# Debt Forgiveness.



## Purple

Right, I think this is the right place for this thread.
What do posters think about the idea of banks writing off mortgage debt?

Some would say that if it’s a publically owned bank then it’s a bad idea but a private bank can do what it likes.
I don’t think it’s a good idea either way as a state owned bank will be giving away tax payers money and a private bank will be giving away shareholders money.

I also think that there’s no moral case to be made for it and a strong moral case against it.

I bought my house in 2004. I have a massive mortgage and if my wife or I lost our job we’d lose the house. I am still 100% against any form of publically funded debt forgiveness and here’s a few reasons why;
1)	I’m an adult and therefore I am responsible for my own actions. 
2)	I’m an adult and therefore I should not expect my neighbour to pick up the tab for my bad financial decisions (and if you didn’t know you were buying a house in a bubble and it would lose a large percentage of its value then you are a fool, pure and simple).
3)	I only have one Mammy and as I am an adult  I don’t expect her to wipe my posterior or tell the bold children (or banks, or tax-man) to go away. Therefore I don’t expect the state or my neighbour to be my Mammy either.

To those out there that think it’s a good idea I have this to say;
We are all adults and should act accordingly. 
I’m disgusted that there are still people out there who want to behave like children.


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## Time

The whole "your an adult" and moral arguments are getting old now. 

The banks should be made pay and pay dearly and I don't care who gets burned in the process.


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## RMCF

I can't honestly see people getting something for nothing.

If there is a reduction in peoples mortgages then it will be by extending the term, or the bank owning half the house etc. I can't see the bank simply saying "that €300k mortgage, sure we'll call that €200k".

There will be a catch.


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## horusd

I agree that the idea of writing off mortgage debt (or any other type of debt) is likely always wrong. Contracts freely entered into, should be honoured. We could frame the question another way. Do you think it's right that this freely contracted private debt should now be partly paid by the taxpayer? 

 As a thought experiment, consider if property were booming and the gov.t proposed that both bank assets and private profits were to be sequestered and re-distributed to those who didn't climb on the property ladder in 2008/9 or whenever. The howls of protest from libertarians would (rightly) be heard in Timbuktu. 

The argument for debt forgivness seems to be that some people were victims of wreckless lending. This may well be true to an extent. But is it a valid reason to redistribute losses to the taxpayer? Not in my view. Perhaps a secondary argument is that should people lose their homes, they will be on the housing list. Fair enough, then address this issue without debt forgiveness and let bank & borrower re-arrange the lending terms such that they can remain at home.


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## dockingtrade

IS debt for equity a no brainer ? LEAves more cash in peoples pockets and reduces bank bad debts over a long period of time


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## z107

Someone is going to have to pay for the 'forgiven' debt and I don't want it to be me. I'm already paying off my own mortgage and don't want to have to pay off other people's courtesy of FF/FG/AIB

I've been stupidly paying chunks off of my mortgage instead of enjoying myself with the money. I eejiting well even paid my SSIA money off the mortgage. I should have known that that is not how it works in Ireland.



> Some would say that if it’s a publically owned bank then it’s a bad idea but a private bank can do what it likes.
> I don’t think it’s a good idea either way as a state owned bank will be giving away tax payers money and a private bank will be giving away shareholders money.


People have the choice to sell their shares. It's a bit more difficult to emigrate.


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## salaried

Purple, I always find your posts interesting and honest. I am not being smart here but to some people a house is more than bricks and mortar, It is their HOME. In response to your reasoning (1) We are all responsible for our own actions . (2) Are you seriously suggesting that a young couple planning on having a family and a decent home to rear them in had more knowledge of what was ahead of them than the people elected to govern us, or The financial regulator, or the board of directors of the banks that ordered their staff to sell ,sell sell on their products , ie mortgages. They are not fools . The fools are the people who engaged in reckless lending, And the financial regulator ,the goverment and the ecb who all were paid to know that if 20% of a countries economy was based on a single entity , eg Constuction that the economy would overheat. We were at 30% and neither our elected representatives, Our financial regulator, the BOD of the banks or the ECB could not see what was coming down the tracks so how can you blame the ordinary tax paying couple for not seeing it. (3) If you are comparing mammy to the banks , Mammy guides you through life until adulthood , From there on out we all put our trust in the people and institutions mentioned above and this is where we were all let down,  Purple you make very valid points but when my neighbour who happens to be a single mother is talking about selling up and losing her friends and neighbours and her 9 year old sons friends then it is no longer an economic debate but a social and emotional one, I hope you don,t take offence to my reply Purple as I have always respected your opinion, It is just my view, Regards ,Salaried.


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## thedaras

There has to some distinction made between those who cannot pay and those who just wont..
I presume that its meant for those who have lost their jobs and cannot afford to pay.
I cant see how this should affect anyone else,it should be the personal debt of the home owner,ie; the debt follows them.
If they have a mortgage of 300k and have lost their jobs,surely the tax payers are presently paying a mortgage supplement to them? Maybe this could be a saving as they would no longer be entitled to this?
I think it all depends on how it is done,if its the homeowners personal debt and they are not working and their repayments are reduced,then when they start to work again it reverts to normal,I dont see how it should affect anyone else.
I find it hard to stomach the fact that there are so many young people who are lossing their jobs and cannot afford to pay their mortgage,and we just say to them ,hard luck..
This should not be about letting them away with the debt but just an innovative way of helping them out of an impossible situation.
What is the alternative? Do we turf them out of their home? Would the taxpayer then end up paying for accommodation for them?


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## horusd

There may well be a cogent argument for debt forgiveness, that despite the moral hazard, makes this a rational policy. Could someone who thinks this is a good idea articulate a a coherent argument for this? It would be interesting to hear an effective opposing view.


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## NOAH

The way it works is, the bank sells the house for less than mortgage and then writes off the balance.  The reporting of this has been awful as usual.

If the government stopped wasting money on qwangos, jobs for boys,  junior ministers etc there would be a lot more money to go around.  All these headline stories are is to keep the real news off the pages.  We own the 2 banks but how many of the executives who caused the problems will be made redundant??  None.  There will be a cull lower down as usual.

We should show no forgiveness to FG at the next election.  FF appointed 182 of their cronies to jobs leading up to election and they cant be removed so FG will do same.

noah


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## Kate10

Purple I think your post is a little simplistic.  

There are many people out there who have homes that they cannot now afford.  They bought at the top of the market with 100% mortgages.  They are now in negative equity by up to 60%.   If/when the properties are repossessed these people will still carry personal debt into the hundreds of thousands.  They will never get another mortgage.  They will never again own their own home.  If the banks exercised all of their rights in these circumstances these people (many of whom were young and inexperienced when they bought) will work for the next thirty years with every cent of their non-essential spending going to pay the debt.  With rent costs etc many will not even be able to meet interest on the amount owed.  Essentially these people would be facing a sort of indentured servitude. 

Personally I think this is morally unjustifiable.  I believe about 80,000 people are currently in some level of arrears on their mortgage.  This is an enormous problem for our country.  

You are suggesting that we just close our eyes and turn our backs on these people.  I am sure that you work very hard and make many sacrifices in order to be able to deal with your responsibilities.  What you many be forgetting is that these people do the same, but are still a million miles away from making their payments.  

Doing nothing about this situation will end up costing the country more in the short and long term.  

Finally I would just like to say that it seems to me that the little guy (ie the private consumer) is always the one who has to face up and carry the can.  I negotiate B2B contracts all the time.  In my experience, when things go wrong in business, only the foolish or very unfortunate end up in litigation enforcing their contract.  Most companies come to the table and work something out, bearing in mind the changed circumstances.  Ignoring changed realities doesn't make the problem go away, and doesn't make money for anyone.  

Kate.


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## Firefly

Kate10 said:


> There are many people out there who have homes that they cannot now afford.  They bought at the top of the market with 100% mortgages.  They are now in negative equity by up to 60%.   If/when the properties are repossessed these people will still carry personal debt into the hundreds of thousands.  They will never get another mortgage.  They will never again own their own home.  If the banks exercised all of their rights in these circumstances these people (many of whom were young and inexperienced when they bought) will work for the next thirty years with every cent of their non-essential spending going to pay the debt.  With rent costs etc many will not even be able to meet interest on the amount owed.  Essentially these people would be facing a sort of indentured servitude.



Hi Kate,

I think we have to be very careful here. I agree there are people in difficulty, but debt forgiveness could be easily exploited by those who may not be in trouble/that much trouble, but would simply like to just hand back their keys to the bank and write off the balance thankyou very much. 




Kate10 said:


> Finally I would just like to say that it seems to me that the little guy (ie the private consumer) is always the one who has to face up and carry the can.



If debt forgiveness is introduced then it will have to be paid for and it will be the little guy who will ultimately have to pay.


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## truthseeker

Purple said:


> .........and if you didn’t know you were buying a house in a bubble and it would lose a large percentage of its value then you are a fool, pure and simple


 
I dont agree with this. 
First of all, Im a professional, well educated, more than one professional qualification to my name. My field of education is technical - I dont know any more than the average person about economics. I am in negative equity. That doesnt make me a fool.

Most of my friends in my own age group are similarly professional, a wide range of degrees in different fields - none of them in economics. They are also in negative equity. That doesnt make them fools either.

I needed a home, rent was so expensive that it was cheaper for me to pay a mortgage. I didnt buy a huge house because I was being 'sensible'and buying within my means. I knew the value of property could go down as well as up but I had no idea it would crash to this extent, nor did I know that my job would impose a 10% paycut or that my government would impose a series of levies and taxes.

Im not a fool Purple. I just didnt know, in my late 20s, that all these things could or would happen, or that they could all happen at once.

I couldnt afford a big house when I bought, so being 'sensible' I bought an apartment. I never intended it to be my lifelong home. Who can afford their lifelong home in their 20s? Is it not the norm to start small, build some equity, have your salary increase with time and then sell your modest property and buy somewhere larger later on? Im asking this quite seriously? I started life in a very small house, and my parents bought a 4 bed semi when they were in their late 30s. Similar to most of my friends parents. I dont think I know anyone who bought their first home and then stayed in it forever.

