Win Win: Rolling Jubilee Occupy NY charity to buy back discounted debt & forgive debt

P

PiedPiper

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http://www.youtube.com/watch?v=Rue1pKxr-Bk

So Occupy NY have started a charity and are buying back the so called bad debts at the huge discounts being offered and doing debt forgiveness.
The person whose debt is being forgiven would then make donations and keeps cycle moving everyone wins.
This is a brilliant idea.
Get us out from under this cloud and moving and producing again.
Get us out from under this mean old blame game that’s getting us nowhere.
 
Interesting concept . . .

But

Why would the banks sell the bad debts to Occupy NY for a couple of cent on the dollar when it would be more feasible to sell the the distressed property and get money bank that way?

Or is this charity based solely around forgiving unsecured debts?

Are people allowed stay in their homes?

How does Occupy NY approach a bank to purchase distressed debt?
 
Didnt pepper buy mortgages for 40% and now chasing home owners for 100% plus costs. Would it not be better for a charity to buy than pepper or the Kennedy backed group that have been buying up loans. Didnt Clearys go for less than the cost of the stock in the shop?
 
Didnt pepper buy mortgages for 40% and now chasing home owners for 100% plus costs. Would it not be better for a charity to buy than pepper or the Kennedy backed group that have been buying up loans. Didnt Clearys go for less than the cost of the stock in the shop?

Are you telling us or asking us
 
The prevalence of mortgage backed securities as financial instruments in the US, the relative simplicity of personal bankruptcy and the chasm between supply and demand for certain properties in the US result in the economic value of certain packages of mortgages being worth only 'pennies on the dollar'.

I think that this approach would be perfect for situations like Priory Hall as the asset is basically worthless. I would happily throw in a few quid to get those people out from under their mortgages.

It is a good headline solution but is only likely to impact a miniscule part of the market. There is a danger that it would distract from resolving the wider problem.

If mortgages are being sold, it would be best if the property owner had the option to buy out their individual loan, possibly with help from family & friends. The problem with this is that banks would not want the hassle/ cost involved. Then there is the moral hazard argument that you would encourage people to default to then purchase their property for 'pennies on the dollar'
 
I think it is an interesting concept but I don’t think any of the banks here sell on individual non-performing home loans to debt collectors – do they? And things aren’t so bad here that you would be talking about cents in the euro (maybe for personal loans but not home loans and I’m not sure there’s much public appetite to help out personal loans) – maybe 40/50 cents in the euro? – the bank could probably do as well by repossessing and selling.

I also don’t know why it has to be a full charitable donation to the borrower. I can understand the need for a middleman to fund/facilitate the transaction but I think there are rarely cases where borrowers (certainly here anyway) are saying that they cannot afford ANY of their repayments – so if they can buy 100K of debt for 5K, why don’t they ask the borrower to repay the 5K so the whole thing is self-financing other than admin costs and float to keep them going.

There is of course already a (very unpopular) example of this sort of thing here already: the builder in Cork who went bankrupt, the bank sold his house (for maybe 40 cents on the euro? I can’t remember exactly) and it was his son-in-law who bought it at the lower price. So as a family, they effectively cleared the debt for 40/50 cents on the euro and still have the house.

With the way the home loan market here is structured, any charitable equivalent of the US concept would probably be better off buying up repossessed houses and gifting them back to the evictees – same concept (and cost) but not requiring bank co-operation with the charity.

I would be interested to know how the tax authorities would treat the ‘gift’. I know in the US if your mortgage provider writes off your debt, it is not considered a gift for tax purposes – but it is specifically a gift from your mortgage provider so a ‘gift’ from any other source might have to be taxed.

[Pepper bought GE’s entire mortgage book at about 40 cents in the euro to allow for sub-prime lending/non-perfomance within the book, they don’t buy (afaik) individual mortgages]
 
I agree with your post Orka. I think this is a fantastic idea but it would be better if a percentage of the money was paid back to the organisation that helped bail you out.

I am also interested to know whether banks here sell on non-performing home loans?

Does anyone know the answer to this please?
 
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