Brendan Burgess
Founder
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...............It is certainly cheaper to keep people in their homes and for the state to pay MIS instead of letting them be repossessed and the state paying them rent supplement.
But this solution, and most solutions, fail because they are not based on a definition of what a sustainable mortgage is.
A mortgage is sustainable for the lender, while the borrower can pay the market rate of interest on the current value of the property.
Using the above example, if the lender gets 4% of €140,000 or €470 a month, then it's of no benefit to them to repossess this property. All they will do is lend the money onto someone else at 4%.
So freeze the €60,000 NE for 3 years and switch the €140,000 to interest only.
If the state wants to supplement this mortgage, then they should contribute only €170 per month.
They should not be paying €470 per month to pay down the capital outstanding on the mortgage!
But what most debt advocates miss out on is the following
30,000 families are in arrears over 2 years.
Around 40% have positive equity and should not receive any state aid.
That leaves around 20,000 in deep arrears and negative equity.
75% of those are in employment and so would not get rent supplement. They are simply choosing not to pay their mortgage.
That leaves around 5,000 who would benefit from any such scheme. A bit more if you include those in less than 2 years' arrears.
Most debt advocates claim that everyone in default, is in default "through no fault of their own". That is rubbish. There are many Misguided Mortgage Holders out there. The only way to get them to engage and pay their mortgage is to make repossession easier.
Absolutely. At best, this idea smells of moral hazard. At worst, it could actively incentivise reckless borrowing and tactical delinquency.If the state wants to supplement this mortgage, then they should contribute only €170 per month.
They should not be paying €470 per month to pay down the capital outstanding on the mortgage!
Most debt advocates claim that everyone in default, is in default "through no fault of their own". That is rubbish. There are many Misguided Mortgage Holders out there. The only way to get them to engage and pay their mortgage is to make repossession easier.
The only unprecedented aspect I've observed is the increasingly popular notion that the lender is supposed to act as the borrower's nanny. At the same time, it seems like every other post here is railing against the unfairness of not being granted a 130% negative-equity mortgage. We can't have it both ways.We have arrears problems because of the unprecedented nature of the property bubble ten years ago. Most repossession advocates don't seem to realise that for every borrower there was a lender...
What will happen in 2017 when MIR ceases for the category of first time buyers who are the only ones entitled to it currently ? Another surge in arrears..?
The only unprecedented aspect I've observed is the increasingly popular notion that the lender is supposed to act as the borrower's nanny
The only unprecedented aspect I've observed is the increasingly popular notion that the lender is supposed to act as the borrower's nanny. At the same time, it seems like every other post here is railing against the unfairness of not being granted a 130% negative-equity mortgage. We can't have it both ways.
. Three families have childcare costs.....we know how expensive that is... all have cars 10+ years old and scarce prospect of saving to improve that position.
. It is one tough slog , and there are many like them. So what do they need?
What do you say to those people who wanted to purchase a house back in the day and were outbid by people paying crazy money to outbid them. Some people never got the chance to purchase their own homes and are now looking at the people who outbid them, looking to being helped by the state with taxpayers money?
Eviction is a loaded word in this country...I prefer 'relocation' myselfIt would seem to be vastly unfair of course. But it has to be looked at as a whole. As in what is best for society. Not sure that evicting lots of families would seem like a good idea, not if another solution can be found.
Around 40% have positive equity and should not receive any state aid.
That leaves around 20,000 in deep arrears and negative equity.
75% of those are in employment and so would not get rent supplement. They are simply choosing not to pay their mortgage.
What is the rational for this?
If someone is in positive equity to the tune of €10k but is unable to afford their full mortgage payment do you think hey should have to sell up and use the equity to fund maybe 10 months of rent in Dublin and then receive rent supplement?
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