GreeBo wrote: »

Why wouldnt the bank just extend the term of the loan (or make it interest only, or some combination) to allow them still maintain the debt?

That would ease the day to day burden of the family without just removing a chunk of their debt forever more?

Good point. Should at least be reviewable depending on value increase.

mjv2ydratu679c

OldNotWIse wrote: »

Good point. Should at least be reviewable depending on value increase.

Yep extend the term - make it 40/50/60 years - whatever makes repayments affordable. Once house is sold outstanding balance could be collected. This or debt for equity would seem the fairest outcome for the taxpayer.

superman28

In every single developed nation if you stop paying your mortgage your house gets repossessed except in Ireland where apparantly nothing happens if you stop paying your mortgage,, it is irrelevant if you think it is wright or wrong or if you think people should never get their house taken from them... this is a fundamental part of borrowing money to buy a house, the Irish banking system is as shady as ever and far from normal in a so called ''developed economy''.

ferike1

The house should be taken away and they should be allowed to rent it.

Dr_Colossus

Good lecture here from Morgan Kelly for a bit of background:

Released before this story broke but still utterly infuriating that this couple are being gifted €150k when the rest of us are screwed to the wall paying taxes and trying to pay rent/mortgages.
There has to be some responsibility for actions instigated in Ireland.

username123

D3PO wrote: »

And of course is these same people making this argument did so with fudged financials provided how can they honestly say it. "Bank didnt stress test me right" ok I gave them Bullsh1t data to use but still .....

Sorry I was actually distinguishing the "falsified documents" people from the "didnt know any betters" there.

The_Conductor

smcgiff wrote: »

I'd agree with this in principal.

The only thing I can think against it is if the couple threatened to go bankrupt and the bank would get nothing. It looks like they were represented well.

Surely bankruptcy only writes-off unsecured debt- secured debt, continues to be secured against the asset- however in this case, it would mean the bank would get 25c in the Euro- whereas under the revised arrangement they get 50c in the Euro with another 5c in the Euro parked for a future date.

So- its not that the bank would get nothing- just that they get twice as much this way (albeit over time) than they would if they simply pulled the plug.

lau1247

GreeBo wrote: »

Why wouldnt the bank just extend the term of the loan (or make it interest only, or some combination) to allow them still maintain the debt?

That would ease the day to day burden of the family without just removing a chunk of their debt forever more?

definitely agree with this and should the economy recover and the couple's income increase over the years, the mortgage should be adjusted accordingly on a set review period.

OMD

The_Conductor wrote: »

Surely bankruptcy only writes-off unsecured debt- secured debt, continues to be secured against the asset- however in this case, it would mean the bank would get 25c in the Euro- whereas under the revised arrangement they get 50c in the Euro with another 5c in the Euro parked for a future date.

So- its not that the bank would get nothing- just that they get twice as much this way (albeit over time) than they would if they simply pulled the plug.

This is the point.
The bank can do this, make less of a loss and require less money from the taxpayer.
Alternatively they can take a principled stand, repossess everything, suffer substantial losses, require more money from taxpayers but keep boards members happy.

Nino Brown

The_Conductor wrote: »

Surely bankruptcy only writes-off unsecured debt- secured debt, continues to be secured against the asset- however in this case, it would mean the bank would get 25c in the Euro- whereas under the revised arrangement they get 50c in the Euro with another 5c in the Euro parked for a future date.

So- its not that the bank would get nothing- just that they get twice as much this way (albeit over time) than they would if they simply pulled the plug.

Yes the bank probably will get more money this way, so from the banks point of view, letting these deadbeats off with 150K is the lesser of two evils. But that's not really the point.
This family is off the hook for a large portion of their mortgage, a sum that would amount to giving somebody a free house in most of the country. And who pays for that? the tax payer.
I thought I was being smart not buying a house in the biggest property bubble in history. Turn's out I was a huge f**cking eejit. Here I am still renting AND paying other peoples mortgages, I can't afford kids but I pay for other people's kids. If you're smart enough to live within your means in this country you should always carry Vaseline and knee pads.

Balmed Out

The priority has to be to recoup as much money as possible for the taxpayer but I don't agree with write downs whereby the beneficiary's identity isn't published and whereby the terms of the deal would allow them to potentially profit from any future price rise.
Is this encouraging strategic defaulters ?

If I owe 500k on a home now valued at 200k then agreements like this would make it very very tempting to take Mondays and Fridays off, ring up some credit card debt and start reducing my mortgage payments.

mjv2ydratu679c

OMD wrote: »

This is the point.
The bank can do this, make less of a loss and require less money from the taxpayer.
Alternatively they can take a principled stand, repossess everything, suffer substantial losses, require more money from taxpayers but keep boards members happy.