I cannot move now. Im ok where I am, but if I wanted to have a family I would have to move or suffer harshly reduced living standards, compared even to my grandparents living arrangements. 

I still dont see how any of this makes me a fool.


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## Purple

Time said:


> The whole "your an adult" and moral arguments are getting old now.
> 
> The banks should be made pay and pay dearly and I don't care who gets burned in the process.



The people who ran the banks should be made to pay and pay dearly’ i.e. 20+ years in prison and every cent they have.

To the argument that if the experts didn’t know what was going to happen then how could the average punter my response is that I don’t believe the experts when they say they didn’t see it coming. I thing that the boards of the banks, the regulators, the politicians and the economists who claim innocence are liars to a man (and woman). I think they are lying through their teeth. There’s no way they didn’t see it coming, not a chance. The banks are not sentient, they are corporate bodies. The people who ran them should be held personally liable. They are the people who should be punished. Therefore I think that every member of every board of every Irish bank should be facing criminal proceedings. I think that the last three ministers for finance and the last two Taoiseach should also face criminal proceedings. The last financial regulator should join them as well as the developers that traded so recklessly  (and I’m sure there’s more that should be on the list). If that requires a constitutional amendment in order to bring in retrospective legislation then so be it. 

To the argument that people will have debts following them for the rest of their lives my response is that it should be treated like a liquidation; take all of their assets (including the family home) and sell them. That’s what the bank gets, the rest they write off and the debtor walks away to start again. 

The argument that people should take responsibility for their own actions extends to the guys who were in the wheelhouse, not just the punters is steerage who got on board even though they knew the guys in charge were steaming for the rocks.


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## Firefly

Purple said:


> To the argument that people will have debts following them for the rest of their lives my response is that it should be treated like a liquidation; take all of their assets (including the family home) and sell them. That’s what the bank gets, the rest they write off and the debtor walks away to start again.



As per my post above this could be easily exploited. Take Truth's situation above...bought somewhere he didn't expect to live longterm and can't sell. He could "miss" a few payments and go down the liquidation route. Hand the keys back and he's sorted. Good for him, bad for the taxpayer.


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## liaconn

It's a tough one. Like everything else, you will have people who just won't try to pay their mortgages taking advantage and bringing the whole thing into disrepute.

On the other hand there are many many people making huge efforts to pay every month, cutting back on everything they can and still finding it hard as interest rates go up and their salary goes down. I think it's unfair to just say 'you're big boys and girls, tough, you should have know what you were doing'. Hindsight is a great thing. Some people were just in the wrong place at the wrong time when it came to buying their first property and I don't think they should be kicked out on the street, made to feel like criminals or have their credit rating wiped out because of the immoral behaviour of fat cats who have not been punished in any way.

 I bought my place based on my Civil Servant's salary and projected increments. Never, ever before have Civil Servants had a pay cut. How would I ever have anticipated taking a massive pay cut? No one could have guessed that. How does that make me a fool?


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## One

I am in favour of debt forgiveness for home owners in certain circumstances. But I don't know any mechanism that such debt forgiveness that be implemented in. It is a messy situation.


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## Kate10

Purple your suggestion that people be allowed a form of liquidation is an option that I think the vast majority of people in real difficulty would jump at.  In fact the debt "forgiveness" being discussed, if it comes to pass, will probably be less generous than that.  

One option being discussed is an increase in the loan term, with a postponement of a portion of interest for a period of time.  Another is that the bank takes a share of the house, thereby reducing the borrower's mortgage but also reducing their ownership of the house by the % by which their mortgage has been reduced.  The bank then benefits from any upswing in value.

Neither of these options is as generous as your suggestion.  After all, the vast majority of people in difficulty don't have any assets.  Their savings are long since chewed up by their mortgage.  

Firefly, I agree that the situation could be exploited, but this could be dealt with in a number of ways.

(i) the debt "forgiveness" could be offered to everyone in negative equity, regardless of their ability to pay their mortgage.  Anyone in negative equity could choose the transfer a % ownership of their home to the bank equal to the % value of their negative equity.  So someone with a €400k mortgage on a home now worth €250k could enter an arrangement whereby their mortgage is reduced to €250k, they own 62.5% of the property and the bank owns 37.5%.  

(ii) debt "forgiveness" offered only to those is dire financial circumstances.  All applicants subject to complete financial review - all outgoings must be reasonable and proven etc etc.


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## DerKaiser

Kate10 said:


> If/when the properties are repossessed these people will still carry personal debt into the hundreds of thousands.
> 
> They will never get another mortgage. They will never again own their own home.
> 
> If the banks exercised all of their rights in these circumstances these people (many of whom were young and inexperienced when they bought) will work for the next thirty years with every cent of their non-essential spending going to pay the debt.
> 
> Personally I think this is morally unjustifiable.


 
I think you're getting to the heart of the matter here.

I have enormous sympathy for the view that it is a horrible thing that someone who simply wanted to buy a home is now sentenced to scrounging out a miserable existance.  

Say someone was 25-30 and renting in 2002, was it right that they should have had to postpone their lives and wait until they were 35-40 before buying a home?

Say someone was 30-40 and married in 2002 and had a two bed place.  Are we saying that the right thing for them to do was postpone having kids or buying a suitable home because it would be 10 years before house prices allowed them to?

I know nobody has an automatic right to a home, but there's something wrong with wider society when home prices can double and then half again in a 10 year period, we can't just blame the collective decisions of hundreds of thousands of people.  We are part of a state so these things can be somehow addressed at a macro level.

At the end of the day though, people have to make an honest effort to pay their debts.  We don't want to throw people in the poor house, but equally someone who bought a nice place that they should have realised was beyond their means should not complain if their lives are being curtailed by repaying the debt.

I do think equity share by the banks in the more severe situations is the way forward rather than debt forgiveness.  People do not get kicked out of their houses but should be incentivised to make good on their original debt if the economy (or their own personal circumstances) improve


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## Purple

Truthseeker, my house is worth considerably less than I paid for it but I knew that would happen. I didn’t know it would be this bad either but I expected a 30% drop.
When I took into account that we were trading up and that I was getting a tracker mortgage and that interest rates would go up ahead of the ECB rate and that it is a home before it is an investment I bought anyway but I never expected Ireland to be different to every other property bubble in history.


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## Purple

Firefly said:


> As per my post above this could be easily exploited. Take Truth's situation above...bought somewhere he didn't expect to live longterm and can't sell. He could "miss" a few payments and go down the liquidation route. Hand the keys back and he's sorted. Good for him, bad for the taxpayer.



Yes, all bets are off now as the banks have been nationalised and their liability is being borne by the tax payer. That said just missing a few payments wouldn’t be good enough grounds to default on your debts. You would have to prove that you have no other option and it wouldn’t just be your house that they could take; all of your assets, including pension funds etc would have to be up for grabs. You’d have the clothes you stand up in and a clean slate, nothing more.


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## liaconn

Well you're obviously a very astute guy Purple. But people trying to get onto the property ladder at a time when houses were going up in value by the day and trying to guess when would be a good time to do it were not necessarily stupid or irresponsible. As Truthseeker says, lots of people are intelligent and capable but don't have a huge grasp of economics


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## monagt

One law for Irish taxpayers, another for bondholders - interesting POV

Smaghi’s application of the moral hazard principle with a zeal that verges on the vindictive with respect to the Irish taxpayer, stands in contrast to his treatment of the bondholders.

[broken link removed]


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## DerKaiser

Kate10 said:


> (i) the debt "forgiveness" could be offered to everyone in negative equity, regardless of their ability to pay their mortgage. Anyone in negative equity could choose the transfer a % ownership of their home to the bank equal to the % value of their negative equity. So someone with a €400k mortgage on a home now worth €250k could enter an arrangement whereby their mortgage is reduced to €250k, they own 62.5% of the property and the bank owns 37.5%.
> 
> (ii) debt "forgiveness" offered only to those is dire financial circumstances. All applicants subject to complete financial review - all outgoings must be reasonable and proven etc etc.


 
I don't quite agree with the debt forgiveness mechanism. The banks share of the home should be the reduction in debt divided by the current market value.

Also there would need to be some mechanism for the owner paying the bank for the use of the bank's share of the house i.e. some kind of rent.  This portion could be postponed and accumulated until ultimate sale of the house.

Of course the ultimate debt forgiveness if bankruptcy.  Maybe the answer is that we should have separate (less severe?) bankruptcy rules for defaulting on residential mortgages


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## Firefly

Purple said:


> Yes, all bets are off now as the banks have been nationalised and their liability is being borne by the tax payer. That said just missing a few payments wouldn’t be good enough grounds to default on your debts. You would have to prove that you have no other option and it wouldn’t just be your house that they could take; all of your assets, including pension funds etc would have to be up for grabs. You’d have the clothes you stand up in and a clean slate, nothing more.



I agree, but given the number of people affected and the time & expense of each case legally it _might_ be cheaper for the bank to cut a deal in some instances, than going down the legal route and ending up with a repossesed property they can't sell / sell at a significant loss. However, it would have to be on a case-for-case basis. Any blanket policy will be open to exploitation as there will be too many cases involved...the banks would need 100's of extra staff to process this nevermind doing all of the checks to prove someone can't actually pay. So in summary, I am against the idea per se, but can see where in some cases the bank have a better hope of getting some money back by writing a portion of the debt off than repossesing a dud property.


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## truthseeker

Purple said:


> Truthseeker, my house is worth considerably less than I paid for it but I knew that would happen. I didn’t know it would be this bad either but I expected a 30% drop.
> When I took into account that we were trading up and that I was getting a tracker mortgage and that interest rates would go up ahead of the ECB rate and that it is a home before it is an investment I bought anyway but I never expected Ireland to be different to every other property bubble in history.


 
I knew there would/could be ups and downs but also I didnt know it would be this bad.

