# Alternative Bank Ownerership as a solution



## How to Cope (1 Jan 2012)

I am new to this site - a friend said should go on it. Therefore excuse me if my suggestion has come up here before.

Is it possible for those in mortage arrears and other difficulties with their banks to come together and form their own mutual or co operative bank?

Thinking of an approach similiar to the Land Leage movement of Davitt and Parnell where land was taken from landlords - tenants came together and were listened to.

In our case we would take control of own debts - get long term low interest finance ( which banks are getting) from ECB - 30 years at 1% and cut out the profitteering bankers who are looking for blood.

New entity would be owned by mortage holders and would give flexibility as it has no other purpose then to support those in difficulty and has a 30 year timespan. Would not have to raise new finance so no worries about 'going to market' etc.


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## thewatcher (1 Jan 2012)

While i have some sympathy for your sentiments, this country is rigged to bleed working people dry by the state and private sector insiders, always has been always will be ,that is effectively the forces you are looking to take on, i wish you luck my friend.
    Take ptsb variable mortgage rates for example........


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## Macstuff (1 Jan 2012)

While It's good to see creative, outside the box thinking, I see lots of issues with your plan. Principally who is going to fund this bank? If you did get over the paperwork / bureaucracy, I very much doubt you would get finance at 1% from the ECB as your members are largely people with mortgage and credit problems. The ECB would see huge risk in lending and would either refuse to lend or lend at a much higher rate.


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## Jim2007 (2 Jan 2012)

In a nutshell you are seeking someone who is willing to give people with poor credit, a 30 year mortgage at a fixed rate of 1% on an over valued property... What is in it for them???


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## How to Cope (3 Jan 2012)

*Alternative Bank Ownership as a solution*

They have already given the mortgage at XX% to people to poor credit - on an overvalued property for 30 years.  Think that is the problem. There would be no new lending into Ireland - just the borrowers saying we have had enough - we will do this ourselves.

It is all done. No new money required or needed. 

I am suggesting that the loan amounts are isolated or taken from the Irish Banks / Building Societies and all put together into one central PAMA  - Peoples Asset Management Agency.  What in it for them - the banks - is that they lose their bad debts.  Problem gone away. 

ECB has their wished for slimmed down banks with no mortgage arrears problems. The government should be happy as credit might flow.

The actual payments may still go through bank, as would all the admin but these loans would be 'isolated' or 'cocooned'. There pretty much no need for a new infrastructure.

The individual borrowers would be taking taking responsibility and ownership for their debts through mutual or shared responsibility. We would all take responsibility together by buying in. There would be penalties for not paying in new structure - lenders would by default go back to original bank and terms. 

The borrowers would now be dealing with a lender whose only purpose is to manage a problem over a long term at an ECB interest rate. This lender - PAMA - could defer- allow flexibility - buy and sell within property portfolio - upgrade - downsize etc. It would and could deal with borrowers as human beings.

Upside for borrowers is that the banks risk penalties and profit % is gone away as is also their drive to have low arrears / capital ratios etc

Why would anybody agree or allow - this is where Davitt and Parnell come in and where people have to take a stand. They took control and rose to a challenge and took the land back from the landlords - something that has not happened anywhere else in the world. We are dealing with nationalised banks and the government controlled ECB - they react to sustained political action. Also by coming together and organising we really just go do it  - nobody can stop a united people.

Maybe it is time to stop touching the forelock. 

I am writing this as an unemployed person with two mortgages - both 6 months in arrears. Have three kids in College/ School.


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## so-crates (3 Jan 2012)

This doesn't add up. Your new mutual entity would have to buy the mortgage from the current bank so they would need a shed load of cash to pay those banks, even if (and I will guess this would be your next idea) the banks take a "haircut" on the loans. 
Basically the banks need to repay the money they borrowed in order to finance those mortgages. Besides the ECB is not lending out for 30 years at 1%, the current facilities are being provided on a much shorter timescale. Nothing to do with some notion about touching forelocks or supine Irish, etc, simple cold hard facts. The money borrowed needs to be repaid. 

As for leaving in place the same structures for payment and assuming there would be no additional cost in this... Sorry this is a little naive. If you didn't set up a separate payment arrangement then all of the banks would need to keep in place and keep administering the existing accounts, they would then additionally have to funnel that money through to your new entity.

