# Distressed Homeowners Are Being Helped. Discuss?



## Alwyn (11 Sep 2012)

Distressed homeowners are of the illusion that nothing is being done to help them.  All banks want to do is kick the can further down the road etc.

There's another view out there that everything has been done for NE property owners and that the vast majority of them should move to the UK and be done with their lives in Ireland.

People seem to miss the point; if 200,000 homes are repossessed then property will crash and I don't mean by a couple of thousand euro.

People are being made feel guilty for staying in their homes when they are only meeting interest payments.  

There are vested interests out there who cannot afford a further housing crisis and will do everything they can do keep the vast majority in their homes.

Am I off the wall in my thinking?


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## mark12 (11 Sep 2012)

I agree, any attempt to repossess such a numer of homes would only further damage the very fragile housing market, plus would make the banks come back to us for more and more money.

Also remember that NAMA haven't even started to dispose of the thousands of properties they have taken from the builders, when they do, houses prices will be cheaper than bananas.

The Banks/Government have no other option but to be happy with interest only for 30years, we the taxpayers should also be happy where at least the interest is being paid on these mortgages, as it will keep the banks at bay from our empty pockets.


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## Wishes (11 Sep 2012)

I agree that banks have no option but to accept interest payments for as long as they can. Without going into speculation of property prices (banned on here) I see it that the home owners are doing a service to the banks and to the rest of the nation by keeping up their home insurance, life policies and upkeep of the properties. 

I know this sounds selfrighteous and arrogent but think about it, if 400 odd people surrendered their homes we would be seriously up the creek.


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## oldnick (11 Sep 2012)

I think everyone agrees with the last few posts. 

Interest only should be offered now to everyone who wants it and we can stop all these "we can't afford to pay" posts.
Also it may stop all these "let us help you go bankrupt" posts.
And it may stop those ,as Marc put it another thread, who can pay,won't pay.

Obviously the properties will not belong to those paying interest only but it's better than mass evictions, collapse of the property market and quite possibly of society.


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## Alwyn (11 Sep 2012)

Couldn't agree more Oldnick.  It's the only way of weeding out the genuine cases.  If our provider offered to rent our home back to us we would fully oblige.  My elf and the otherhalf will be long dead by the time our mortgage is payed off anyway.


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## Kkma (11 Sep 2012)

Just out of curiosity, are interest only payments roughly corresponding to rents in the same location? I realise many variables are involved, but are people on IO in roughly the same position as someone renting in their locality? I realise renting is more flexible, but there are also people around that could possibly afford a mortgage but can't get one, and when they do they will be on a SVR not a tracker and will end up paying nearly as much in interest as if they had bought in the boom. Not dismissing anytime who is stuck in negative equity or with a huge stressful mortgage, I'm just wondering how it all compares. Probably going totally off topic now....


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## mark12 (11 Sep 2012)

If the banks started offering long term interest only to everyone, there would not be so many people going the nuclear option of leaving everything behind for a new life abroad.

The country and the banks themselves could only gain from this soft option.
But again a bank is nothing more than a well paid blind man on top of a pyramid who could not give a crap.


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## oldnick (11 Sep 2012)

Kkma -   interest only v rent? Well, actually on present sales prices an interest only loan may be cheaper than renting. 

However, in the scenario under discussion  we're talking about people who borrowed in the boom which means they paid twice the present price. 
We have to compare the interest only cost of the boom price loan versus present rents.

If interest rates set at *4*% :-
House presently selling at 200k. Boom price 400k. Borrower owes, say, 360k.
If lnterest set  at 4% this means 14.400 p.a. interest.
The rent for this price of house would be  ca. 12k.

Similarly a two bed apt in Dublin city now selling at 160k -this suffered a big drop from ca. 400k.
Again, the rent would be ca. 12k p.a. and the interest also would be ca. 14-15K

 If ,however, the govnt set a *3*% interest level - still lower than trackers , then the picture changes. The rent and interest costs would be similar.

There would be many exceptions to the rent levels I describe, and doubtless a poster will tell me that one can easily rent a house for 500 euros a month. i 'm mainly talking about Dublin ,and mentioned a couple of properties at prices and rents I'm familiar with.

But,even with exceptions to the rent v. interest examples, if the govnt set a low interest rate and fixed it at least for a few years, I'm convinced that a majority of those in trouble would benefit - as would the banks, governments and ultimately the rest of us.


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## Bronte (12 Sep 2012)

I know someone who has strategically defaulted and is paying less than 450 Euro rent for a new large 4 bedroomed detached house. And very soon social welfare will be paying for it, ie taxpayers. Obviously not Dublin, but that figure is a long way from their mortgage on a tiny 3 bed terrace, badly built, badly laid out estate which is slowly crumbling. 

Going forward I can only see this trickle of people increasing as people decide they've been waiting for a solution long enough, I think a lot of people initially were in shock when the boom came to an end, they then used up all their savings to pay mortgages, see now no sign of a recovery, no chance of a job, any job they comtemplate will not pay enough to live comfortable and pay mortgage, see others defaulting, have had it with banks, have had a few years of the stress of bank letter, and waited and waited for the insolvency bill (still not here) and low and behold were fooled again into thinking that would solve their problems. 

How is interest only a solution. Interest only for a couple of years while one waits to get a job is fine, but long term it will not work.  I wonder if mortgages were written down for those who cannot afford them to a level of affordability would that be a better solution. In general people prefer to stay in their own homes.


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## sulo (12 Sep 2012)

Bronte, can the person "that you know" afford the full mortgage?   How were they allowed Default.  I suppose, I wonder how those that can afford, can suddenly say the "can't"... if they still have work, etc?  Does evidence not have to be given to default?


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## Booter (12 Sep 2012)

Interesting ideas on this thread; I have felt for a long time that this concept of dealing with borrowers on a "case-by-case" basis is little more than a bankers' charter; a divide and conquer approach by the banks. 

This should be replaced, by a system which is driven by a clear menu of published forbearance/restructuring options, which can be availed of by choice, by borrowers, subject to certain qualification criteria. So if a borrower wanted to reduce their payments to interest only for 3 months, they fill in an online form, find out if the qualify, and click submit. Job done.

Come to think of it, a shift to this type of approach would surely free up huge person resources within the banks; all those mortgage advisers, dealing with minute detail of borrowers income & expenditure.


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## Chris (13 Sep 2012)

oldnick said:


> If ,however, the govnt set a *3*% interest level - still lower than trackers , then the picture changes. The rent and interest costs would be similar.



And how would that work? Banks can't even break even with rates at current levels. And what happens when interst rates start rising? Who is going to pay for the difference? You are suggesting reducing the interst rates on the highest risk loans in the country; that puts banks in worse shape than they are.


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## jetski (6 Mar 2013)

The part I dont understand is that a bank agrees to lend money to someone and at a rate that makes it profitable to them.

When the economy and in turn family who took out the mortgage gets into financial trouble the bank still expects to make the same level of profit. Cant understand this at all. They should be forced to take a hit IMO.


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## Dermot (6 Mar 2013)

Jetski. There is not one profitable in this country at the moment. BoI lost €2.1 Billion in their last financial year which I think included Management Bonuses.


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## Kine (7 Mar 2013)

Interest only for 30 years?

Please rearrange the following words:

road can the kicking the down


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