# Nama insider lends some advice to Varadkar



## Brendan Burgess (4 Oct 2009)

An excellent piece in yesterday's  by Miriam Lord shows that the opposition doesn't really understand NAMA. 







> A source close to Nama (where they obviously aren’t doing much work yet) asks us to forward the following letter to Fine Gael’s Leo Varadkar, who wants Nama to take his apartment, which is now in negative equity, off his hands.
> 
> 
> “Dear Deputy Varadkar, I regret to inform you that there is no benefit to you in selling your apartment to Nama. Unfortunately, you will still owe the full value of the mortgage outstanding. If you fail to meet these repayments, you are likely to have your property seized by Nama and you could not avail of the 12-month moratorium on mortgage repayments that exists with your present mortgage provider. The possible resultant bankruptcy proceedings could bring a premature end to your very promising political career.
> ...


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## Brendan Burgess (4 Oct 2009)

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


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## Brendan Burgess (4 Oct 2009)

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.


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## Purple (4 Oct 2009)

Brendan said:


> An excellent piece in yesterday's  by Miriam Lord shows that the opposition doesn't really understand NAMA.


 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.


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## fobs (4 Oct 2009)

Purple said:


> 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?


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## Bronte (5 Oct 2009)

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


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## Purple (5 Oct 2009)

Bronte said:


> 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.



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.


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## Bronte (5 Oct 2009)

Purple said:


> 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?


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## Brendan Burgess (5 Oct 2009)

Bronte said:


> 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



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


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## desperatedan (5 Oct 2009)

Brendan said:


> 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



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............


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## Brendan Burgess (5 Oct 2009)

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


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## Complainer (5 Oct 2009)

Brendan said:


> An excellent piece in yesterday's  by Miriam Lord shows that the opposition doesn't really understand NAMA.


'The opposition' is bigger than Leo Varadkar. Generalisations don't help. You might as well conclude that doctors don't really understand NAMA.


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## Brendan Burgess (5 Oct 2009)

Sorry Complainer

By the Opposition, I mean Fine Gael. 

Brendan


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## JoeB (5 Oct 2009)

Bronte said:


> 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?




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?


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## Bronte (6 Oct 2009)

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?


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## Brendan Burgess (6 Oct 2009)

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


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## GSheehy (6 Oct 2009)

Brendan said:


> There are important details we don't know about. 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.


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## Brendan Burgess (6 Oct 2009)

GSheehy said:


> The devil is in the detail.



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


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## marshmallow (6 Oct 2009)

JoeBallantin said:


> 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?
> 
> ...


 
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.


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## Purple (6 Oct 2009)

Brendan said:


> I have no problem with anyone being skeptical as long as they  understand what they are being skeptical about.


 Well said.


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## Complainer (6 Oct 2009)

Brendan said:


> Sorry Complainer
> 
> By the Opposition, I mean Fine Gael.
> 
> Brendan


Fine Gael is bigger than Leo.


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## GSheehy (6 Oct 2009)

Fair enough. 

From my unelevated view, those that are not in favour of NAMA (in it's current format) have a tad more credibility and I would struggle to come up with a list of 5 'pro' folk that do not have some form of vested interest in favouring it's current structure.


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## Duke of Marmalade (6 Oct 2009)

GSheehy said:


> Fair enough.
> 
> From my unelevated view, those that are not in favour of NAMA (in it's current format) have a tad more credibility and I would struggle to come up with a list of 5 'pro' folk that do not have some form of vested interest in favouring it's current structure.


This has become a favourite line of anti NAMArs. Sticking to politicians I see real vested interest in FG's opposition to NAMA. They see a very soft populist line and sense the possible collapse of the government. I even suspect that Leo knew that he was talking nonsense but played his dirty trick anyway.

I'm no FFer, or Greenie for that matter, but I honestly think that the government in power genuinely have the national interest at heart on this occasion. They may be wrong, but this is not IMHO a bail out of the Galway tent as Enda Kenny so disingenuously keeps suggesting.

If FG get into power anytime soon I am sure they will find the wriggle room to support NAMA after all, maybe with a few tweaks.

_Disclosure of vested interest:  I want this country to get out of this mess_


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## GSheehy (6 Oct 2009)

Duke of Marmalade said:


> _Disclosure of vested interest: I want this country to get out of this mess_


 
As do I Duke, but with as little pain as possible for my kids.


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## TarfHead (7 Oct 2009)

Bronte said:


> Nama goes after the borrower .. is declared bankrupt .. Borrower can go get a loan and buy property


 
I accept that this is an hypothesis, but surely being declared bankrupt for not repaying a mortgage would leave you unable to get another one  ?


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