Mortgage bail out

D

Danielle24

Registered User
Messages
209
Did anyone else see the front line the other night? I can't get my head around this scheme they're talking about to bail people out that are in mortgage arrears. Whats your views, opinions on it?
 
Hi

I didn't get that much info on it but what I gathered was they were planning to help out people in trouble via the taxpayer.
 
I've had enough of paying for other peoples financial stupidity (banks etc.). I dont want any more of my hard earned money being used to bail out more stupid people.
 
I can't understand how in the world this is fair, I can't afford my own mortgage why should my tax be going towards funding someone elses. I have all the sympathy in the world for people who have lost their jobs are in mortgage arrears etc, but at the end of the day having your own home is a luxury whether people accept that or not, what's next would anyone like to pay my car loan.
 
Ok I did watch the program and the notion that there will be a "bail out" for mortgage holders is somewhat of a misnomer.

Whilst he ranted on a bit hysterically Karl Deeter made a number of points which I'm pretty sure will start forming the guts of this "bail out".

First off, no-one is writing blank checks, no-one is getting blank checks. The term to note is [broken link removed].
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
Click to expand...

So the bail out really just facilitates those who have no choice (delinquent on the loan or need to move) in clearing the loan and moving on with their lives. It reduces the costs involded for all parties and really just formalises the process that banks currently undertake. The 2 year moratorium needs to be removed. The stigma attached dismissed. And the personal consequences to bankruptcy in Ireland reduced.

The last thing the Irish Economy needs is 10s of thousands of households putting every penny they have into paying interest payments on overpriced property. Not to mention mortgage interest relief and mortgage interest supplement, which are really just trasfers of money from the Iirsh taxpayer to the banks.

The advisory group on which Brendan now sits will seemingly have the ultimate word of this.

Will this have consequences for the Irish tax payer? Well first off this would be on a case by case basis. The number of likely cases would be thousands over a number of years and so fairly managable. Currently banks still have to go through the same process, it just takes longer and costs more.

The largest lender during the boom was ILP. They have sufficient resources to take the hit without recourse to Govt funds. The shareholders will get pasted. I've no problem with that.

Foreign owned lenders formed another significent portion of the market (Ulster, ACC, BOSI, First Active. National Irish Bank). These guys will make massive losses. I've no problem with that.

AIB was known to be quite prudent with regards to it's residential loan book during the boom - in stark contrast to it's Commercial loan book. Losses there may be manageable.

BOI ?

EBS ?

Irish Nationwide ?

Anglo: As far as I know they didn't have much of a residential loan book, bar some dodgy looking deals with freinds and family.

If you are in negative equity and are currently servicing your mortgage - tough.


The hit to the taxpayer doesn't look too bad, IMO.
 
My house is modest and so is my mortgage. I pay enough tax.
I do not want to bail out idiots who spent half a million on a house when they were only earning €40k.
 
tenchi-fan said:
My house is modest and so is my mortgage. I pay enough tax.
I do not want to bail out idiots who spent half a million on a house when they were only earning €40k.
Click to expand...
If the mortgage is taken out with a foreign owned bank or ILP then you won't be bailing out anyone.
 
Howitzer said:
That's just my opinion. There's no bailout for anyone at the moment. What do you currently construe the situation to be?
Click to expand...

I'm not undermining your opinion at al Howitzer, you're more educated on the whole situation than I am. I just heard, mortgage bail outs, banks and taxpayers and thought here we go again.
 
I disagree in principle with allocating any tax resources to householders in negative equity. I also disagree with NAMA.

People in real hardship will be helped via social welfare, if they declare bankruptsy or sell their house at a significant loss (agree that bankruptsy laws and self-employment welfare entitlements should be reformed). Our social welfare system is generous and is sufficient to meet the needs of those who are truly in dire straits. The emotive language of people being homeless and sleeping in doorways if they lose ownership of their house is a nonsense. Renting is always an option.

People who cannot afford to be homeowners because of changes in their circumstances cannot expect others to subsidise their lifestyle choice. Whatever happened to cutting your cloth according to your means, and lying in the bed you made. While the ownership of a home was massively and widely hyped throughout in the early noughties and people received bad advice, ultimately the people who decided to pay exorbitant prices were adults and have to take responsibility for their decisions. Moral hazard must apply to everyone. Life is brutal, families face adjustment and ruin, these are the harsh realities. More nanny-statism and handouts from the taxpayer,in particular from people who were prudent with their financial resources are not the answer.
 