I wasnt trading up, I was just wanting a roof over my head, a home, even if it went down in value I thought that between the amount Id paid as a deposit, and the amount Id paid back in a 7/8/9/10 year period would allow me to at least break even to sell (or a manageable shortfall like 20k) and in the meantime have saved a good deposit for somewhere bigger. I never saw it as an investment. I just didnt realise it would drop so drastically. Obviously if Id known that in 5 years the place would be over 100k in NE Id never have bought it!

I did know about property bubbles, but I didnt know about government levies, paycuts in work, pay freezes in work etc.

I was single when I bought, Im married now. I didnt know about that either. Nor did I think that both of us would end up facing quite a long future in an apartment. When I got married my husband was on a huge salary. Now he is out of work. I didnt know about that either.

Im not really sure where this makes me a fool. Apparently I was a fool when i was renting. I found renting incredibly difficult, very expensive and a little uncertain. So I stopped being a slave to rent and bought and had a better quality of life because I had more disposable income immediately, no uncertainty, and I could actually decorate the place as I pleased. 

Should I have waited til now to buy - well in hindsight - yes. Although between paycuts, levies, a husband out of work and me not getting any younger I dont know if a bank would give me the same mortgage now anyway - although the same mortgage today would go a long way towards buying a 'forever' home. So its possible if I hadnt bought, Id still be renting, and facing continuing to rent for the forseeable.


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## Shawady

Say 3 couples each bought a house on the same road in 2007 for 400K. The houses are now worth 200K.

All couples are in negative equity to the tune of 200K.

Couple no.1 are have lost one or two of their jobs and are unable to make their repayments or sell house.
Couple no.2 are both are still working and are able to make the mortgage repayments.
Couple no.3 are also working but maybe have taken a small pay cut or now have a young child and are struggling to make the monthly payments. Basically, they bit of more than they could manage when they borrowed 400k and would be struggling even if their house were still worth 400K.

Which of these couple should receive debt forgiveness?


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## truthseeker

Shawady said:


> Say 3 couples each bought a house on the same road in 2007 for 400K. The houses are now worth 200K.


 
To give you real numbers for this - my apartment was worth 400k in 2007 (luckily I did not pay this). There is currently one for sale at 160k - and its been on the market for months.

So if someone bought in my development in 2007 they are now in more than 200k NE - depending on the deposit they put down.

Which may impact on your thought experiment. Did the 3 couples all put down a minimum deposit?


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## Firefly

truthseeker said:


> I dont know if a bank would give me the same mortgage now anyway



I think this is one of the reasons so many bought at the top of the bubble...they knew things were likely to get ugly (but not sure how ugly) but at the same time knew that if they didn't buy now, they were likely to be refused a mortgate later (and for good reason!).


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## Shawady

truthseeker said:


> Which may impact on your thought experiment. Did the 3 couples all put down a minimum deposit?


 
Assume they all took 100% mortgage.


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## liaconn

To be honest, you can't win in this country. Anybody still renting or living at home in their mid thirties is looked on with pity. Anybody who got it together to buy a house is a fool.


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## Firefly

liaconn said:


> To be honest, you can't win in this country. *Anybody still renting* or living at home in their mid thirties *is looked on with pity*. Anybody who got it together to buy a house is a fool.




I don't know!!! A lot of people are sitting on nice deposits and will be buying dream homes for the price of average homes a few years ago (feckers!)


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## liaconn

Yes, but I bet four years ago people would have been saying 'why hasn't he got his own place. He must be at least 32'.


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## truthseeker

Firefly said:


> I don't know!!! A lot of people are sitting on nice deposits and will be buying dream homes for the price of average homes a few years ago (feckers!)


 
Only if they havent been subjected to the same pay cuts, levies, job losses as the average person!!


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## michaelm

People should probably be allowed to hand back the keys to settle the mortgage debt. That option should also ensure that banks were more circumspect in their mortgage lending and might prevent future bubbles growing so large.  Many people got caught up in the property bubble and something should be done for them.  

Why would one baulk at helping a young couple who 'foolishly' bought at the peak with a 100% mortgage over 30 years and are now trapped but not baulk at the taxpayer paying back a private EU bank that foolishly lent the money to a private Irish bank in the first place?

We need to undo the negative equity trap and restart the banks and economy.  The ECB should write off a sizeable chunk of bank debt and then just print new money for that amount.

I realise that this post may simply highlight my economic naivety


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## truthseeker

Firefly said:


> I think this is one of the reasons so many bought at the top of the bubble...they knew things were likely to get ugly (but not sure how ugly) but at the same time knew that if they didn't buy now, they were likely to be refused a mortgate later (and for good reason!).


 
Well I know a lot of my friends (and me to some extent) had been saving 'normally' for a deposit - and became frightened at how quickly the house prices were rising and just hoped they werent buying at the top of the bubble.

I was saving perhaps 7K a year. The prices were rising a at a ridiculous rate. The goal posts just kept getting further and further away and many people bought apartments because the market simply swept along too quickly for them to afford houses and they knew if it kept going theyd never get a mortgage at all. Then crash-boom, paycuts, levies, job losses - they may not get one anyway.


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## truthseeker

Shawady said:


> Assume they all took 100% mortgage.


 
Either all or none. I cant see how it would be fair otherwise.


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## Kate10

DerKaiser said:


> I don't quite agree with the debt forgiveness mechanism. The banks share of the home should be the reduction in debt divided by the current market value.
> 
> Also there would need to be some mechanism for the owner paying the bank for the use of the bank's share of the house i.e. some kind of rent.  This portion could be postponed and accumulated until ultimate sale of the house.
> 
> Of course the ultimate debt forgiveness if bankruptcy.  Maybe the answer is that we should have separate (less severe?) bankruptcy rules for defaulting on residential mortgages



So by your method the bank would own 60%, the borrower 40% with a mortgage of 250k and a further rental liability of some description?  This wouldn't do enough for people.  Mortgage might drop by about €740 but then rental liability would eat most of that up.  Debt forgiveness will have to involve some real benefit.


And at the end of the day we're talking about real people here and therefore human behaviour.  We have to motivate people to keep working to do their best and pay as much as possible.  If we make it too tough people will give up.


Look , lets look at one of those young couples Shawady and truthseeker are talking about.  Bought a two bed apartment in 2006 for €400k.  Today worth €160k if it could be sold.  NE of €240k.  Mortgage payment €2,000.  He was working as an engineer earning €65k.  She's a public health nurse, was netting about €2,700 now about €2,100 after tax increases and pension levy.  He got a cumulative pay cut of 40% before being let go in Jan 2010.  They have one child and she is pregnant.  They had savings which they used to pay their way while he looked for a job.  No luck on the job front (two of his friends got jobs doing bar work in 2009 because it paid more than they were earning at the engineering consultancy, but by the time he was laid off these jobs were much harder to find ) and they have now missed four mortgage payments.  He went to a job fair in Dublin and has been offered a job in Australia earning €75k.  She can earn good money their too and they are told they will qualify for permanent residency, and ultimately citizenship if they want it.  So they have a way out.  

So they can either rent the apartment (if its lettable) and send money home to top up the payment, knowing that the apartment will probably never be worth what they paid for it), or they can send the keys in the post and bet that the bank won't track them down.  Which would you do?  Knowing all that went on in the banking sector, in government, in the regulator, and the EU, would you still feel a strong moral imperative to pay the mortgage?

People like this example are still the lucky ones of course, because at least they have a choice.  I'm more worried about the people who don't have any choices.


----------



## liaconn

truthseeker said:


> Well I know a lot of my friends (and me to some extent) had been saving 'normally' for a deposit - and became frightened at how quickly the house prices were rising and just hoped they werent buying at the top of the bubble.
> 
> I was saving perhaps 7K a year. The prices were rising a at a ridiculous rate. The goal posts just kept getting further and further away and many people bought apartments because the market simply swept along too quickly for them to afford houses and they knew if it kept going theyd never get a mortgage at all. Then crash-boom, paycuts, levies, job losses - they may not get one anyway.


 
In addition people who, for whatever reason, had waited until their late thirties or early forties to buy really had no choice. They knew they wouldn't get a mortgage if they left it for another couple of years because they'd be considered too old, and the rental market in this country is not well regulated enough to make it an attractive proposition for elderly people.


----------



## thesimpsons

Shawady said:


> Assume they all took 100% mortgage.


 

and there is one of the biggest problems. Banks handing out and people taking out 100% or even 110% mortgages for houses.  the plot was completely lost when they then took out loans for a new car, a fitted kitchen, new furniture, electronics, gardening, etc.  Gone were the days of getting loan of furniture or buying it when you had savings.  Every friend I knew who bought new house had it fully kitted out before they even moved in and usually had a holiday the same year too (and some a massive wedding funded by another loan). Unfortunately  people lost the run of themselves and having had no history of saving to buy things or experiencing anything other than salary increases, thought it was going to last for ever.  Watching programmes like `reeling in the years' people though we'd never have job losses and emigration or double digit mortgage interest rates ever again.  Lessons should be learned from history, and unfortunately people are learning them the very hard way now.


----------



## Bronte

Firefly said:


> I don't know!!! A lot of people are sitting on nice deposits and will be buying dream homes for the price of average homes a few years ago (feckers!)


 
That would be me then.  Also have a property in negative equity.  Why shouldn't I be able to give back my negative equity property too and get debt forgiveness?


----------



## liaconn

thesimpsons

Not all of us who bought during the boom behaved like that. I furnished my place from charity shops and furniture friends were getting rid of and have done without holidays since.

I agree though that some people were really stupid and their borrowing didn't end with trying to put a roof over their head and get out of the rental market. They also wanted brand new furniture, decking in the garden, a second car, winter holidays and so on. It is hard to feel sympathy for some people who are struggling, but its also annoying to see them being used as an example of why anyone who bought during the boom years was just a materialistic silly spendthrift.


----------



## Bronte

truthseeker said:


> I was just wanting a roof over my head, a home, even if it went down in value I thought that between the amount Id paid as a deposit, and the amount Id paid back in a 7/8/9/10 year period would allow me to at least break even to sell (or a manageable shortfall like 20k) and in the meantime have saved a good deposit for somewhere bigger.


