Brendan Burgess
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An excellent piece in yesterday's by Miriam Lord shows that the opposition doesn't really understand NAMA.
Nama insider lends some advice to Varadkar
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Brendan Burgess
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Apparently, it was in response to this piece on his :
Friday, 11 September 2009
Re: Offer to sell my apartment
Dear NAMA
I would like to offer you the opportunity to purchase my apartment. I bought it in 2004 for €350k. In 2007, it was valued at €500k by a reputable national estate agency. Allowing for a 50% fall from peak property prices it is now worth about €250k.
Using the formula outlined by your chief valuer at to the Joint Oireachtas Committee on Finance, I estimate its Long-Term Economic Value (LTEV) to be €420k. I would be willing to sell my apartment to NAMA for this price.
It would allow me to pay off my mortgage and car loan thus satisfying the banks and would leave me with a small deposit which I could use to buy back my apartment with a mortgage I can better afford.
I look forward, anxiously, to your reply
Yours sincerely
Leo Varadkar TD
Friday, 11 September 2009
Re: Offer to sell my apartment
Dear NAMA
I would like to offer you the opportunity to purchase my apartment. I bought it in 2004 for €350k. In 2007, it was valued at €500k by a reputable national estate agency. Allowing for a 50% fall from peak property prices it is now worth about €250k.
Using the formula outlined by your chief valuer at to the Joint Oireachtas Committee on Finance, I estimate its Long-Term Economic Value (LTEV) to be €420k. I would be willing to sell my apartment to NAMA for this price.
It would allow me to pay off my mortgage and car loan thus satisfying the banks and would leave me with a small deposit which I could use to buy back my apartment with a mortgage I can better afford.
I look forward, anxiously, to your reply
Yours sincerely
Leo Varadkar TD
Brendan Burgess
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The head of NTMA responded and told him that if Varadkar's offer was accepted by NAMA, he would consider selling his own house to them.
I read that as well. Over the last few weeks Varadkar has shown that he isn't up to the mark at the top level of politics.
But it hits a chord with the usual suspects who spout out on the Vincent Browne show unchecked. How many will read this repsonse as opposed to Varadkars populist one?
Trying to understand Nama.
So if an ordinary person defaults as in the case above, his mortgage would be say 350, the value of the property is 250 but the bank will sell it to Nama for 270 (how is that arrived at?). Now the bank has lost 350 - 270 = 80K. Meanwhile Nama goes after the borrower for the full 350 which the borrower doesn't have and he ends up paying Nama zero but is declared bankrupt.
The bank is down 80K
Nama has an asset it paid 270 for and can sell for 250 but it holds onto it (? how do they hold and mange property) and sells it when the market goes up to 270
Or sells it when the market goes down to 150 say
Borrower now owes nothing.
Borrower can go get a loan and buy property for 270 or 150
This all sounds somehow wonderful but obviously I too don't understand Nama
So if an ordinary person defaults as in the case above, his mortgage would be say 350, the value of the property is 250 but the bank will sell it to Nama for 270 (how is that arrived at?). Now the bank has lost 350 - 270 = 80K. Meanwhile Nama goes after the borrower for the full 350 which the borrower doesn't have and he ends up paying Nama zero but is declared bankrupt.
The bank is down 80K
Nama has an asset it paid 270 for and can sell for 250 but it holds onto it (? how do they hold and mange property) and sells it when the market goes up to 270
Or sells it when the market goes down to 150 say
Borrower now owes nothing.
Borrower can go get a loan and buy property for 270 or 150
This all sounds somehow wonderful but obviously I too don't understand Nama
If he’s bankrupt then NAMA will get something after they force the sale of the family home and any other assets he has. In the case of a major property developer then the personal assets will be bigger. I don’t think it would be hard to prove reckless trading in the case of most of these bozo’s.
But Nama is set up based on the fact that the long term economic value will rise? If there are no other assets as would be the case with many homeowners there is nothing else.
In relation to developers do you really think Nama will go after the personal assets, I'm sure they are ring fenced and if not currently being sorted out. We saw only this year that one famous property developer put everything into his wife's name, in April I think. Do you not think that those that haven't done this are now liquidating their assets and putting it offshore?
Brendan Burgess
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Unfortunately the home loan metaphor doesn't really apply to NAMA.
Varadkar presumably can afford to pay his mortgage so the value of the home is irrelevant to the lender. He bought it for €350k in 2004. We have no idea how much his mortgage is, so LTV is a very important issue.
Homes are rarely repossessed in Ireland and people are rarely made bankrupt.
Commercial banks have to make commercial decisions. They might have a variety of securities for any loan e.g. the property itself, another property and a personal guarantee. They can put the boot in and force the sale of the properties and call in the personal guarantee. They might register a judgment mortgage against the borrower's home.
In practice, they will do a deal. Banks do them all the time. One of the problems with NAMA is that if they do a deal with a big borrower which makes commercial sense, the public will be up in arms alleging political interference.
