ONQ's proposal for Universal Debt Forgiveness

If the person owes 400k on a house that is worth @200k and walks away.

The bank sells house in a distressed sale for €190k - expenses of say 15K so they net €175

Better to reduce mortgage to 200K and let people agree to pay it and taxpayer is up 25k + taxpayer does not have to provide social support such as house, allowances......etc.

The excess equity has already been written off.
 
monagt said:
If the person owes 400k on a house that is worth @200k and walks away.
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There is currently no facility to walk away, mortgages were not non-recourse. This is why bankruptcy is the solution for some indebted mortgage holders.

monagt said:
The excess equity has already been written off.
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What equity, there is only negative equity? Who has already written off the negative equity of all these mortgage holders?
 
There is currently no facility to walk away, mortgages were not non-recourse. This is why bankruptcy is the solution for some indebted mortgage holders.
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Correct Ontour, I am being simplistic in my use of words. UK or NI being options on bankruptcy.

What equity, there is only negative equity? Who has already written off the negative equity of all these mortgage holders?
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VinB Monday, it was said and not contradicted that it has been written off in the banks books and does not have to be replaced if they do deals with mortgagees.
 
monagt said:
VinB Monday, it was said and not contradicted that it has been written off in the banks books and does not have to be replaced if they do deals with mortgagees.
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Ivan and gang said that the debt has not been written off by the banks. The point was made that the recapitalization of the banks could be used to write off this debt.
The point was made that this course of action would result in an increase in the cost of bond financing. The banks would basically be spending the ‘rainy day’ fund now, without it they are a higher risk.
Also this recapitalization applies to about 50% of the mortgage market and none of the panel had an answer on how to deal with struggling mortgage holders in the other banks.

What was consistent across the whole panel was that the concept of a universal mortgage write down was rejected.

For anyone who did not see it, Ivan Yates panel was Paul Sommerville, [FONT=&quot]Brian Hayes[/FONT], Karl Whelan and Mike Soden
 
Also, if I have a house that cost me 400k that is worth @200k and I am servicing the mortgage on it, and I see my neighbour's mortgage reduced to 200k due to debt forgiveness, then there is a great incentive for me to alter my circumstances so I can gain 200k net of taxes and the interest on that amount over the period of the mortgage - probably worth nearly 400k in income. Takes a very long time to earn that money. Better for me to lose my job and gain that money all at once. You have to admit, it is a really huge incentive.
 
The Finance Minister says the capital is already in Irish banks to allow them to write off loans in a debt forgiveness scheme.

Michael Noonan says it is a pressing issue for some families and will have to be dealt with.

But he insists it is manageable.
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Also, if I have a house that cost me 400k that is worth @200k and I am servicing the mortgage on it, and I see my neighbour's mortgage reduced to 200k, then there is a great incentive for me to alter my circumstances so I can gain 200k net of taxes and the interest on that amount over the period of the mortgage - probably worth nearly 400k in income. Takes a very long time to earn that money. Better for me to lose my job and gain that money all at once.
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Yeah, I see your point 2. Unfortunately I don't have an answer thats acceptable to all.
 
monagt said:
Those in the 1980's and 1990's who fell in to arrears on their mortgages weren't given or expected a bailout.

TRUE and I lived thro' it but the circumstances differ radically.
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I don't agree.
For those people who were in arrears in the 1980's and 1990's the stresses and problems associated with those arrears were just as real then as they are now. The only difference now is that there is a bigger group of people experiencing these problems and these people are collectively a bigger voice than those lonely individuals of 10 and 20 years ago.
 
I don't agree.
For those people who were in arrears in the 1980's and 1990's the stresses and problems associated with those arrears were just as real then as they are now. The only difference now is that there is a bigger group of people experiencing these problems and these people are collectively a bigger voice than those lonely individuals of 10 and 20 years ago.
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I Disagree!