 
Unfortunately this is a perfect example of where it all went wrong.  It wasn't you truthseeker.  The problem was the banks started shelling out too much money, if they hadn't you wouldn't have been able to buy and property prices wouldn't have gone so crazy.  Which all leads back to interest rates going too low.  When I saw interest rates at 2 and 3 percent I thought it was like money for nothing.


----------



## truthseeker

liaconn said:


> thesimpsons
> 
> Not all of us who bought during the boom behaved like that. I furnished my place from charity shops and furniture friends were getting rid of and have done without holidays since.


 
Same as me. I saved for and paid outright for my wedding, and same for a very conservative second hand car. I have no other loans bar my mortgage. I do also have savings but right now need to keep them as a cushion with the OH not working and it looking like I may lose my job too.


----------



## liaconn

Sorry to hear that Truthseeker.


I seem to be dipping more and more into my savings for everyday stuff that my salary  just won't stretch to anymore.


----------



## truthseeker

liaconn said:


> Sorry to hear that Truthseeker.
> 
> I seem to be dipping more and more into my savings for everyday stuff that my salary just won't stretch to anymore.


 
Thanks Liaconn - its ok, I have alternative plans in place if the worst comes to the worst. 

I hear you about the savings, earnings are back to 2002 levels, but expenses are still at 2011 levels!!!


----------



## csirl

No matter what way its dressed up, debt forgiveness or rescheduling or equity swaps will cost money immediately. The country has no money, so the cost will be passed onto taxpayers in terms of increased taxation.

There are a lot of struggling taxpayers in this country - increasing their tax to pay for the debts of a minority will be the last straw for many.

You'll end up with a situation whereby the most wreckless will get a bailout from the most prudent, which will in turn drag down a large proportion of the most prudent. Unfortunately for the prudent, there will be nobody left to bail them out. 

The other thing to consider is the Constitutional position - I believe the context of the word "prudent" in the preamble could make any debt forgiveness which makes prudent people pay for less prudent peoples debts is unconstitutional.


----------



## truthseeker

csirl said:


> You'll end up with a situation whereby the most wreckless will get a bailout from the most prudent, which will in turn drag down a large proportion of the most prudent. Unfortunately for the prudent, there will be nobody left to bail them out.


 
This is already what is happening in this country with the taxpayers bailing out the banks.


----------



## Sol28

I am one of those people in my late 30s who didnt buy in 2006 because I saw that the estate agents werent even working to make their money - frequently not turning up for appointments without telling prospective buyers, and with no apologies. The last house i looked at was in a run down area of Crumlin - needed full redevelopment - there was a queue of people outside and not an estate agent to be seen for one evening viewing. 

I decided then to keep renting in a place I wanted to live as opposed to buying one in an house/area I didnt - because if people werent even having to work to make fortunes on the property market - there was something wrong.

At the same time I was asked to go to one of those qualitative discussion groups on mortages for people of my age interested in buying. It was hosted by a unnamed financial institution. It was about the 100% mortgages and people's opinions of them - and also of the 110% mortgages. I was vehemently opposed to them - I was always raised to believe - if you havent saved for something - you shouldnt have it.

At this group discussion there was a couple, both of whom were PhD students (in arts and sciences i believe). Qualifications in these do not necessarily mean large salaries. This couple were arguing that we should have 110% mortgages - as how else would they ever be able to get a house. My response at the time was that they shouldnt, they have no savings now - so why would they expect to own things. Its not a right!

I was kept in my corner by the discussion faciliator - it was obviously something that the FI was not interested in hearing.

It would gall me to know that a couple like that - who had no savings - were now being forgiven for their debt - when it was obvious that they should not be buying in the first place - not until their careers had actually started and returning profit!

I have every sympathy for thos in NE, but these same people were the ones parading around about how much their property had increased in value and that I was a fool for not buying at the same time of them. There is no way that their profits would have been shared - why should their debts.


----------



## liaconn

csirl said:


> No
> You'll end up with a situation whereby the most wreckless will get a bailout from the most prudent, which will in turn drag down a large proportion of the most prudent. .


 
Not everyone who still has money was prudent and not everyone who's struggling was reckless. That's an unfair statement.


----------



## The_Banker

There is no way of deciding fairly if someone should have debt written off. No matter who gets it there will always be someone who has a more deserving situation who wont have it written off.

Therefore it is every man for himself. Get what you can from who you can and dont worry about anyone else.

Somewhat similar to the Celtic Tiger. Only in reverse.


----------



## Time

There is no way a bank would be chasing/making someone pay for 30 years for a shortfall. 
The most they can eek it out is over a 12 year period where they can enforce a judgement for the shortfall. 

If I was in the situation of having a shortfall of hundreds of thousands of euro I would be running down to the high court to file for bankruptcy. That would be discharged after 12 years in a worst case scenario. If I had the funds I would go the UK and go bankrupt there and never set foot in Ireland again.


----------



## Purple

Kate10 said:


> Look , lets look at one of those young couples Shawady and truthseeker are talking about.  Bought a two bed apartment in 2006 for €400k.  Today worth €160k if it could be sold.  NE of €240k.  Mortgage payment €2,000.  He was working as an engineer earning €65k.  She's a public health nurse, was netting about €2,700 now about €2,100 after tax increases and pension levy.  He got a cumulative pay cut of 40% before being let go in Jan 2010.  They have one child and she is pregnant.  They had savings which they used to pay their way while he looked for a job.  No luck on the job front (two of his friends got jobs doing bar work in 2009 because it paid more than they were earning at the engineering consultancy, but by the time he was laid off these jobs were much harder to find ) and they have now missed four mortgage payments.  He went to a job fair in Dublin and has been offered a job in Australia earning €75k.  She can earn good money their too and they are told they will qualify for permanent residency, and ultimately citizenship if they want it.  So they have a way out.
> 
> So they can either rent the apartment (if its lettable) and send money home to top up the payment, knowing that the apartment will probably never be worth what they paid for it), or they can send the keys in the post and bet that the bank won't track them down.  Which would you do?  Knowing all that went on in the banking sector, in government, in the regulator, and the EU, would you still feel a strong moral imperative to pay the mortgage?
> 
> People like this example are still the lucky ones of course, because at least they have a choice.  I'm more worried about the people who don't have any choices.


A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.


----------



## liaconn

Purple said:


> A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.


 
Has he said why? If he feels it's because he was reckless then fair enough. But as I've already said not everyone who is struggling behaved recklessly during the good years. A lot of people just bought a very modest home in a very unsalubrious area because they thought it was the sensible thing to do. We weren't all out borrowing money for SUVs and skiing trips and unnecessary enhancements to our properties.


----------



## Kate10

Purple said:


> A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.



Purple fair dues to your friend.  That is an enormous sacrifice and not one I would be willing to make.  

I really don't think our society should expect people to make this sort of sacrifice to pay back mortgage debt.  If all the daddies had to leave their kids (and wives/partners!) for three years in order to bail out our economy would we be willing to allow that?  What sort of impact would that have on our society?  I find it a bit nauseating to hear all of the anti Debt forgiveness (which is really just debt rescheduling by another name) and at the same time have to listen to a lot of talk about bond holders being "systemically important".


----------



## liaconn

I agree with Kate. I think it is horrendous that someone will only see their children for 3 weeks a year and I think that would be a sacrifice way too far for most people. It is also not fair on the children. I think there has to be a middle ground here somewhere. Yes, people have to take some responsibility for their decisions, but there also has to be a recognition that a lot of people are suffering because of things that are not in their control. A bit of compassion and empathywould not go amiss and was something that was sadly missing during the boom years but will hopefully start creeping back into our thinking now. It really shouldn't be all about dog eat dog, tough luck I was smarter than you were now go sink or swim kind of thing.


----------



## The_Banker

Purple said:


> A friend of mine is in this situation. He had a very successful business and earned piles of money. He used it to fund a nice lifestyle, bordering on lavish. He also bought a big investment property in Dublin. Now his business is gone and he owes millions. He spend 6 months trying to find a job in Ireland that would cover his debts but couldn’t so now he’s moved to the Middle East on a three year contract. He will see his children for 2-3 weeks a year for the next three years. He’s 100% against any form of debt forgiveness.


 
While noble I think he is foolish. In 15 years time when his kids question where there father was during their childhood the last thing they will want to hear about is his noble efforts to pay back a bank who were bailed out by taxpayers..

Anyway, we can discuss debt forgiveness, debt restructuring, defaulting etc till the cows come home. At the end of the day its the people around you who are important not the address in which you live.

In 20 or 30 years time after we have been through another boom/recession/depression cycle the politicians will still be corrupt, the banks will still be screwing people and people will continue to live beyond their means. 

But I am getting philosopical and I probably shouldnt...


----------



## The_Banker

liaconn said:


> I agree with Kate. I think it is horrendous that someone will only see their children for 3 weeks a year and I think that would be a sacrifice way too far for most people. It is also not fair on the children. I think there has to be a middle ground here somewhere. Yes, people have to take some responsibility for their decisions, but there also has to be a recognition that a lot of people are suffering because of things that are not in their control. A bit of *compassion and empathy *would not go amiss and was something that was sadly missing during the boom years but will hopefully start creeping back into our thinking now. It really shouldn't be all about dog eat dog, tough luck I was smarter than you were now go sink or swim kind of thing.


 

Sadly lacking from some posters here. Let them eat cake.


----------



## Shawady

The_Banker said:


> There is no way of deciding fairly if someone should have debt written off. No matter who gets it there will always be someone who has a more deserving situation who wont have it written off.


 
I think this is part of the problem. There are so many variable to come up with a 'one size fits all' plan.
I know people that are in serious negative equity but are able to make their repayments and are not planning on moving.
I also have friends in apartments that again can make their repayments but want to move somewhere bigger to start a family.
Then there are the more serious cases when the mortgage cannot be paid.


----------



## Purple

The_Banker said:


> While noble I think he is foolish. In 15 years time when his kids question where there father was during their childhood the last thing they will want to hear about is his noble efforts to pay back a bank who were bailed out by taxpayers...



