# Personal Insolvency Act: Expect a large number of foreclosed properties to hit market



## casey (8 Mar 2013)

With introduction of Personal Insolvency Act can we expect a large number of foreclosed properties to hit the market soon?


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## bugler (8 Mar 2013)

I wouldn't expect it, based off the Insolvency Act. 

The closure of the _*"Dunne Lacuna"*_ is the more interesting development. But only the most intransigent and/or hopeless Owner Occupiers will have their properties repossessed. BTLs will be repossessed, but there is no guarantee they will be sold. They may continue to be rented. The banks approach to this is not known.

Also, this is Ireland. The politicians will be keen to stage manage this, keeping any repos to a certain limit. There will be no tidal wave.


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## khards (8 Mar 2013)

The number of repossessions will almost certainly increase from the unusually low rate of 0.5% to somewhere 2% to 5%*, also given the sheer number of hopeless cases and size of the backlog.

Regardless of the calming exercise the media are trumpeting, expect a glut of these to hit the market all at once due to the the following reasons:

1, The number of 'bank-renters'/homeowners who are more than 720 days in arrears and have given up paying their mortgage. There are 20,000 of these cases, even if 10% are repossessed that would be 2,000 properties compared to the 200 that were taken into possession last year - which is a 10 fold increase.

2, The effect of the Dunne Judgement storing up a backlog of cases that should have been dealt with over the last 2 years.

*based on average repossession rates from the UK 3% and US 5% see:
www.irishexaminer.com/ireland/banks-to-get-more-powers-to-seize-homes-224844.html


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## meepman (8 Mar 2013)

So if at the moment there are 20,000 homeowners that have not paid mtg for over 2 years, are we looking at a crisis soon. I am trying to compare this to the UK which has a population of nearly 20 times here. So, the equivalent there would be 400,000. 

Is this sustainable?


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## casey (10 Mar 2013)

According to the article cited above by khards - 51,352 residential mortgages are in arrears for over 360 days.

I don't see how this is sustainable any longer. Taxpayers who now essentially own the banks subsidies people living beyond their means and who defaulted on their mortgages. It is not fair and it doesn't make any economic sense


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## bugler (11 Mar 2013)

It makes no sense, but it's, politically, a very sensitive issue. 

And politicians don't care about sense, economic or otherwise. They care about re-election.


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## khards (11 Mar 2013)

At least with a coalition government they can point the finger and blame each other whilst quietly plotting to repossess homes and sell them back to the banks cheaply through REITS (Real Estate Investment Trusts) holding companies.

www.budget.gov.ie/budgets/2013/Documents/Budget%202013%20-%20Presentation%20on%20REITS.pdf


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## Time (11 Mar 2013)

The government seem to be in no hurry to close the Dunne lacuna.


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## bugler (11 Mar 2013)

They set no records, but the Dunne Lacuna will be closed this month.


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## casey (11 Mar 2013)

bugler said:


> It makes no sense, but it's, politically, a very sensitive issue.
> And politicians don't care about sense, economic or otherwise. They care about re-election.



Well, I, personally, would vote for a politician who supports the idea of repossession of properties which are more than 360 days in arrears on mortgage repayments.


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## bugler (12 Mar 2013)

You are in the minority there, I don't see that making it onto the pamphlets any time soon 

Amid all the fuss over the prospect of repossessions, I haven't yet hear a simple question asked of or answered by a politician:

"What do you suggest we do with borrowers who are 1-2 years + in arrears, and who may have no job or prospect of servicing the mortgage for the foreseeable future?"

I suppose they spend most of their lives avoiding giving proper answers so I shouldn't be surprised. And the media are quite abject also, so they don't ask the right questions.


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## Gardener (12 Mar 2013)

The repossessions are a disaster waiting to happen.  As it is there are already 100,000 people on a waiting list to be placed in social housing.  Can we really afford to add to that number?


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## Dermot (12 Mar 2013)

A lot of people and posters think that owners living in 250k to whatever price should have hundreds of thousands written off without any consequences. There are tough cases out there but what a lot of politicians and trade unions are shouting for is not sustainable ie no repossessions. The lack of action on this front over the years has actually made matters worse. How can anyone say that not dealing with a mortgage for say 2 years where absolutely no payment of any sort is a policy that is sustainable. There has been a big growth in the can pay wont pay brigade and other forms of strategic methods of default. There are also people who still want to live at the better class address but will not accept that maybe moving less than a kilometre to similar but more affordable house is not acceptable to them.  If some of the crazy dreams of some politicians and trade unions are granted we will be facing another bank bail out as sure as night follows day. This will set the country back further and bring another section of society into the web of poverty and so on. I am no supporter of banks or bankers but some reality has to be brought to the table. By the way I just work hard to survive at the moment.


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## dub_nerd (12 Mar 2013)

Gardener said:


> The repossessions are a disaster waiting to happen. As it is there are already 100,000 people on a waiting list to be placed in social housing. Can we really afford to add to that number?


 
Two points on this: a) not everyone who can't pay their mortgage can't afford anything at all -- they just can't afford the one they're in at the moment, and could rent elsewhere, b) we're paying for them anyway.


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## Delboy (12 Mar 2013)

now now, Dub_nerd, we can't expect people to rent....that's just cruel!!!!

Primetime tonight on the mortgage crisis had the usual cases....1 woman who gave up her home to the bank, said it was'nt right that people should be made 'homeless'...she now lives in a house provided by the council. 

