EBS bidder says principal should be reduced.

[mcaul]

Interesting comment by one of the favourites to take over EBS. Probably the most honest opinion form a banker in a long time. - Basically "the banks messed up, they have to take pain"

from rte.ie -

A consortium which has submitted a bid for EBS Building Society has raised the possibility that the lender could cut the amount people owe on their mortgages.
One of the potential investors, Wilbur Ross, gave an interview to CNBC television today. Mr Ross is a veteran US investor and an industry leader in bankruptcies in the banking sector.
He told CNBC television today that he had joined a consortium which was bidding for EBS. The other members of the consortium are Dublin-based Cardinal Capital and the international Carlyle Group.
Advertisement

They have pledged to put €550m into EBS in return for a 70% stake. This would leave the Government with the remaining 30%.
In today's interview Mr Ross said that lenders would have to cut the principal amount people owed on their mortgages. He added that people in Ireland, unlike some states in the US, remained on the hook for their borrowings even if a bank had repossessed a home.

 

[jpd]

obviously, if we introduce no recourse mortgages into Ireland (ie borrower is not responsable for any shortfall between house value and mortgage) then the interest rate will be higher on these mortgages than on a normal mortgage in order to take into account the risk of the borrower handing back the house and walking away.

It seems to me as if Mr Ross is showing a lack of knowledge of the mortgage business in Europe, where no recourse mortgages are not at all common unlike the US market.

 

[Meathman99]

Is this consortium still considering buying EBS? And if so, are they persisting with the idea of reducing the principal. Would this affect tracker loans