This is a process that has only really begun and above figures do not include PIA's/Bankruptcies.
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I think this is a contradiction...negative equity should have nothing to do with people going into arrears, but you are proving my point (and Delboy's) by implying that negative equity leads to arrears.
No they aren't. Last reasrch I saw from Greece anyway showed three month arrears of 15.5% and climbing. I think Ireland's peaked (hopefully) at around 18%. Hardly off the radar compared to theirs. We also had a larger property crash than either of those Countries so negative equity is a bigger problem. We had larger mortgages v income due to the generosity of our banks during the boom. And there are other differences if you really want to compare.
You mention cases you know. Give us one case with real details and as close as you can figures, and confirm that these people are living the high life.
It is going to be very difficult to filter out chanchers and smart asses from genuine cases.
And the people to sort things, sadly are our failed banks?
Someone in severe negative equity may with some justification decide to join the bandwagon.
I cannot disagree with most of the posts, all make good enough points.
But the problem of arrears/default/chanchers can only be resolved by actively writing down an appreciable amount of Mortgage debt.
In writing off debt, there is NO doubt Mr Chancher will feature a lot higher than any of us will like under moral hazard. However , unless we can set up a broad brush stroke type of resolution ,that will sadly include chanchers , we will only end up in the stalling/non resolution that we see.
Time to take the bitter pill methinks!
Who mentioned people living the high life? I'm not sure if you are deliberately trying to misunderstand my point?
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Well summed up Bugler...thats exactly the type of scenario that highlights the madness of this debt write off programme while retaining the home.
That family in Cork that borrowed 478k and now get 195k written off- that must be some house in Cork that cost 478k plus, even during the boom.
But now they get to keep it with just a 200k mortgage
Personally, as someone likely to buy a house in the next 2-3 years, I've learned the lesson. I should not be afraid to borrow the maximum amount because there will be no real negative consequence for doing so. The bank and state have negated the risk. So I will.
The above example does certainly illustrate a situation where a borrower took a higher level of risk certainly. However it has little to do with the moral hazard issue, where borrowers are deliberately not paying their mortgage on the basis that they want to retain funds to meet a high lifestyle. In my own banking experience I have seen very few examples of this. In most cases the banks will trust the SFS sent in by the client and agree to loan repayment reductions, provided expenses provided are within a reasonable level. However, subsequent reviews of these arrangements will include a greater level of interrogation of information provided and segragate those who can't pay from those who won't pay. Ultimately this type of strategy can work in the short term but not the long term!
The above example does certainly illustrate a situation where a borrower took a higher level of risk certainly. However it has little to do with the moral hazard issue, where borrowers are deliberately not paying their mortgage on the basis that they want to retain funds to meet a high lifestyle. In my own banking experience I have seen very few examples of this. In most cases the banks will trust the SFS sent in by the client and agree to loan repayment reductions, provided expenses provided are within a reasonable level. However, subsequent reviews of these arrangements will include a greater level of interrogation of information provided and segragate those who can't pay from those who won't pay. Ultimately this type of strategy can work in the short term but not the long term!
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