I think it’s more a case of personal integrity and keeping his word. He took the loans and so thinks he should repay them. 
Why do so many people think it’s ok to keep something that doesn’t belong to them?
If a tenant can’t pay the rent should they be allowed to keep living in the house anyway? If not then how’s that different to not paying your debts?

Have people no sense of honour or integrity? Does their word mean nothing?


----------



## DerKaiser

Kate10 said:


> So by your method the bank would own 60%, the borrower 40% with a mortgage of 250k and a further rental liability of some description? This wouldn't do enough for people. Mortgage might drop by about €740 but then rental liability would eat most of that up. Debt forgiveness will have to involve some real benefit.


 
You are right, if we merely replace interest with rent it might not have a big enough impact on improving people's day to day finances. This is why it should be rolled up.

An example of this is as follows:

Mortgage €400k, Market Value €250k.

Bring the mortgage down to a manageble amount - say €300k (I'm assuming there are a lot of people who would be out of immediate trouble from a 25% reduction in mortgage payments).

For this €100k reduction, the bank takes 40% (100/250) ownership of the property.

Say a rental yield of 4% is set. The owner must pay the bank 40% of this or 1.6% of the market value of the property.

If the person is unable to pay this, it is knocked off their equity i.e. if they simply continue to make the payments on the €300k with no rent, after ten years their ownership drops a further 16% (1.6% * 10) to 44% of the property.

The advantage of this is that they are no forced to move out of their house and take a forced loss at a firesale price.

If their circumstances improve over the next 10 years they can start to buy back a full share of their house.  Additionally if the house can be sold on better terms at a later date, the losses are not as severe as in the forced sale situation.

It does us no good to engage in mass forced sales in the current environment and equally it does us no good to pardon debts of people who may bounce back in the future.


----------



## liaconn

Purple said:


> I think it’s more a case of personal integrity and keeping his word. He took the loans and so thinks he should repay them.
> Why do so many people think it’s ok to keep something that doesn’t belong to them?
> If a tenant can’t pay the rent should they be allowed to keep living in the house anyway? If not then how’s that different to not paying your debts?
> 
> Have people no sense of honour or integrity? Does their word mean nothing?


 
I'm sorry Purple but honour and integrity??? How do you think we got into this mess. I really don't see why children should be deprived of their father for a sizeable part of their childhood because of high minded ideals. These are exceptional circumstances and I think should be dealt with by exceptional measures. I agree with The Banker.


----------



## DerKaiser

Kate10 said:


> He went to a job fair in Dublin and has been offered a job in Australia earning €75k. She can earn good money their too and they are told they will qualify for permanent residency, and ultimately citizenship if they want it. So they have a way out.
> 
> So they can either rent the apartment (if its lettable) and send money home to top up the payment, knowing that the apartment will probably never be worth what they paid for it), or they can send the keys in the post and bet that the bank won't track them down. Which would you do? Knowing all that went on in the banking sector, in government, in the regulator, and the EU, would you still feel a strong moral imperative to pay the mortgage?


 
If they can lead a confortable lifestyle even allowing for topping up whatever rent they make to meet the mortgage, I see no reason for them to illegally walk away from their debt.


----------



## thedaras

Perhaps there should be different types or restructuring then.

Firstly for those who can no longer afford to pay their mortgage due to job loss.

They should be the priority, negative equity is to me anyway,a different issue.
You can live with negative equity,while it may restrict your life choices,it is not the same as being unable to pay due to job loss.

Luckily for me,Im not in negative equity and can pay my mortgage.I did borrow for an extension,but the price first quoted was double what I was willing to pay,so I waited..and got it for less than half of the original quote.

The point is ,how can we turn our backs on the younger crew,who tried to get a home for themselves and possibly a family.These were mainly bought in towns far from their workplace away from family and friends and have a long commute every day..if they have a job..

SO what happens to them now,if they dont have a job,they cant pay the mortgage,so the bank lets them go on interest only for a couple of years,but then what..no one seems to know..but I think if we dont do something for them,they will end up in rented accommodation,paid for by the tax payer.
If we just leave them,what will happen to the thousands of houses out there that have been taken over by the banks?

What will the people who are in that position do?
What do people suggest they do?

Think about it,you are young,you may well have saved for years for a deposit,your mortgage could be very reasonable,then you and /or your partner lose your job/s,what would you do? What would you hope would happen.

We cant say,hard luck..that just wont work,how could it?

Regarding those who bought during the boom being immature,and the suggestion that they rent,you must bear in mind that if all of those who bought houses,rented instead,surely that would mean that a lot of people would have invested in apartment building,the people who built the houses,the plasterers,plumbers electrics, block layers,jcb drivers,home furniture stores.curtain makers,architects etc etc would not have had jobs either.so while they may have added to the boom by buying a house ,they also helped many others giving them employment which meant in turn they could give others jobs by eating out,buying cars etc..

If people are in trouble in their thousands, we must do something or else society will break down..
I would love to hear what others suggest they do?


----------



## thedaras

Purple said:


> I think it’s more a case of personal integrity and keeping his word. He took the loans and so thinks he should repay them.
> Why do so many people think it’s ok to keep something that doesn’t belong to them?
> If a tenant can’t pay the rent should they be allowed to keep living in the house anyway? If not then how’s that different to not paying your debts?
> 
> Have people no sense of honour or integrity? Does their word mean nothing?


If a tenant cant pay the rent,they would normally be entitled to rent alllowence,so that is their bailout..

What is the alternative Purple?


----------



## Kate10

Mortgage holders in real trouble don't want to keep something that doesn't belong to them.  They would be very happy to give up the house if they could give up the mortgage too.  They just want a fresh start.  

Its just not about integrity.  I came across a guy once who was not very educated, he was a skilled laborer.  His Dad did some business with a particular business bank that I suppose I shouldn't name.  He applied for a personal loan with the mortgage section of that bank and got a call shortly afterwards from the manager in the business section to tell him that he didn't qualify for a personal loan (he didn't earn enough) but not to worry they would "sort him out".  He was given a business/investment loan at a rate of 6.5% variable (this was in 2004) to buy his first home.  He managed payments for about 24 months, then things started to slip.  He is unemployed with two small children today.  He's a simple guy who bought a simple three bed semi because he wanted to provide a home for his kids.  He now has no job, huge NE, and no choices.  He suffers from depression.  I'm sure he would have grounds for mis-selling against the bank, but the bank took a personal guarantee from his Dad so he is terrified of rocking the boat.  So that's one person among many.  It is not lack of integrity or honour that is keeping him from paying his mortgage.  If he can't afford the house then he should give it up - he would have no argument with that - but then he would be in state housing.  Wouldn't it be better though to reduce the mortgage, give him something realistic to work for and give him some pride back?


----------



## Kate10

DerKaiser said:


> You are right, if we merely replace interest with rent it might not have a big enough impact on improving people's day to day finances. This is why it should be rolled up.
> 
> An example of this is as follows:
> 
> Mortgage €400k, Market Value €250k.
> 
> Bring the mortgage down to a manageble amount - say €300k (I'm assuming there are a lot of people who would be out of immediate trouble from a 25% reduction in mortgage payments).
> 
> For this €100k reduction, the bank takes 40% (100/250) ownership of the property.
> 
> Say a rental yield of 4% is set. The owner must pay the bank 40% of this or 1.6% of the market value of the property.
> 
> If the person is unable to pay this, it is knocked off their equity i.e. if they simply continue to make the payments on the €300k with no rent, after ten years their ownership drops a further 16% (1.6% * 10) to 44% of the property.
> 
> The advantage of this is that they are no forced to move out of their house and take a forced loss at a firesale price.
> 
> If their circumstances improve over the next 10 years they can start to buy back a full share of their house.  Additionally if the house can be sold on better terms at a later date, the losses are not as severe as in the forced sale situation.
> 
> It does us no good to engage in mass forced sales in the current environment and equally it does us no good to pardon debts of people who may bounce back in the future.



Hi Derkaiser I think this is really interesting but if you do the sums (unless I'm missing something) it doesn't work out.

A reduction in mortgage from €400k to €300k (assuming 30 yr term 4.4%) works out in a reduction of monthly payment of about €500.  However 4% yield (I assume on the reduced amount of €300k?) is €12k and 40% of this is €4,800 or €400 per month.  So the borrower in question would be better off by €100 per month.  This is not going to do the job and the borrower still can't sell the home as he is still in NE.  Did I misunderstand you?


----------



## Purple

thedaras said:


> If a tenant cant pay the rent,they would normally be entitled to rent alllowence,so that is their bailout..


Mortgage holders get interest relief. I am against rent allowance as it is just a subsidy to landlords to keep a floor in the rental market.



thedaras said:


> What is the alternative Purple?


 People go bust (lose everything but have no legacy debts), banks go bust; depositors lose their money and bondholders lose their investments. The tax payer shouldn’t have to pony up one cent for any of this. Even at this stage we should default, with or without the cooperation of the IMF/EU. 
We need to wipe the slate clean and start again. Moral hazard should always be there, like the sword of Damocles, as a cautionary sign to anyone taking or offering a loan or making or taking an investment.  Once we forget that then we will have a form of free market socialism where debts are nationalised and profits remain private. It is fundamentally wrong.


----------



## Sunny

Purple said:


> People go bust (lose everything but have no legacy debts), banks go bust; depositors lose their money and bondholders lose their investments. The tax payer shouldn’t have to pony up one cent for any of this. Even at this stage we should default, with or without the cooperation of the IMF/EU.
> We need to wipe the slate clean and start again. Moral hazard should always be there, like the sword of Damocles, as a cautionary sign to anyone taking or offering a loan or making or taking an investment. Once we forget that then we will have a form of free market socialism where debts are nationalised and profits remain private. It is fundamentally wrong.


 
While I wouldn't go as far as you Purple (purely for realistic reasons), your point is valid. One of the biggest problems in this Country at the moment and is forgotten about is personal bankruptcy laws. There is something wrong when a company owing millions can go bankrupt easier and with less consequences than an individual owing tens of thousands.


