# Brendan's figures challenged on the Late Late Show



## four18 (26 Oct 2012)

All Brendans figures got lashed tonight on the late late show. I dont think he got a fair say but maybe David Mc Williams etc shouted louder than him. Good TV though and well done Brendan, You Tried but maybe rework the figures to see if you are actually in the ballpark at all.


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## Brendan Burgess (26 Oct 2012)

four18 said:


> All Brendans figures got lashed tonight on the  late late show. ...You Tried but maybe rework the figures to see if you  are actually in the ballpark at all.



Hi four

I am away for most of the weekend, but will respond to the numbers  thrown out by David McWilliams later. It was frenetic and very difficult  to deal with all the stuff thrown out. I don't _think _I got any of my  numbers wrong, but I will check the replay later to see what I said. 

McWilliams said something like "there are 10's of thousands, no -   hundreds of thousands in arrears"

There are 66,000 houses in arrears over  90 days according to the last Central Bank figures. (83,251 mortgage  accounts) 

There are 36,000 homes in arrears of under 90 days. 

Total homes in _any _arrears: 102,000 - that is a lot but it is not "hundreds of thousands" 

74,379 mortgage accounts have been restructured - which is 60,000 homes - I think that is the figure I used.


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## PiedPiper (27 Oct 2012)

http://trueeconomics.blogspot.ie/2012/08/2382012-mortgages-arrears-in-ireland-q2.html?m=1

The real figures ladz


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## Brendan Burgess (2 Nov 2012)

Hi four18

I had a chance to see what I said and what others said.

All of my figures were correct. 

I said: There are around 600,000 homes with mortgages.


[broken link removed]

Total Residential Mortgage _Accounts_: 761,533
There are around 1.25 accounts for each home which has a mortgage, so that is 609,000 homes with mortgages 

 "66,000 of them are in arrears over 90 days. "

Accounts in arrears 91 -180 days: 17,553
in arrears over 180 days: 65,689
Total accounts in arrears over 90 days: 83,242
Equals about 66,593 homes. 

I said: " 60,000 of them have been restructured "

Total residential mortgage loan accounts that are classified as restructured: 84,941
Equals about:  68,000 homes 

OK, I was out by about 8,000 on this one. But I was making the point that a lot had been done for borrowers in arrears.  I understated what had been done, instead of exaggerating it. 

I said around 15,000 homes are totally unsustainable and we have not done enough for them. 

This is my estimate. I reckon it's somewhere between 10,000 and 20,000, which is roughly derived as follows: 



loans in arrears over 90 days|66,000
Less loans in positive equity|22,000
Loans in arrears over 90 days and negative equity| 44,000
1/3rd are paying at least the interest on their mortgage|15,000
1/3rd are paying some but not all the interest|15,000
1/3rd are paying little or nothing|15,000


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## Brendan Burgess (2 Nov 2012)

By contrast the facts and figures used by David McWilliams and David Hall were misleading or plain wrong 

Mc Williams: 


> The greatest crisis facing the country is, not the tens of thousands, but the hundreds of thousands of people who are facing arrears



Total cases outstanding: 128,416
This equals about 102,000 homes.  

I suppose if you multipy 102,000 homes by joint owners and their children and their guarantors, that would be "hundreds of thousands of people"

He later said that there were "128,000 people in arrears over 120 days" 

This is simply outrageous. He is presumably referring to the 128,416 cases outstanding.  65,698 of those are in arrears over 90 days.  But claiming 128,000 over 120 days makes the "mortgage time-bomb" much more explosive. 

He later said "When I forecast that house prices would crash many people , including Brendan Burgess, laughed at me". He made that up out of thin air. I don't find him remotely funny to laugh with or at. 

When I gave the example of a tough Mortgage Arrears Code as an example of what had been done for people in mortgage arrears, David Hall butted in "it's a voluntary code and it's not strong" 

While we can certainly differ over whether the MAC is strong or weak, it is certainly not voluntary.


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## Duke of Marmalade (2 Nov 2012)

_Boss_ I didn't even check the figures, I presumed you were right and you haven't let me down.