Obviously having to rent means your 'homeless' to many on the bailout side of the mortgage crisis. 
As someone who behaved prudently during the boom years, and is in a house now too small for my growing family (but am still able to afford the mortgage), I'm afraid this is going to end in tears from my point of view.....those that went way over their heads with huge mortgages, top-ups for luxury holidays and cars etc etc, are going to get deals and be allowed stay in their nice gaffs....'bed blockers' essentially, who will deny the likes of myself the opportunity to trade up at a reasonable price.
Thats the price of financial prudence it seems....is it too late now to run out and buy a very expensive gaff and stop paying the mortgage in a years time but still get to keep it????


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## Bronte (13 Mar 2013)

casey said:


> With introduction of Personal Insolvency Act can we expect a large number of foreclosed properties to hit the market soon?


 
Nothing happens quickly in Ireland. The Act may be law but the latest is that the implementation of it will begin early summer. So when I hear that I add another 6 months so end of this year earliest before it starts. Then it will take ages until everybody fully understands how it's going to work. And another while for banks to decide what way they are going to deal with people. 

Meanwhile banks are now doing deals outside of this Act. I think they will come to debt write down for those who can not pay, split mortgages and other options for those who can defer part of their mortage. More tricky is those who won't pay but cannot pay, I can see the banks starting to look more closely at those. That's for home owners only. 

For the Buy to lets I imagine it will be repossessions for can not pay and won't pays. And most of these properties are not going to be suitable for families, mostly apartments in the Dublin area (badly built apartments at that, terribley laid out, too small, with management fee issues and parking problems). In the rest of the country there are excellent family homes in the BTL sector but who wants to live in rural Donegal/Sligo/Leitrim. And then you have the altogther mad apartment schemes in remote areas - unsaleable as they are unrentable - maybe people will snap up holidays homes at half nothing but then you all the taxes and running costs, I wouldn't take a holiday apartment in some areas if it were given to me for nothing, it's only hassle.

And you can be sure the banks are not going to allow any wholesale firesale of repossessed properties, nor will the government.  But repossessed properties there will be and we badly need it.  And some people are going to make killings.


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## Bronte (13 Mar 2013)

Delboy said:


> who will deny the likes of myself the opportunity to trade up at a reasonable price.


 
Are prices not reasonably currently?  Is it Dublin?

Can you sell where you are now without NE?


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## Gerry Canning (13 Mar 2013)

Difficult one , we need to try to avoid moral hazard ie letting chancy bankers or house owners off the hook , and we need to serve society not just an economy.
Some views (not necessarily mine)
1. Customer that was originally given 90 to 100% mortgage ,he NEVER really owned the house ,either repossess/sell/ or long term rent according to ongoing means.
2. Customer (now out of work) Should be paying 1000 per month, can afford 500 and is genuine. Let customer pay 500 for 5 years BUT have his mortgage reduced as th ough he WAS paying 1000. After 5 years review/revert, @ worst Bank has lost 60 @500 rather than a repossessed fire sale . It gives Bank&Customer an incentive.
3. Customer owes k300,can,t afford it ,house worth K230. Either come to ongoing arrangement with Bank , or go Bankrupt {not as bad as having an unsustainable drag}
My own view is that the Banks don,t have the bottle to make decisions, the Politicians are being dragged every way. LET THE CUSTOMER make his decision on his current and medium situation as this CANCER is killing people slowly.


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## khards (13 Mar 2013)

Gardener said:


> The repossessions are a disaster waiting to happen.  As it is there are already 100,000 people on a waiting list to be placed in social housing.  Can we really afford to add to that number?



Ah the old straw man argument -Where will everyone go.

Oversupply of houses - check
Number of people constant - check

There are houses and people, they just need re-organising and by force if necessary.



salmon9077 said:


> My own view is that the Banks don,t have the bottle to make decisions, the Politicians are being dragged every way. LET THE CUSTOMER make his decision on his current and medium situation as this CANCER is killing people slowly.



I thought the same "the Banks don,t have the bottle to make decisions" until today then I read this:

*www.independent.ie/opinion/analysis...nswers-on-mortgage-arrears-mess-29126549.html*

"
BoI has asked the High Court for clarity on Judge Dunne's interpretation of the 2005 Interpretation Act.
It  has complained that the "constitutional implications" for secured  lenders were never teased out in the Dunne ruling, and say the outcome  would have been different if they were.
Alternatively, it  wants the 2009 act struck down as an arbitrary and capricious  interference with its property rights. What a mess.
Now, more than ever, we need firm clarity on the Government's mortgage arrears strategy."


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## Gerry Canning (13 Mar 2013)

casey said:


> With introduction of Personal Insolvency Act can we expect a large number of foreclosed properties to hit the market soon?


 I don,t think so , there will be an initial increase on the absolutely hopeless/keys left in ,etc. Banks are starting t get their {little} heads around managing down an issue as distinct from winding up values.they might be pleasantly surprised at the outcome as an agreed deal always beats firesales, but then again maybe they are still rabbits in headlights !!!


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## Delboy (13 Mar 2013)

Bronte said:


> Are prices not reasonably currently?  Is it Dublin?
> 
> Can you sell where you are now without NE?




I don't think they're reasonable still...half a mill for a 4 bed semi-d in Knocklyon/Firhouse with terrible energy ratings and modernisation needed...and when you go to look at the likes of that, you struggle to get parking nearby as there's dozens of people at the viewings.....supply has frozen as the whole market is in limbo without repos etc

(hope I'm not breaking any rules on discussing house prices here by throwing out a generalisation such as this)


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## Gardener (13 Mar 2013)

khards said:


> Ah the old straw man argument -Where will everyone go.
> 
> Oversupply of houses - check
> Number of people constant - check
> ...



And I though the Anglo Landlord class was long gone - me wrong!

So if an ex purchased council home is being repossessed on the wrong side of Dublin do we then move the inhabitants to a five bed NAMA property in South Dublin or do we place them in a bedsit that's not fit for purpose?


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