In general terms:

1. Public Service did not get a reduction in Pay or Pensions. (people were able to depend on their income levels)

2. Unemployed were able to access alternative jobs abroad easier, and many did, now the whole world (except Asia Pacific) is in the same mess.

3. Credit did not dry up, Banks were not bust, Government was not bust.

4. It was different.
 
monagt said:
I Disagree!

In general terms:

1. Public Service did not get a reduction in Pay or Pensions. (people were able to depend on their income levels)

2. Unemployed were able to access alternative jobs abroad easier, and many did, now the whole world (except Asia Pacific) is in the same mess.

3. Credit did not dry up, Banks were not bust, Government was not bust.

4. It was different.
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I agree with all of the above, having lived through it and seen 60,000 of my peers emigrate PER YEAR from the middle of the 'Eighties.

The mid-eighties was the period was the time the first bank bailout occurred.

The economy was in the can with Charles Haughey telling us in 1980 that -

" As a community we are living away beyond our means. I do not mean that everyone in the community is living too well. Clearly many are not and have barely enough to get by. "

- while he was living it up in various posh nosh houses and being financed by AIB.

You can refresh your memory here -

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- and read about all the other issues centering on systemic lack of governance in banking circles here -

http://en.wikipedia.org/wiki/Allied_Irish_Banks#Insurance_Corporation_of_Ireland

The more things change, the more they remain the same.
 
I tend to agree with Michael Noonan's position. I think it is best sorted between the bank and the homeowner. Some sort of blanket Debt Forgiveness scheme would be too difficult to work.
 
ontour said:
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This was the widely anticipated outcome at this stage, but enlivening the debate has made it something a bit more than a brief dismissal.
Intelligent people have taken and continue to take a long hard look at the underlying issues to see what and whether appropriate relief may be available.

Now, people affected are considering something else - the role of selling agents and lending agents who gave poor advice to borrowers who undertook loans beyond their foreseeable means.
People who have profited from misdirection and overselling to consumers could be limited to a return based on a level of debt the borrower might have been afforded under prudent lending guidelines.

This is ot to suggest that people who over-borrowed should have the balance of the mortgage written off, on the contrary, but it draws a logical line in the sand as to where the write off might be positioned.
Ths could be operated on a debt for equity swap resulting in a manageable mortgage in the interim with the penalty for the lender that they would have to forego realizing their claim on the asset until the eventual sale.
 
The reality is that vasts amount of people are not in debt because of negative equity but because they have no means of paying the mortgage after losing their jobs so there should really be more government focus on jobs , if banks could give people more time in way of interest only or extending the term greatly until such time that persons become more stable with employment, I personally don't want debt forgivness I would rather be back in my job and paying my way, that was my commitment and I don't feel responible for losing my job I became surpless to requirement like so many others because companies with good credit cannot access money and they are in fear of closing. If people could see this is just a circle of events that will continue to turn people against each other until the cycle is broken and the real life issues are dealt with. There is no focus on creating jobs in this country or programme for supporting businesses to employ just one person if every company around the country employed just one person off the live register it would greatly reduce numbers and spending will start to kick off. The biggest time of year is shortly approaching for spending which is christmas time and its also a time of year when shops make decisions to close with closing down sales in January. Business around Ireland need to be involved in this recovery stage and supported to employ people instead of this internship scheme which is a disaster waiting to happen.
 
My understanding is that there is money in banks for venture capital investment, i.e. new business ventures, as opposed to propping up existing businesses. But that's for another thread.
 
I understand what your saying about the money in the banks for new business but is it really wise to putting money into new business when existing ones are shutting down. Banks are just cherry picking ventures but I wonder will they be willing to bail them out when they come looking for more credit. I understand this may belong to another thread, but finally look at all the loyal customers of the banks now that are not being supported, such a shame.
 
As I said, this is the subject for another thread. Feel free to start one and I'm sure many will join in. :)
 
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