# NAMA idea: transfer physical to financial assets by providing houses to the public.



## amh (13 Apr 2011)

Today on News-talk I heard talk that Nama is discussing the idea of transferring physical assets into financial assets through the process of providing houses to the public. 

The purchaser would put up the normal deposit amount and then sign up to repaying Nama an amount per year (at a cost of course), similar to a mortgage repayment. Thus they would of load their property portfolio, public can by houses and no more money would have to be borrowed by the banks to fund mortgage borrowings. 

I think these are the principles of the idea. It sounds a good method to 'solve' an accounting headache whilst helping potential buyers. 

What this would do to the mortgage providers and the mortgage brokers? 

I'd say is not good for their business however it maybe good for the market to find a bottom at some time in the near future rather than in the never never, Banks might well be glad to provide these negative equity mortgages as a way of still trading a profit down the line.

Any thoughts on this idea and what it might do for the country? Would it help in anyway to stabilise the economy and drag rates back to where they would be affordable in the medium term?


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## amh (20 May 2011)

Again this subject was talked about except this time AIB and BOI are suggested as suppliers of credit. Basically purchaser puts up 10%, mortgage provider provides 70% and there is a buffer of 20% not drawn down to protect against any future price drop. Thereby protecting against future neg eq. if a property is sold. However if after a period of time the property is not in neg eq then the balance is drawn down.

Personally if this type of a scheme was to come into place I believe that the whole amount should be drawn down and then if the purchaser falls into neg eq and needs to sell in 5 years time then the NAMA buffer should come into play.

This type of activity is going to happen and what effect it will have on both the NAMA properties (of which there are quite a few) and indeed the more numerous non NAMA properties will be a worry or concern to all.

Any views this time?


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## tvman (20 May 2011)

If it leads to NAMA releasing it's stock onto the market it can't but help to give some clarity on prices - but (bearing in mind the AAM rules on discussing house prices) increasing supply can only have one impact on prices...


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## amh (20 May 2011)

Not wanting to talk about prices, just what are the practicalities of this type of idea, is it good bad or indifferent. Could it work? Can NAMA get involved in mortgages directly themselves?


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## Brendan Burgess (20 May 2011)

tvman said:


> If it leads to NAMA releasing it's stock onto the market it can't but help to give some clarity on prices - but (bearing in mind the AAM rules on discussing house prices) increasing supply can only have one impact on prices...



I think it's important that we are able to discuss the pros and cons of NAMA providing mortgages. We couldn't do this without discussing its impact on house prices. 

Under the circumstances, we will make an exception for discussing the impact of this proposal on house prices. This does not allow for people to speculate generally on house prices. 

Brendan


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## amh (20 May 2011)

Thanks for allowing this thread to continue, I understood from the beginning that it might lead to some being tempted to speculate on prices but that was not my intention. 

This topic is going to have implcations for us all as both home owners and as NAMA is state run and we as tax payers will be liable for any shortfalls they accrue. 

Is this potential action going to put the country back on sound footing or is it going to drive us the tax payer into the ground? How will it be controlled and who will regulate it? Will the cushion against neg eq. be enough to persuade potential buyers back into the market? If it does how will this impact on VAT returns and other property related taxes? Will there be any incentives by the banks for people to draw down these mortgages give the cushion against potential neg eq eg slightly better long term fixed rates as LTV will be lower?

AMH


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