And a penalty that involves saddling the banks with dealing with what would be essentially the crud from the distillation of all the worst mortgages in the market? If people aren't willing to pay up with your hypothetical 1% and 30 years, then what would be the benefit of your penalty? They certainly won't pay more.

Sorry - this whole idea is simply unaffordable and unworkable. The only plausible reason why NAMA might work is scale, the property book transferred consisted of a smaller number of large loans as opposed to a large number of small loans.

As something of an amateur historian. Parnell was a landowner so he wasn't "taking land back from the landlords". Besides your invocation of the Land Wars of the 1870's bears no relation to the current situation. Those people who eventually bought (and remember they took out a loan and bought that land back) land under the various land acts from the Ashbourne Land Act forward were the descendants of the dispossessed. The land had been granted to the landowners by Crown decree. The current travails are being visited on the landowners, not dispossessed tenants. The situation is in no way similar.


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## How to Cope (3 Jan 2012)

*Altrnative Bank Ownership as a Solution*



*In reply to So-Crates  -  *

*I am not a banker or expert but just putting forward a suggestion for alternative thinking which I hope maybe can tie in with what some others might be thinking – start a debate. Not really interested in getting into a tit for tat defence of an undeveloped proposal, as it is just to easy to say –‘this not work – that not work’.  Committed and positive people need to see what can be done  - not what cannot be done. I really don’t have all the answers and would invite others with suggestions to come forward.*

*The main points you raise are  -*

This doesn't add up. Your new mutual entity would have to buy the mortgage from the current bank so they would need a shed load of cash to pay those banks, even if (and I will guess this would be your next idea) the banks take a "haircut" on the loans. 
Basically the banks need to repay the money they borrowed in order to finance those mortgages. Besides the ECB is not lending out for 30 years at 1%, the current facilities are being provided on a much shorter timescale. Nothing to do with some notion about touching forelocks or supine Irish, etc, simple cold hard facts. The money borrowed needs to be repaid.

*Complete misconception of proposal. The existing mortgage would be transferred in same way, as that banks at the moment will give out loans to collection agencies and tell a borrower they are no long dealing with them. This proposal is all about and for those willing and wanting to repay in full – every cent – but want the time and room. No haircuts, which you jumped to presume. The 30 years is not relevant – what is relevant is long term finance at lowest finance terms – with bank taken out of loop so that the borrower is not trying to support bank profits on top of handling a crisis.*

As for leaving in place the same structures for payment and assuming there would be no additional cost in this... Sorry this is a little naive. If you didn't set up a separate payment arrangement then all of the banks would need to keep in place and keep administering the existing accounts, they would then additionally have to funnel that money through to your new entity.

*It do not see as this as a major admin task. My preference would probably be to set up a separate admin structure – to have a clean break. However to get legals all correct leaving existing admin might be better. Of course there would be costs. Look what NAMA costs. This would not be a market stall but a mulit billion operation.*

And a penalty that involves saddling the banks with dealing with what would be essentially the crud from the distillation of all the worst mortgages in the market? If people aren't willing to pay up with your hypothetical 1% and 30 years, then what would be the benefit of your penalty? They certainly won't pay more.

*The individual borrowers would commit to work with and in new structure. If they don’t they would no longer be eligible to the benefits. There is a whole spectre of individuals who cannot pay – for a variety of reasons and who will end up being bankrupt or are looking for debt forgiveness. Individuals who cannot cope in this new entity would need to look at their options across what best route is to go. Hopefully there would be advice and guidance for those looking for it. This proposal is not meant as a solution for this sector.*


Sorry - this whole idea is simply unaffordable and unworkable. The only plausible reason why NAMA might work is scale, the property book transferred consisted of a smaller number of large loans as opposed to a large number of small loans.

*Not sure if you are correct on this as. There are 1000s of loans involved in NAMA with many of the smaller ones remaining with and managed by the banks. There is huge amounts with individual developers but beneath this is a myriad of uncomplicated and often undocumented arrangements / loans. In comparison residential mortgages are clean and documented. This proposal is to enable those who can and want to repay debts to be allowed to do so with best interest rates and best terms. NAMA is about taking over properties and managing out of a situation.*


As something of an amateur historian. Parnell was a landowner so he wasn't "taking land back from the landlords". Besides your invocation of the Land Wars of the 1870's bears no relation to the current situation. Those people who eventually bought (and remember they took out a loan and bought that land back) land under the various land acts from the Ashbourne Land Act forward were the descendants of the dispossessed. The land had been granted to the landowners by Crown decree. The current travails are being visited on the landowners, not dispossessed tenants. The situation is in no way similar.