----------



## Latrade

Purple said:


> I agree but it is being suggested that people should keep the home they can't afford and a portion of what they borrowed should just be written off. I don't think that's acceptable. What sort of a lesson is that to teach your children?


 
The tale and the possible solutions to this tale are why this debate is necessary. 

We have people in serious financial peril. Some, undoubtedly due to their own need for maintaining a certain lifestyle and some through unfortunate circumstances and timing. However, it does this state no good to have either struggle, homeless, on welfare, or emigrate. It does families no good to live through this.

Some of us here will have lived through the daily pressures of the bad old days and the impact that had on families. I hoped we'd never be back.

Debt forgiveness is not a solution, but it's a starting place. There are other options.

Take your friend. Why should we lose that earning potential, intellectual potential, tax income, vat income, etc? He needs to down grade to support his circumstances. Forgiveness should come into it in terms of selling a house to downgrade and what we then do with the negative equity. Again it does no good immediately to demand this money. Can a structure not be put into place then in terms of a new loan with a fixed rate that takes account of the new property and the negative equity. Maybe the NE is fixed to not be subject to interest.

It is then set within a scale of periodic review whereby when circumstances improve, then the repayment system reflects this.

So yeah, some who weren't careful will be recipients of a scheme, but it does us no good to just ignore the increasing problem facing a lot of people. We either end up with a greater social welfare bill or we start splitting up even more families or lose whole families to go off and pay taxes elsewhere. 

We've gone past the stage of shoulda, coulda, woulda. Lectures on financial responsibility won't feed a family. Restructuring debt along with debtors taking responsibility with a proven downgrade in their lifestyle and a longer debt repayment system wouldn't make huge dent in our current economics. But the potential for recovery is huge in that we retain them here, we have weights taken off their mind and we still have them as potential future good earners and spenders.


----------



## thedaras

@Purple;Mortgage interest relief is being phased out as far as I remember and its not comparable to rent allowance which is much higher.( I may well be incorrect in this though)

If those who need rent allowance dont receive it,what do you suggest they do if they cant afford to put a roof over their heads?

And what will happen to all the landlords who own apartments that then cant rent them out?

I dont think it has been said that the tax payers should necessarily pay for those who go bust,rather that they come to some arrangement that will allow them to pay over a longer term? Or until their circumstances change?

I understand the moral hazard,and I dont like the idea of bailing out anyone,banks etc,however we are talking about thousands of men,women and children and we need to find a way for them to make it through this.

Obviously it must be very closely monitored and even if one or two make it through that shouldnt be bailed out,it may be something we have to sacrifice for the greater good.

I just dont see how we can leave all these people with no homes,no jobs,no prospects,no light at the end of the tunnel,It would be one hell of a world we live in where we have to bail out the banks and yet tell those who have nothing to get stuffed.

Its all about how this is done,and how it is implemented,I dont think any of us know how the government propose to do this,it will be interesting to see how they can appease everyone,and take moral hazzard into account.

The logic is that if we do nothing we will have thousands upon thousands of families with no homes ,we will have thousand upon thousands of houses vacant,we will have to pay to accommodate these families.and that is neither workable nor fair.


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## DerKaiser

Kate10 said:


> Hi Derkaiser I think this is really interesting but if you do the sums (unless I'm missing something) it doesn't work out.
> 
> A reduction in mortgage from €400k to €300k (assuming 30 yr term 4.4%) works out in a reduction of monthly payment of about €500. However 4% yield (I assume on the reduced amount of €300k?) is €12k and 40% of this is €4,800 or €400 per month. So the borrower in question would be better off by €100 per month. This is not going to do the job and the borrower still can't sell the home as he is still in NE. Did I misunderstand you?


 
The 4% (set below the prevailing interest rate) would be on the market value of the property owned by the bank, in this case €100k. This would be €333 rent p.m. compared to €500 p.m. interest plus capital repayment on the €100k.

The key would be 
1) the rental yield is set below the interest rate to ensure the borrower is better off - this is a form of debt forgiveness (€170 p.m. in this cse)
2) The first point on its own will almost certainly not be enough in most cases, so the rental portion can be exchanged to leave the bank with further equity. In this case €60k of waived rent over ten years would leave the bank with €160k of equity.



The main advantages are:

The bank does not prematurely write off debt and lock in losses only for circumstances to improve
The customer has a chance to stay in their home, with reduced monthly payments and some breathing space to sort themselves out over a reasonable period of time
The main disadvantage would be if the economy and the individual is in an even worse state 10 years from now


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## liaconn

Purple said:


> We are a nation that behaved like spoiled children over the last 10 years and many of us have learned nothing from it, still expecting someone else to clean up after us. Maybe someday we’ll grow up.


 

*Some *people behaved like spoilt irresponsible children gorging themselves until they got sick, _*some*_ people just wanted to put a roof over their heads and bought at the wrong time out of panic that prices were going to keep going up. Seriously, a bit of sympathy instead of tarring everyone.....


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## Chris

I have read this thread from start to finish, and I think it is the same arguments we have been hearing for a while now. Personally I do not want to see any debt forgiveness because it will cost the taxpayer and I do not agree with the mistakes of a few being paid by everyone. The same goes for the bank bailout, which I am totally opposed to, but I think that sooner or later the country will have to default on a large portion of the socialised bank debt.

Reading posts on this thread I see that one thing that has not been affected at all is that so many people still believe that owning your own home is some sort of right even obligation. So many people still think it impossible to have a family in a rented property. I bought a house in 2004 and sold in 2008 because I changed job and prices had clearly started going down. Since then I have been renting and we now have a baby. To this day I have people asking me how I can live in a rented house with a baby. A friend of mine and his wife want to start a family but "are stuck in an apartment". Even after I pointed out that they could cover 75% of the mortgage by renting it out, and then rent a nice house a little bit further out of town for less than what their mortgage is, they refused to acknowledge this as a solution.

It is this obsession with property ownership and this bizarre idea of a property ladder that contributed to the mess and it certainly continues to do so now. Any form of taxpayer subsidised debt forgiveness will not bring the necessary change in attitude.


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## liaconn

I agree we would be better off if we lost this obsession with owning our own property. But that has to go hand in hand with a properly regulated rental market where rents can't be put up at the drop of a hat, properties have to be well maintained and tennants can't be evicted because the landlord's son wants to move into the property. There is no way, in the current situation, that I would want to be renting in old age or see any of my siblings in that position.


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## truthseeker

Agree Liaconn.

The idea of owning your own property in Ireland is a cultural norm. Its not easy to change the culture of an entire population. And certainly not easy when the rental market is not properly regulated.


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## Latrade

Purple said:


> We are a nation that behaved like spoiled children over the last 10 years and many of us have learned nothing from it, still expecting someone else to clean up after us. Maybe someday we’ll grow up.


 
This would be fine if we weren't on the verge of a very serious problem. As Liaconn states not everyone of those pursued an unrealistic lifestyle. It may not be the most accurate survey, but the fact that 250,000 people have no money left after paying bills is worrying. Any interest rate change or any inflation is going cause serious issues for them and those nearly at that point. 

This is not just people looking at a big house, two cars, holidays, credit cards and shopping in BTs. This is people who bought property as a home at the peak of a market, who have seen wages reduced to 2002 levels, but prices remain at 2011 levels.

But it's that critical mass of out of 4 million people in the state, 250K may not be able to put food on the table. 

This is where empathy and what is best for us can meet. It is not in my interest as a tax payer that they are left to struggle. Whether it be welfare bills and other benefits, there's health issues and more importantly the prospect that they just up and leave the state so we are left with the complete loan on our books (as we own the banks) and we lose tax revenue. 

What we aren't show is just how the cost of restructuring loans (it will never be full forgiveness) compares with the long term cost of leaving people in that situation. I'm not coming at this from an empathy level, I'm purely looking at what other burden I'm likely to carry if we leave it like it is in the short term and then the effect of that on long term recovery. 

Yes people will have to change their attitudes to property, but then that should be part of a deal, downgrade, lower costs and debt will be reasonably restructured. For many of those involved it will be a temporary measure and once there's recovery, then we renegotiate the loans. 

If we control the downgrading and then how we structure the negative equity, we also get to control the house prices to some extent and aren't left with fire sales of abandoned or repossed properties. While not artifically propping it up, at least preventing an even greater crash and the consequences then on pensions. 

I've stated all along, when it comes to the bankers, developers and those citizens who tried to achieve a lifestyle on credit, I'm as annoyed and disgusted as the rest. But I just want the problem fixed rather than, as we have, spending 3 years fixing the blame. I'd rather my future was more optimistic than see it ruined for the short term satisfaction of schadenfreude.

Long ranting way of saying, yes we should grow up, people should accept responsibility, but there also needs to be maturing done by others that we may need to shoulder some of this to prevent an even bigger disaster and an even bigger bill for us.


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## thedaras

Ok, I am all for helping those young families who bought a long way from home etc.but what happens in the following scenario..
A one child family buys a house,expensive but affordable,they knock it and rebuild to very high spec ,costing a fortune,all during the boom.While other neighbours with more kids didnt do this.
Now they are in trouble with trying to repay their mortgage,what should be done about that situation? 
I for one,do not want to help them out..I am more that willing to help some but not others,does this make sense?


----------



## liaconn

thedaras said:


> Ok, I am all for helping those young families who bought a long way from home etc.but what happens in the following scenario..
> A one child family buys a house,expensive but affordable,they knock it and rebuild to very high spec ,costing a fortune,all during the boom.While other neighbours with more kids didnt do this.
> Now they are in trouble with trying to repay their mortgage,what should be done about that situation?
> I for one,do not want to help them out..I am more that willing to help some but not others,does this make sense?


 
That's the conundrum alright. There's no denying that some people did behave atrociously during the good times, borrowing large amounts of money for complete inessentials and purely motivated by showing off and trying to make other people jealous. I do agree that they should have to face up to the consequences of their foolish behaviour. I do think, though, that people who simply bought a very ordinary house or apartment in a very ordinary area and are now on a hugely reduced salary and in negative equity are not in that category. I definitely don't think taxpayers should be funding people's holidays, SUVs, re done kitchens etc. There would have to be strict criteria as to who got some help with their debts and who are really victims of nothing except their own greed.