For what its worth heres my view.
I think an idea to get people spending again is to take the negative equity that people have in their homes and put it on "hold". Say i have a mortgage here for 280k, 274k remaining. My home is currently worth circa 210k. That leaves me 64k in neg eq. The bank would effectively hold back on getting the 64k back until things improve. they would also retain 23% of my home. Therefore I would only be paying back (temporarily) on what the house is worth (210k) meaning a lower repayment, more disposable income to put back into the economy.

In turn retaining some jobs as me and others spending more would help retain other jobs i.e having a knock on effect within the country. retail etc..Also it may stimulate the property markets. when I can afford it then, I would up the repayments back to the level they are now and continue to reduce the stake the banks have in my home.
Its probably a rediculous suggestion but it might help those that are finding it really difficult to keep up mort payments
Any thoughts?
 
doubledeb said:
For what its worth heres my view.
I think an idea to get people spending again is to take the negative equity that people have in their homes and put it on "hold". Say i have a mortgage here for 280k, 274k remaining. My home is currently worth circa 210k. That leaves me 64k in neg eq. The bank would effectively hold back on getting the 64k back until things improve. they would also retain 23% of my home. Therefore I would only be paying back (temporarily) on what the house is worth (210k) meaning a lower repayment, more disposable income to put back into the economy.

In turn retaining some jobs as me and others spending more would help retain other jobs i.e having a knock on effect within the country. retail etc..Also it may stimulate the property markets. when I can afford it then, I would up the repayments back to the level they are now and continue to reduce the stake the banks have in my home.
Its probably a rediculous suggestion but it might help those that are finding it really difficult to keep up mort payments
Any thoughts?
Click to expand...

If you go Interest Only, isn't that the same or similar result? You postpone paying the principal. More disposable income put back into the economy etc..
 
Yes, but if mortgage holders have already been down this road maybe this might be the next step for them. I think most lenders will give you 6 months interest only but what options are after that?
In the case when one person or both have been made redundant, maybe they could put it the (neg eq) on hold until they return to work.
Last resort for some I know but it would at least keep a roof over the ol heads?
 
doubledeb said:
Last resort for some I know but it would at least keep a roof over the ol heads?
Click to expand...
Hardly a last resort to keep a roof over your head. A last resort list lower than that might be: Rent, Rent a Council property, Move back in with parents/relatives.

I'm not being conceited. These are genuine last resorts. Creating a convoluted scheme which solves absolutely nothing for either the person, the bank or the state is worse than useless.

This isn't a criticism of you but of the idea. Matt Cooper has floated a flavour of this. I do genuinely agree with the idea that those deep in negative equity AND unable to service their mortages need help. But the help they need is in winding up their position, clearing the debt with the bank and starting again.

That's a solution* that works for all 3.

*(There is no solution)
 
For what its worth heres my view.
I think an idea to get people spending again is to take the negative equity that people have in their homes and put it on "hold". Say i have a mortgage here for 280k, 274k remaining. My home is currently worth circa 210k. That leaves me 64k in neg eq. The bank would effectively hold back on getting the 64k back until things improve. they would also retain 23% of my home. Therefore I would only be paying back (temporarily) on what the house is worth (210k) meaning a lower repayment, more disposable income to put back into the economy.
Click to expand...

Someone has to pay the interest on the full 274k remaining - if you're not doing it who is? The taxpayer? The banks cant afford it, so ultimately it will come from the taxpayers pocket in the form of higher taxation.
 
csirl said:
Someone has to pay the interest on the full 274k remaining - if you're not doing it who is? The taxpayer? The banks cant afford it, so ultimately it will come from the taxpayers pocket in the form of higher taxation.
Click to expand...
No it won't. We don't own all the banks.

Ok, for a convoluted scheme such as that outlined the state would have a liability as they would be interferring in the market, but in general who cares if someone defaults on a sub-prime lender?
 
Quote:
Many people who bought houses during the recent boom did so because they wanted a home not to make a profit. Why should these people suffer while those who bought before the property boom saw their properties soar in value.

Emm... why should those who would have liked to buy a house to raise their families but make a financially prudent decision to keeping renting fork out for those who were profiligate. Perverse, though not quite as perverse as NAMA.

Handouts should be the reserve of those who are truly desperate, as Howitser said householders who cannot afford that status should wind up their position.
 
You must log in or register to reply here.
Back
Top