*Does it make any difference if Parnell was a landlord a baker or a candlestick maker or what the nature of the challenge was then. My comparison was the leadership shown and the strength in unity of purpose.*

*Again these are just suggestions and maybe entirely unworkable. I think there is too much drift and no solutions execpt those handed down by the banks. The banks and their apologists seem to be saying what can and what cannot be done.*


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## RichInSpirit (3 Jan 2012)

I'm with you on this How to Cope.  I was thinking of starting a slightly similar thread but  different 

Here's a thought to make your idea workable. 
If you approached the ECB and offered them 1.5 or 2% . (That is 0.5 to 1% over ECB rate) then the ECB would be making a profit on the transaction compared to the 1% they get paid off the banks at the moment. 
You would effectively have tracker rates and the ECB would be making more money than they are at present.


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## Jim2007 (3 Jan 2012)

How to Cope said:


> Maybe it is time to stop touching the forelock.



 No, is time for you to you to understand the economic facts of our situation - the taxpayer can neither afford nor is willing to support another bail out and what you're proposing is exactly that.  You can not simply move loans of a bank's balance sheet without replacing it with further financing and furthermore, moving it from one government owned entity to another achieves nothing, but increases costs!

As for land reform, the land had to be bought of the landlords through financing, as would your proposal.  But at least in that case the majority of the people supported the idea, that is not the case now.

In my opinion the best you can hope for is your mortgage to be converted to what is known as a no recourse mortgage - meaning that you could hand back the keys and owe nothing, of course you would loose your house and have to rent something instead.  Such a proposal might gain the support of the taxpayer but that is about it.


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## Brendan Burgess (3 Jan 2012)

> I am writing this as an unemployed person with two mortgages - both 6 months in arrears. Have three kids in College/ School.


As a matter of interest, why have you two mortgages?


> *Again  these are just suggestions and maybe entirely unworkable.
> *



Correct. They are unworkable. You are asking other taxpayers to subsidise your interest rate. 
*
*


> * I think there  is too much drift and no solutions execpt those handed down by the  banks*



This is trotted out all the time. The banks and the Central Bank have come up with many solutions.

70,000 mortgages have been rescheduled by those banks.
Fewer than 1,000 houses have been repossesed over the past two years - and most by sub-prime lenders. 
A Deferred Interest Scheme was introduced for those who can afford to pay at least 2/3rds of the interest.
The banks have been banned from charging penalty interest
The banks have been banned from switching people off trackers.
The banks have been banned from harrassing people - maximum 3 calls per month
18,000 people are getting Mortgage Interest Supplement from the taxpayer
Borrowers who bought at the peak of the market are getting additional tax relief 
The Local Authority rules were changed so that people can now qualify for local authority housing before they are actually put out on the street. 

But some people want the taxpayer to subsidise their interest or to subsidise debt forgiveness. This won't and should not happen. 

What does need to happen, is that those who have unsustainable mortgages, should lose their home and have their mortgage written off. The legislation is in train to achieve this, but it will take some time to implement.


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## so-crates (3 Jan 2012)

How to Cope said:


> *In reply to So-Crates  -  *
> 
> *I am not a banker or expert but just putting forward a suggestion for alternative thinking which I hope maybe can tie in with what some others might be thinking – start a debate. Not really interested in getting into a tit for tat defence of an undeveloped proposal, as it is just to easy to say –‘this not work – that not work’.  Committed and positive people need to see what can be done  - not what cannot be done. I really don’t have all the answers and would invite others with suggestions to come forward.*




Brendan has already responded with the points I was going to make so I won't repeat them - I will however point out that a debate is a discussion where people may well disagree with you, in fact they ought to challenge you http://dictionary.reference.com/browse/Debate. 
It is good to try thinking outside of the box and searching for solutions is important but if your idea is not as good as it seems on first thinking of it there is little value in invoking irrelevant history to try and drum up support for a flawed suggestion. No amount of "committed and positive" people will ever make a bad idea into a good one.