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## thedaras

liaconn said:


> That's the conundrum alright. There's no denying that some people did behave atrociously during the good times, borrowing large amounts of money for complete inessentials and purely motivated by showing off and trying to make other people jealous. I do agree that they should have to face up to the consequences of their foolish behaviour. I do think, though, that people who simply bought a very ordinary house or apartment in a very ordinary area and are now on a hugely reduced salary and in negative equity are not in that category. I definitely don't think taxpayers should be funding people's holidays, SUVs, re done kitchens etc. There would have to be strict criteria as to who got some help with their debts and who are really victims of nothing except their own greed.


Plus 1.

Very well put and I couldn't agree with you more..


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## csirl

Most of the proposals for restructing, forgiveness etc on this thread all cost money - at least in the short term. However, nobody has said where this money will come from. If the question is 'what can we do'? Then the answer is 'nothing' if there is a cost involved. We dont have the money full stop.

Just thinking about my circle of friends, relatives, acquitances - while many are struggling, it appears that those who were less extravagant during the boom years are the ones knuckling down and paying off their negative equity mortgages, whereas the ones who lives the high life - holidays, 4x4s, new kitchens etc. are the ones who are missing payments (because they deserve their holiday in the sun) and moaning about debt forgiveness.

The most galling example I've come across is one individual I know who ran a small business. Lived the good life. In recent months, as the business was going south, she stopped paying her bills and started asset stripping the company. Walked out with a considerable sum in her pocket while leaving suppliers unpaid - some of whom had to lay off staff as a result. Justification for doing this - she's just decided to get married and needs to pay for a 40k wedding and 10k honeymoon. Doesnt matter about the carnage left behind - her lifestyle must be funded. Also looking for a bailout on the mortgage - by the time she's paid for the wedding, there'll be no money left to pay the bank. But sure, that's not her problem - they can have the keys if they want, property in negative equity.


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## DerKaiser

Kate10 said:


> If he can't afford the house then he should give it up - he would have no argument with that - but then he would be in state housing.  Wouldn't it be better though to reduce the mortgage, give him something realistic to work for and give him some pride back?



This is another very good point.

There's a cohort of people with mortgages who, in any other generation, most probably would have availed of council housing.

There's a strong case for means testing people in such a situation, let them stay in their current accommodation (provided it's not extravagant) and have them pay what they can - more akin to council rent.

Any such debt forgiveness should state driven (not bank driven) and be subject to this type of means testing with a view to keeping people in their own modest homes rather than throwing them out and having no use for the vacant house.


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## horusd

DerKaiser said:


> This is another very good point.
> 
> There's a cohort of people with mortgages who, in any other generation, most probably would have availed of council housing.
> 
> *There's a strong case for means testing people in such a situation, let them stay in their current accommodation (provided it's not extravagant) and have them pay what they can - more akin to council rent.*
> 
> *Any such debt forgiveness should state driven (not bank driven) and be subject to this type of means testing with a view to keeping people in their own modest homes* rather than throwing them out and having no use for the vacant house.


 

I see where this argument makes some sense, but there is a moral hazard involved, and we would be making the state officials judges of subjective terms like "modest" and "deserving" and "extravagant" and so on. Officials would have to review all spending and previous/current behaviour to ascertain if fault and poor money management were to blame for debt predicaments. 

To allow proper supervison we would need oversight. A kind of IMF for distressed homeowners such that their freedom would be sacrificed to allow it. Better to  allow them to come to arrangements with lenders for longer payments and avoid debt forgiveness.


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## DerKaiser

horusd said:


> Better to allow them to come to arrangements with lenders for longer payments and avoid debt forgiveness.


 
I'd agree with this for those who might eventually work their way out of trouble, but we will probably have long term unemployment rates of at least 10% for the best part of a decade, it is these people who should effectively be taken into the broader social welfare system on a more structured basis including how home ownership & debt is dealt with.


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## bemmi

We've been raising a family of 3 (all under 8) in rented accommodation for the last 8 years because we believed the market was overheated and had no interest in long commutes at the expense of family life.  We've saved anything extra in the meantime and have been cautious with our money - only one car, imagine!  I do feel sorry for some people that bought into it, but there were people that didn't (and lived in not so nice houses) and we shouldn't bear their costs.


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## balmed out

I dont think theres a massive amount of people who splurged as much as people here seem to be making out. The problem was people who were willing to borrow more then they could afford for homes that they put too high a value on.

Im heading to my mid thirthies and like bemmi I looked around at the property market and decided it didnt represent any sort of value for money. 

Why should people there be any sort of debt forgiveness for people who invested poorly?

If property values had weirdly continued to rise then in 20 years how many of you would advocate property profit sharing with the likes of bemmi and I ?

Properties are still overvalued in most areas of the country and wont return to realistic values until people get their heads around the fact that they have something called personal responsibility. A false economy is preventing those that waited from being able to purchase a home.

I have no problem with a debth for equity but only at a level thats fair to the tax payer and to the market. It has to be at such a punitive leisure that it will only attract those in very desperate situations.


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## mammyof2

Re liaconn's point on strict criteria, surely some sort of formula could be fairly easily worked out. For instance, to be eligible for any sort of debt write down or restructuring, you would need to 

a) have bought a house between say 2002 - 2008
b) LTV ratio must have been less than 100% (cuts out people who borrowed to furnish house/buy car and had saved nothing towards deposit)
b) be in negative equity of a minimum of 30% (this could be set higher)
c) one or both parties must have either lost their jobs or suffered a gross pay cut of over 20%
d) those who borrowed against the nominal value of their home - equity release - subsequent to taking out the mortgage are not eligible (again, this cuts out those who drew down debt for 'lifestyle' expenditure)
e) those with savings and investments above, say, 10 grand, are ineligible (this cuts out those who can in fact pay their debt, but don't want to)

My preference would in general be that the deal is a sort of bankruptcy-lite; you have to hand back the house to the bank but the mortage debt in written off so you are starting from scratch again.


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## Magpie

Integrity doesn't feed my children. and where is the integrity at the top, why is it the worst off that are supposed to be the moral defenders? 

I'm in massive NE for a tiny house, 3 children in 2 bedrooms, and I've lost my job. I'm on reduced payments and if OH loses the job too, which is quite likely, we won't even be able to pay that.  What do you want from me? I can't pay it. I can't sell it, and couldn't pay the huge difference even if I could. 

Tell me what I should do? I bought a small house, within my means, on a 92% mortgage after saving for years for the deposit. No loans, no credit cards, no fancy holidays, no nice car. We're crammed into this tiny house and no prospects, no money, no nothing. 

Tell me what you want me to do, I'm all out of ideas.


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## Bronte

csirl said:


> The most galling example I've come across is one individual I know who ran a small business. Lived the good life. In recent months, as the business was going south, she stopped paying her bills and started asset stripping the company. Walked out with a considerable sum in her pocket while leaving suppliers unpaid - some of whom had to lay off staff as a result. Justification for doing this - she's just decided to get married and needs to pay for a 40k wedding and 10k honeymoon. Doesnt matter about the carnage left behind - her lifestyle must be funded. Also looking for a bailout on the mortgage - by the time she's paid for the wedding, there'll be no money left to pay the bank. But sure, that's not her problem - they can have the keys if they want, property in negative equity.


 
That is really shameless behaviour, truly shocking.


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## Bronte

Magpie said:


> , 3 children in 2 bedrooms, .


  don't get this, is it a 2 bed house or are the 3 children in 2 bedrooms and the parents in another bedroom?


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## davebrien

*possible workable solution*

on newstalk this morning this lady rang in to say herself and her partner bought a house for 440K in 2007 they both lost jobs in 2008 - their combined income was 80K - they havent paid anything since and are still in the house.

The situation for this couple is that they are now in stalemate - there is no value for the bank or no value for the individuals.

The house should be repossed and then this house sold at auction - the debt stays on the property and if there is an up turn in the value of property the orginal debt is liable against the property and its either cleared or the place is sold to clear the orginal debt.

The original mortgage holder can only get another mortgage when the original debt has been cleared by the other party.  This at least moves property prices towards a bottom and  allows people out of the debt trap and at least gives a solution where all parties are carrying a burden. 

It could also only be put in place where both mortgage holders are unemployed.  It would also invigorate the rental market and move us towards a european ratio of rental to ownership.


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## johnnygman

Magpie said:


> Integrity doesn't feed my children. and where is the integrity at the top, why is it the worst off that are supposed to be the moral defenders?
> 
> I'm in massive NE for a tiny house, 3 children in 2 bedrooms, and I've lost my job. I'm on reduced payments and if OH loses the job too, which is quite likely, we won't even be able to pay that. What do you want from me? I can't pay it. I can't sell it, and couldn't pay the huge difference even if I could.
> 
> Tell me what I should do? I bought a small house, within my means, on a 92% mortgage after saving for years for the deposit. No loans, no credit cards, no fancy holidays, no nice car. We're crammed into this tiny house and no prospects, no money, no nothing.
> 
> Tell me what you want me to do, I'm all out of ideas.


 

Waste of time Magpie, most of the up on their high horses types on here who are most likely the ones who made the huge killings from selling inflated property and land wll tell you that you were reckless and that you fully deserve your current position.
It's all about self interest on here, and that's just the reflection of today's selfish society.


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## amh

There are many different suggestions as to how to pay off mortgage arrears and debt forgivness etc etc. There are problems with the budget deficits and public spending etc etc. What I hear anytime these things are mentioned are pension contributions, changing bands, changes to mortgage interest allowances etc etc. It's about time that a spade was called a spade and there was a universal charge applied to all citizens on an equal basis regardless of social standing, employed unemployed, mortgage holder or non mortgage holder. The money to be divided up to get the people with inflated, unworkable mortgages back on track and public spending cuts back to within 1.5% of GDP.