It's not one or the other. Alternatively they can swap debt for equity and reduce mortgage appropriately and possibly save the taxpayer even more money.

Cuddlesworth

The_Conductor wrote: »

Surely bankruptcy only writes-off unsecured debt- secured debt, continues to be secured against the asset- however in this case, it would mean the bank would get 25c in the Euro- whereas under the revised arrangement they get 50c in the Euro with another 5c in the Euro parked for a future date.

So- its not that the bank would get nothing- just that they get twice as much this way (albeit over time) than they would if they simply pulled the plug.

Seems to be a assumption here that they would qualify for bankruptcy.

Lando Griffins OTHER HALF

2004 = prioritise your mortgage above all your debts or you're out on the street.

2014 = prioritise everything else it's ok to fall behind on the house, in fact it pays to.

MayoSalmon

Would love if everyone just stopped paying their mortgage and the chaos that would ensue

_Kaiser_

Nino Brown wrote: »

Yes the bank probably will get more money this way, so from the banks point of view, letting these deadbeats off with 150K is the lesser of two evils. But that's not really the point.
This family is off the hook for a large portion of their mortgage, a sum that would amount to giving somebody a free house in most of the country. And who pays for that? the tax payer.
I thought I was being smart not buying a house in the biggest property bubble in history. Turn's out I was a huge f**cking eejit. Here I am still renting AND paying other peoples mortgages, I can't afford kids but I pay for other people's kids. If you're smart enough to live within your means in this country you should always carry Vaseline and knee pads.

Post of the month IMO

I was the same.. got the same calls from AIB every other week offering free money, pre-approved mortgages for several hundred thousand euro, but I refused it as I figured I'd be screwed for decades if I lost my job (something which happened a few years later), and the idea of living in the middle of nowhere, with a 2/3 hour commute wasn't too appealing in my single 20s.

What I SHOULD have done was take every penny they were offering as I've ended up paying for it anyway through taxation and other inventive means of extracting more from my monthly paycheque while those who did gamble and lost are rewarded for it as in this case.

But I've learned my lesson even if no-one else has.. when it all starts again I will take all I can get... run up the credit cards, buy expensive cars, go on lots of holidays, and get a McMansion in the country because when things go sour I'll just cry poverty, blame the banks/estate agents/government/neighbours/friends/family .. ANYONE except myself!

It'll work too! :rolleyes:

Frank Lee Midere

Nino Brown wrote: »

Yes the bank probably will get more money this way, so from the banks point of view, letting these deadbeats off with 150K is the lesser of two evils. But that's not really the point.
This family is off the hook for a large portion of their mortgage, a sum that would amount to giving somebody a free house in most of the country. And who pays for that? the tax payer.
I thought I was being smart not buying a house in the biggest property bubble in history. Turn's out I was a huge f**cking eejit. Here I am still renting AND paying other peoples mortgages, I can't afford kids but I pay for other people's kids. If you're smart enough to live within your means in this country you should always carry Vaseline and knee pads.

Indeed its the moral hazard. Rents are increasing, property prices too, and the part of the rental sector which stayed out of the boom and was prudent, and future generations, are being punished. As for the story about the prices in this case dropping by 75% - ridiculous. its not just renters, people who bought prudently are also being screwed.

Kaiser2000

Kaiser2000 wrote: »

Post of the month IMO

I was the same.. got the same calls from AIB every other week offering free money, pre-approved mortgages for several hundred thousand euro, but I refused it as I figured I'd be screwed for decades if I lost my job (something which happened a few years later), and the idea of living in the middle of nowhere, with a 2/3 hour commute wasn't too appealing in my single 20s.

What I SHOULD have done was take every penny they were offering as I've ended up paying for it anyway through taxation and other inventive means of extracting more from my monthly paycheque while those who did gamble and lost are rewarded for it as in this case.

But I've learned my lesson even if no-one else has.. when it all starts again I will take all I can get... run up the credit cards, buy expensive cars, go on lots of holidays, and get a McMansion in the country because when things go sour I'll just cry poverty, blame the banks/estate agents/government/neighbours/friends/family .. ANYONE except myself!

It'll work too! :rolleyes:

me too, when i first looked to see how much of a mortgage i could get i was told 'go out find a house you like, we will give you what you want'
i wasnt happy with this and i waited and i got a mortgage that i could afford at the time. i waited until after the boom to buy (2009)
now ive lost 35% of my income, my house is worth less but yet im paying my mortgage every month.
i have cut all my outgoings to pay my mortgage.

i was clearly stupid. i shouldve just bought the most expensive pile i couldve got back in the day and ran up huge debts, loans and credit card bills, because at least now i could get 150k off my mortgage.

Frank Lee Midere

And lets be clear, the "boom" in SCD is totally because of this kind of nonsense. There should be tens of thousands of houses for sale.