McWilliams has the most unbelievable brass neck. He just doesn't care if what he says is wrong - if it sounds a crowd pleaser he just throws it out. I have heard so many instances especially on radio were I just scream "don't let him away with that" but he keeps getting away with it.

I liked the "I'm glad you asked me that question". His answer was such a contorted tissue of nonsense I can't remember half of it.


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## truthseeker (2 Nov 2012)

Ive tried to watch the segment on rte player a few times but unfortunately the player just halts and refuses to play any of the show (although Ive sat through the ads a few times).


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## runner (2 Nov 2012)

McWilliams is a comedian.
Thats why hes in Kilkenny.


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## Gardener (2 Nov 2012)

Brendan hadn't a chance on that programme.  The debate was very one sided, 4 people (including Tubridy) against 1.  It was impossible to manifest a decent debate from such narrow one track thinking.


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## Novaman (2 Nov 2012)

Brendan,

I watched the LLS last Friday and I think that you had an uphill struggle - looked like you were the only one who was trying to get some facts into the public domain to reflect the actual state of affairs wrt mortgage debt etc, but you were drowned out by the emotion of the other panellists and the audience, and indeed Mr. Tubridy.

Since last Friday I have heard DMcW on both RTE radio & TV, Today FM & Newstalk promoting his latest book and his comedy festival in Kilkenny, which is fair enough, but he seems to be making a lot of very pessimistic predictions about the state of the property market and in particular the tracker mortgage holders whom he describes as a ticking time bomb.....

In all cases when I heard this prediction by DMcW none of the interviewers could challenge him. Part of his argument was that the average historical rate of a 20 year mortgage in the past was 4 – 5%; hence once this tracker rate kicks in there will be mass default…..

IMO there is no one out there who can challenge this assertion objectively because there seems to be a huge information deficit.

In order to bring some perspective, accuracy and context to the overall discussion I am wondering if once and for all we could have the exact facts in relation to the quantity and quality of outstanding mortgage debt in Ireland.

I note that you state above that the 761,533 residential mortgage accounts (equate to approx 600,000 households based on your 1.25 factor), representing a total outstanding debt of €111,989,313 according to latest Central Bank report.

I have some questions relating to the above;

1.	Why do we not know how many actual households these mortgages relate to?? – Have the banks not got this data already?? – this will give much more accurate analysis of the situation.

2.	Have the banks any idea of the current book value of all the properties to which these mortgages relate – i.e. if there is a loan book of almost €112 billion – is that greater or less than the current valuation of all the mortgaged properties?

This is probably not a difficult question to answer but it would be nice to know if any proper analysis has been carried out by the banks…..

3. Do we have any kind of profile on the outstanding duration for the repayment of the above €112 billion - i.e. is there a breakdown on how many repayment years are left on all these mortgages;

e.g. - value and number of mortgages (households) in the 
0 - 5 year remaining payment period;
6 - 10 year remaining payment period
11 - 15 year remaining payment period
16 - 20 year remaining payment period
20 - 25 year remaining payment period
etc etc.

This is important data, because any discussion concerning "ticking time-bombs" need to relate to the facts – otherwise is a speculative argument based on educated guesses.

The basis of DMcW argument is that most mortgages taken out during the boon were trackers and once rates go up these trackers will become unaffordable, however in the meantime the capital on these trackers is being paid back at the low tracker rate, and there is no short to medium term indication (at least up to two years) of interest rates being raised. Hence DMcW affordability argument may not be a rational one – unless of course these people lose their jobs, which is a different argument…..

I note that on the LLS a member of the audience indicated that she had been repaying her mortgage for the last 15 years and was not in favour of debt forgiveness - of course she wouldn’t because she has probably paid off almost all of her mortgage and is probably not even in negative equity if she bought her house in 1997/1998......hence she would have an issue and may not understand those who are genuinely under pressure seeking debt forgiveness.

4. Does the above data include the buy to let mortgage debt? 

And if not, where can we get the latest data relating to the BTL debt  and apply similar analysis contained within points 1, 2 and 3 above?

Apologies for the protracted post, but this debate should not take place in an information vacuum, and I would appreciate if you could direct me to locating some insight into the above……


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## Brendan Burgess (2 Nov 2012)

This thread is about the specific claim that my numbers were wrong. 