Brendan
desperatedan
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So, what do you make of the Banks position in the Carroll/Zoe case?
Does the deal the Banks (except ACC) want to make with Carroll/Zoe make commercial sense?
Should the public not be up in arms?
Is NAMA-as-is not "political interference" on a gigantic scale?
based on overpaying €54 Bil for the toxic assets (€68 Bil loans + €9 Bil unpaid interest)..........
in a falling market........
the backed assets (properties) are supposed to have a CMV of €47 Bil (based on peak value of €88 Bil allegedly) assuming a 47% drop in value from peak to now.......
"now" is assuming we are at the trough......
the €68 Bil loan figure assumes an LTV of 77% on the loan book.....
this asks us to believe that developers put in 23% equity.....or €20 Bil.....
they didn't even pay the interest.....
Carroll/Zoe could not convince the High/Commercial or Supreme Court on numerous hearings of the validity of their so-called Business Plan(s).
NAMA awaits Carroll/Zoe toxic loans.....
We await developments............
Brendan Burgess
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Well, if I was the only bank which had lent money to Liam Carroll, I would accept that I had to write a substantial part of the loan off. I made a bad loan - I must now move on to how can I maximize my recovery.
If I felt that he had assets which I could access, I would access them.
If there was some form of rescue which realized my loss, I would probably take it and move on.
Brendan
If I felt that he had assets which I could access, I would access them.
If there was some form of rescue which realized my loss, I would probably take it and move on.
Brendan
Complainer
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'The opposition' is bigger than Leo Varadkar. Generalisations don't help. You might as well conclude that doctors don't really understand NAMA.
Brendan Burgess
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Sorry Complainer
By the Opposition, I mean Fine Gael.
Brendan
By the Opposition, I mean Fine Gael.
Brendan
J
JoeB
Guest
I was wondering why the government seemed to be dragging its heels, apologies if not so.
Perhaps this is to give the developers time to move assets out of reach of the banks? A bit cynical perhaps?
Can people move assets into their wifes' name only to be declared bankrupt a few weeks, or months later? This seems disgraceful to me..
Could we set the CAB on these people if they claim to have no assets, and no source of income. ... and yet they live a millionaires lifestyle? (If this is indeed the case). Obviously they are living off the wife, but could an energetic and brave public prosecutor allege that any transfers of assets to a wife was a ploy to avoid paying debts, to frustrate creditors with valid (subsequesnt but foreseeable) claims on the assets, it's thus illegal, and could the transfers be reversed?, leaving the assets open to be used to reduce the debts owed?
Or am I too cynical?
What difference does it make if Fine Gael do not understand NAMA, does the electorate, does anyone on AAM, does FF? I for sure don't understand NAMA much and all as I've tried.
You say the home loan metaphor doesn't apply to NAMA but what if Varadkar cannot repay, and there are many people reaching the point of cannot repay, then can the bank sell this bad debt to NAMA?
You say the home loan metaphor doesn't apply to NAMA but what if Varadkar cannot repay, and there are many people reaching the point of cannot repay, then can the bank sell this bad debt to NAMA?
Brendan Burgess
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Varadkar can pay his loan. That is the whole point. He is well off. 15% unemployed means that 85% are still employed. Most people can pay their mortgage. The fact that it has fallen in value does not affect his repayment capacity.
It makes a big difference because the opposition, sorry FG, are so critical of NAMA and they don't understand it.
It makes a big difference because it is likely that FG will be in government and running the country. They have to understand it.
I have a good general grasp of NAMA. Most people here do as well. There are important details we don't know about. There are details we get wrong and are subsequently corrected. Those who have to make decisions must get to understand NAMA.
None of knows how it will work out over the next 20 years.
Brendan
It makes a big difference because the opposition, sorry FG, are so critical of NAMA and they don't understand it.
It makes a big difference because it is likely that FG will be in government and running the country. They have to understand it.
I have a good general grasp of NAMA. Most people here do as well. There are important details we don't know about. There are details we get wrong and are subsequently corrected. Those who have to make decisions must get to understand NAMA.
None of knows how it will work out over the next 20 years.
Brendan
Surely, everyone is entitled to be sceptical about NAMA until such time as the full explicit details are in the public domain.
If you are being fed the detail in fits and starts then it is unlikely that you can form a coherent opinion on it until such time as the 'masterplan' is laid bare.
The devil is in the detail.
Brendan Burgess
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This is like the statement "mind the pennies and the pounds will look after themselves". It sounds great, but it is misleading.
The broad thrust of NAMA is clear. It has been well discussed.
I would like to see changes and improvements to it. But it should not be derailed by people who do not understand it. I have no problem with anyone being skeptical as long as they understand what they are being skeptical about.
Brendan
marshmallow
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Must admit I thought the same thing - surely if assets are transferred to the wives it is a blatant attempt to avoid paying debts and should be a CAB issue.
Well said.