Oh and banks employ debt collectors to chase you, they cannot "give" the loans to the debt collector. Your contract is still with the bank, not the debt collector and you can refuse to deal with any third party. 
Also, interesting you invoke that as an example of how to transfer the loan when you also say you wouldn't be suggesting a "haircut", any bank that has decided to use the services of a debt collection agency has resigned themselves to the fact that they won't be getting the full amount back.


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## TRS30 (4 Jan 2012)

Brendan Burgess said:


> As a matter of interest, why have you two mortgages?
> 
> 
> Correct. They are unworkable. You are asking other taxpayers to subsidise your interest rate.
> ...


 
Brendan- who will cover the cost of these write offs?


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## Kerrigan (4 Jan 2012)

TRS30 said:


> Brendan- who will cover the cost of these write offs?


 
Exactly.  

Brendan, who do you envisage will purchase all these repossessed homes?


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## RichInSpirit (4 Jan 2012)

Brendan Burgess said:


> What does need to happen, is that those who have unsustainable mortgages, should lose their home and have their mortgage written off.



This is the capitalist model. However all the Irish banks and some of the foreign ones operating in Ireland would be gone bust by now if the true capitalist modal had been allowed to take it's course.
So I think it's a legitimate question to debate an alternative banking scenario.


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## How to Cope (11 Jan 2012)

*Bank Ownership as a solution*

Hi all    -  thought would let debate develop before replying.  I did not mean that last reply / comment to come across in big print like it did.  I wrote it in word and copied pasted it in - so excuse me if it came across as dramatic.  Also did not mean to be undemocratic re debate and dismiss other views - got all defensive. This is my first post to a forum of any kind and started taking things personally.

I have two mortages as bought a house with some redundancy money in 2002. I wanted a place near my mum down in Waterford - somewhere to stay when visiting etc when down. It is not in negative equity.  

Thanks for all who have thought about this suggestion - I only meant to get people thinking and talking - looking at alternatives.

Has anybody seen where the banks are proposing exactly same scheme. In their case it was what suits them and they are proposing moving tracker mortages across to the former Anglo Bank -  the IBRC.  They would do this in the exact same way as my suggestion. They are proposing this as these accounts are draining their profitability.  Now if the banks are proposing it ????? !!!!!!   

On the other hand accounts in arrears are actually generating super profits re increased variable interest charges and also penalty charges - legal, extra bank charges etc.

Again my suggestion would have no impact on taxpayer, there would be no remortaging. The winners would be the banks -  yes, the borrowers, the government and the country. Mortage arrears are covered in the bailout -as potential losses. I think up to a value of circa €10b - as part of the 'stress test' - getting capital right etc.  These provisions could go with mortages to new entity.

I will look again to see where you think the problems / costs / taxpayers are involved or there would be new borrowing - I do not see it. This proposal is about taking personal responsibility.


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## How to Cope (23 Jan 2012)

*Alternative Bank Ownership as a solution*

Any comments on todays Sunday Business Post article re Banks looking to move or transfer Tracker mortages as they are a strain on their profitability  - /stroke capital structure.

I was on a merry go round withh 100k + income  - music stopped - job gone - redundancy went on keeping payments up to date - until all gone. Went through the phases -  had the drink problem, the depression, the seperation.

Mortages holders held off like lions while the credit card and car loan people ( wolves)   - called to house to look for car and took credit rating- closing my bank account . There is feeding for us all here - you feed yourself -  we are guaranteed.


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## Bronte (23 Jan 2012)

Well your idea is no more hair brained than NAMA.  Give it 20 years and we'll see how stupid that was.  

The only reasons there have not been more repossessions is that the banks don't want the properties as they cannot sell them, otherwise government or no government there would have been widespread repossessions.  At least the subprime for all their bad press are slowly going through the mess.  I wonder if you cannot afford to repay your mortgage are you better off with subprime or government banks.  Will those who get repossessed now, early in their lives in 5 years times be better off than those who are lingering with extended payment terms etc.  

Repossession are they a bad thing? Is it worse to have a long lingering slow death of bank letters, arrears, rescheduling with no hope of ever getting back on track.  Personally I'd prefer a repossession than holding onto the family home at all costs.  

Instead of deferred interest it would be better if after about 2 years of that the bank wrote down some debt, and reduced the mortgage amount to that which the borrower can now afford to repay (only borrowers who have no hope).  Instead of repossessing, evicting families, not dealing with reality and pretending everything will be ok when house prices recover/the economy recovers and the bank avoiding all the costs of repossession.


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