I have moved replies to this thread which are general comments on approaches to mortgages arrears to the main thread

Brendan and David McWilliams on Late Late Show


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## Brendan Burgess (2 Nov 2012)

I had forgotten about McWilliams description of his role in the guarantee: 



> [FONT=&quot]I suggested a temporary, temporary, guarantee to stop a bank run . I had no idea and I was never in the dept of finance to talk to people about the idea that this would be a 5 or 6 year policy and you will find nothing that I have ever written to say that we should pay any bondholders because in actual fact I was in the vanguard of the movement to say that we should not pay the bondholders after  we had stopped the bank run, [/FONT]



But this is what he said on his website on the morning before the guarantee was announced 

[broken link removed]
.


> The only option is to guarantee 100 per cent of all depositors/creditors in the Irish banking system. This guarantee does not extend to shareholders who will have to live with the losses they have suffered. However, it applies to everyone else.




There is no mention anywhere in his artice that the guarantee should be temporary.  



And it's very clear that this applies to all creditors other than the shareholders. That includes senior and subordinated bondholders.


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## millieforbes (3 Nov 2012)

Novaman said:


> 1.	Why do we not know how many actual households these mortgages relate to?? – Have the banks not got this data already?? – this will give much more accurate analysis of the situation.



I suspect the answer to this is reporting or systems - eg the banks report the information to the central bank on the basis of number of accounts, rather than number of households or that the data structures dont support easily reporting the number of households rather than the number of accounts



Novaman said:


> 2.	Have the banks any idea of the current book value of all the properties to which these mortgages relate – i.e. if there is a loan book of almost €112 billion – is that greater or less than the current valuation of all the mortgaged properties?
> 
> This is probably not a difficult question to answer but it would be nice to know if any proper analysis has been carried out by the banks…..



Is this really useful information to have? I'm not sure how it would add to the debate?



Novaman said:


> 3. Do we have any kind of profile on the outstanding duration for the repayment of the above €112 billion - i.e. is there a breakdown on how many repayment years are left on all these mortgages;
> 
> e.g. - value and number of mortgages (households) in the
> 0 - 5 year remaining payment period;
> ...



I dont think this information exists in a cohesive report across all banks but individual banks do have this information



4. Does the above data include the buy to let mortgage debt? 

And if not, where can we get the latest data relating to the BTL debt  and apply similar analysis contained within points 1, 2 and 3 above?
[/QUOTE]


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## Brendan Burgess (3 Nov 2012)

Hi Novaman

Most of the information is available from a variety of sources. I will try to compile a Key Post on the issue.


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## Novaman (3 Nov 2012)

Brendan - thanks for your reply.

By coincidence there is an analysis of the mortgage market is an article in today's Indo by Charlie Weston with a corresponding graphic which indicates that there are a total of 169,000 mortgages, of the 762,000, "in trouble" and out of a total of 150,000 BLT mortgages with a value of €32b, 48,000 BTLs are also "in trouble" (value of €13b).

Whilst I welcome any analysis I think the Indo has exaggerated the extent of the problem, by including the 40,211 residential mortgages, which are not in arrears but have been re-structured, in the 169,000 figure, thus adding more emotion that fact into the analysis.....


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## Brendan Burgess (3 Nov 2012)

If I get my Key Post done quickly, I might offer a version of it to the Indo as a response to Charlie's article.


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## Wishes (3 Nov 2012)

Novaman said:


> Whilst I welcome any analysis I think the Indo has exaggerated the extent of the problem, by including the 40,211 residential mortgages, which are not in arrears but have been re-structured, in the 169,000 figure, thus adding more emotion that fact into the analysis.....



These are real figures, not exaggerated.  Any mortgage that has been restructured in any way, shape or form is in difficulty.  

Why restructure to begin with if you are not in trouble?

Can it be confirmed that the 40.211 residential mortgages "without arrears" have not had arrears recapitalised?


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## monagt (3 Nov 2012)

> Why restructure to begin with if you are not in trouble?



And every one forgets the mortgages that are not in trouble (yet) which are hanging on via parents direct supplements, parents indirect supplements (clothing children and grandchildren, buying unaffordable food and presents to ease their children's load) and destitution behind closed doors (every expenditure cut to the bone).

These you cannot count so any estimate you guys discuss are just that an estimate!

You don't know.


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## Novaman (3 Nov 2012)

Wishes

I respect the fact that homeowners who restructured mortgages may be classified as being "in trouble". 

However it all depends on the context of the restructuring - there is a pie chart on the Central Bank report which breaks down the analysis of the restructured loans - 12% had the arrears capitalised.

If we accept the 169,000 number as being the correct “in trouble” amount (equating to 135,000 households – based on the 1.25 factor) then I am inclined to believe the analysis presented by McW on the LLS debate – this is almost 25% of the current residential mortgage book, and based on a household size of 2.73 this equates to the welfare of almost 370,000 people - quite significant………………….

However I will reserve any judgement until the facts outlined in my initial post above are clarified by Brendan.


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## Wishes (3 Nov 2012)

Hi Novaman, 

The banks have lied to us all before, who is to say any of these figures are correct?


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## Wishes (3 Nov 2012)

monagt said:


> And every one forgets the mortgages that are not in trouble (yet) which are hanging on via parents direct supplements, parents indirect supplements (clothing children and grandchildren, buying unaffordable food and presents to ease their children's load) and destitution behind closed doors (every expenditure cut to the bone).
> 
> These you cannot count so any estimate you guys discuss are just that an estimate!
> 
> You don't know.



I agree.  

Plus the Trackers are an explosion waiting to happen.  We haven't even scratched the surface.


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## Brendan Burgess (6 Nov 2012)

Hi Novaman

Thanks for the suggestion. 

I have now compiled a Mortgage Arrears Factfile 

I would welcome any corrections to or questions on the numbers as I believe it's very important that any policy decisions are based on the evidence and not on the hype.


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## Bronte (6 Nov 2012)

I've not checked any figures.

If McWilliams is completely incorrect how come he has not been pulled on it?


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## Brendan Burgess (6 Nov 2012)

Hi Bronte

I did my best to challenge him, but it was not good enough.

He stated quite clearly " When I forecasted in 2003 that house prices would collapse, people laughed at me. Brendan laughed at me" 

He made that up. I did not get a chance to challenge him on it.

I did not get a chance to follow up his denial of his role in the bank guarantee. 

He also claimed on the Late Late
"[FONT=&quot]We should bring in a debt for equity swap which was done in America during the Great Depression.  " 

This really surprised me as debt for equity does not work where there is negative equity. Maybe those clever Americans managed to defy the laws of math.   I have emailed McWilliams asking for more information on where this came from and will let you know when he responds to me.

He has repeated this in the Irish Independent 

[/FONT]


> In the US in the 1930s they introduced a scheme whereby the bank and  the individual did a deal. The person's mortgage was reduced and the  bank was compensated by being offered half of the potential equity in  the house, so that when the house is eventually sold in 10 or 15 years,  the bank get first call on half the value of the house.
> 
> 
> Now the  bank must be able to turn into money the potential equity, which it is  now holding until the house is sold. So the bank will have to get  someone to lend it money against the collateral, which is the future  equity in the house. Who might that be?


[FONT=&quot]

Séamus Coffey has challenged this here saying that the US introduced no such scheme. 

I debated this issue with Stephen Donnelly on Prime Time when he claimed that the UK had a successful debt for equity scheme. I told them that they had a scheme but it was limited to borrowers who had a maximum LTV of 80%.  Despite being corrected, he repeated it the next day. 

It's not fair to struggling borrowers to pretend that there is a free magic bullet which will magic away their problems. 

I think that a lot of the debate is divorced from any of the data or evidence and the media is not diligent enough to challenge these sound bites. 
[/FONT]


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## Brendan Burgess (7 Nov 2012)

Bronte said:


> If McWilliams is completely incorrect how come he has not been pulled on it?



Hi Bronte

I had a read of his blog and there is a link to a very good, long article "David McWilliams: The Merchant of Guesses" It starts off with a petty point about the population of Gorey, but it gets much better after that. Well worth a read. 

Brendan


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