Unless the broken generation are helped then this society is going to struggle to make it out the other side. We are borrowing money to pay for the public service and to refinance the banks when there is money in this country. When I've money in my account I don't borrow money from the bank, I put my own money to use.

This problem is our problem, all of our problem. We are a nation and unless we help ourselves we cannot expect anyone to come in here from outside to help us for nothing. A society is only as strong as the people it is made up of.


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## balmed out

amh said:


> a universal charge applied to all citizens on an equal basis regardless of social standing, employed unemployed, mortgage holder or non mortgage holder. The money to be divided up to get the people with inflated, unworkable mortgages back on track and public spending cuts back to within 1.5% of GDP.


 
How are the unemployed with no savings supposed to pay this charge? Why should everyone? I can understand all those who bought and sold land or property being expected to pay and pragmatially so do the rest of us but surely it should not be to the same extent.

How does this debt forgiveness that make any sense. So Barry and Aine with their dream 4 bedroomed house recieve debt forgiveness while Sean and Mary who have rented a hovel pay for it?

We need to allow those in negative equity to transfer it to a new mortgage, ie they can sell a house if they need to and put the outstanding balance to their new mortgage.

We need to examine the possibility of the banks taking equity (and rent) fro those unable to pay.

We need to examine the possibility of allowing a freeze on payments for those who have lost all earnings and have no savings.

However all these measures should only be done with punitive sanctions so that thay are only taken up by those with no choice.

Its important to bring house prices down to normal levels and thats not going to happen if theres lots of people hoping to chance their arm on a bit of debt relief.


----------



## Brendan Burgess

csirl said:


> The most galling example I've come across is one individual I know who ran a small business. Lived the good life. In recent months, as the business was going south, she stopped paying her bills and started asset stripping the company. Walked out with a considerable sum in her pocket while leaving suppliers unpaid - some of whom had to lay off staff as a result. Justification for doing this - she's just decided to get married and needs to pay for a 40k wedding and 10k honeymoon. Doesnt matter about the carnage left behind - her lifestyle must be funded. Also looking for a bailout on the mortgage - by the time she's paid for the wedding, there'll be no money left to pay the bank. But sure, that's not her problem - they can have the keys if they want, property in negative equity.



This is galling but it's an extreme case and should not be used when developing policy. The Code of Conduct on Mortgage Arrears and any Debt Settlement System will make it a condition of participation that you act in good faith. 

Brendan


----------



## PaulinesPens

bemmi said:


> We've been raising a family of 3 (all under 8) in rented accommodation for the last 8 years because we believed the market was overheated and had no interest in long commutes at the expense of family life. We've saved anything extra in the meantime and have been cautious with our money - only one car, imagine! I do feel sorry for some people that bought into it, but there were people that didn't (and lived in not so nice houses) and *we shouldn't bear their costs*.


 
That's great for you bemmi, I did the same for 10 years, rented, then bought after realising a mortgage could be cheaper than rented accommodation (way back pre-boom time). There are many who have been cautious with their money, not all have had the three holidays a year, the two cars, etc. It make me appreciate the fact I'm not surrounded by the type of people csirl knows.

Some of us bought a family home with two jobs and factored one job loss into the mortgage repayments. However, nobody saw what was coming down the road. As you state "we shouldn't bear their costs" but if those people are forced to move, where do you think they will end up? 

You will still be "bearing their costs" by way of social housing or rent relief after their home has been repossessed.


----------



## amh

Rather than being given a period of interest only could it be an option for the banks to give a period of capital only? ie. the interest is side stepped for a period of time say 5/10 years and then repaid at the end of the mortgage through an extension of the lifetime of the mortgage. Of course the extra interest accrued would be paid but at the end of the mortgage lifetime and at a higher rate say at the rate at which the capital was being paid at.


----------



## Bronte

davebrien said:


> on newstalk this morning this lady rang in to say herself and her partner bought a house for 440K in 2007 they both lost jobs in 2008 - their combined income was 80K - they havent paid anything since and are still in the house.
> 
> The situation for this couple is that they are now in stalemate - there is no value for the bank or no value for the individuals.


 
Then it would be better for them to hand back the keys and let the bank give them a bad credit rating and when that has ceased they can start again.  The couple are only delaying things themselves and the only people to benefit is the bank.  

Is the state not paying the interest only on the mortgage?


----------



## PaddyW

Bronte said:


> don't get this, is it a 2 bed house or are the 3 children in 2 bedrooms and the parents in another bedroom?


 
I noticed that too.. I was brought up in a 3 bed house. There was 9 of us total. 4 of us boys in one room, 3 sisters in another room and the parents had the box room. 3 children with 2 rooms between them. I think that's more than adequate.


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## Magpie

PaddyW said:


> I noticed that too.. I was brought up in a 3 bed house. There was 9 of us total. 4 of us boys in one room, 3 sisters in another room and the parents had the box room. 3 children with 2 rooms between them. I think that's more than adequate.




No its 2 bedrooms total, 2 adults and 3 children across 2 bedrooms (2 adults plus baby in master, 2 children in second). It's really a very small house, but we didn't expect to be in it forever. (Yeah I know, we were meant to be financial geniuses and/or have a crystal ball, all our own fault, yada yada yada).


----------



## ManChild

Why not let people who are in negative equity or who have substantial unsecured debts they are struggling to pay back draw down some of their pension if they have one? This would only be allowed if they proved they had the debt and the funds drawn down were used to pay off that debt. This would be a one time only option and subject to limits (% or €).No use in a 40 year old not being able to put food on the table or stressing about the mortgage/unsecured debt repayments if they have a lrge sum of money saved (in my case in excess of 150k) sitting in a pension pot. The gov can access my money when they are stuck but I cant doesn't seem right to me!


----------



## mistakes?

Why do so many people still feel that anyone should be concerned with paying back debts to banks in full?
The banks ripped us the customers off completely and they still act as if they are above us.If I rip off a customer no one will say its my customers fault for buying the product ,they will blame me ,the seller for selling a faulty product.The banks sold us products,we bought what was offered to us (Mortgages on over valued property)If they didn't make it available we would not have bought it.As a 24yr old carpenter I was able to get a 350K mortgage for a house in the This post will be deleted if not edited to remove bad language end of no where (My Father knew it was madness but I wouldn't listen) , why did the bank not know it was madness?

We as taxpayers are know picking up the tab so why do people still insist on saying paying the banks back is the right thing to do.The banks are now being paid back through my over inflated taxes instead of through my monthly direct debit, but they are still being paid back.And for this privilege of covering their mistakes I know have a big black mark on my ecb.I do not see why I should pay higher taxes to cover the banks mistakes and still have to try and deal with my own debt.


----------



## Bronte

I think some of you need to have a good hard look at why you are in debt and what you are doing to sort it out.  A good start would be looking at the excellent thread started by a new poster called 'the optimist'.


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## Bronte

Magpie said:


> No its 2 bedrooms total, 2 adults and 3 children across 2 bedrooms (2 adults plus baby in master, 2 children in second). It's really a very small house, but we didn't expect to be in it forever. (Yeah I know, we were meant to be financial geniuses and/or have a crystal ball, all our own fault, yada yada yada).


 
I'm going to ask a very personal question which perhaps I ought not to but it came into my head so I'll ask it anyway.  Why did you have a third child in a house that you felt was only suitable for 4 people and you knew you couldn't afford to move?


----------



## amh

If as I suggested yesterday, a mortgage could be broken into 2 seperate parts ie capital and interest and the capital portion only be repaid for a period of time there would come a time relatively soon where the capital portion would be lower than the value of the property and the property would no longer be in negative equity in a capital sense. 

Once this point is realised then the home owner could be give 2 options, 
1. go back onto repayment of interest and capital over a period extended to ensure that repayment is no more than current repayment plus a say 10 percent.
or
2. sell home and take a personal loan at market average rate for a 5 year fixed motgage plus 0.5 percent. Loan to be secured against future pension entitlements or social income. Many banks are govt. owned so can't department of social protection ensure that repayment guarantees be put in place?

In my uneducated opinion this would ensure that people have opportunities to move while interest repayments and monies due are repaid whilst not creating a financial benefit to not make a genuine effort to repay.

Yes properties are in negative equity but if repayments are made, some time in the future loans will have a value lower than the property value and so moving will not be such a big difficulty. It's a matter of reducing the amount owed as compared to the property value as quickly as possible


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## Magpie

Bronte said:


> I'm going to ask a very personal question which perhaps I ought not to but it came into my head so I'll ask it anyway.  Why did you have a third child in a house that you felt was only suitable for 4 people and you knew you couldn't afford to move?



You might have heard that there is no abortion in Ireland, and no contraception is 100% effective, despite best efforts. These things happen.


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## balmed out

mistakes? said:


> Why do so many people still feel that anyone should be concerned with paying back debts to banks in full?
> The banks ripped us the customers off completely and they still act as if they are above us.If I rip off a customer no one will say its my customers fault for buying the product ,they will blame me ,the seller for selling a faulty product.The banks sold us products,we bought what was offered to us (Mortgages on over valued property)If they didn't make it available we would not have bought it.As a 24yr old carpenter I was able to get a 350K mortgage for a house in the This post will be deleted if not edited to remove bad language end of no where (My Father knew it was madness but I wouldn't listen) , why did the bank not know it was madness?
> 
> We as taxpayers are know picking up the tab so why do people still insist on saying paying the banks back is the right thing to do.The banks are now being paid back through my over inflated taxes instead of through my monthly direct debit, but they are still being paid back.And for this privilege of covering their mistakes I know have a big black mark on my ecb.I do not see why I should pay higher taxes to cover the banks mistakes and still have to try and deal with my own debt.


 
The banks are in the main pretty much owned by the taxpayer. All those debts are owed back to the taxpayer wether its via a mortgage with AIB or a ghost estate in NAMA. Its the bank/NAMA/Governments duty to make sure that these debts are paid back as much as possible.
"we bought what was offered to us " Get Real. You bought what you asked to buy.
People need to grow up and accept their responsibilities and stop expecting the rest of us to bail them out. The rest of us who didnt partake in the Housing bubble are already having to pay dearly for the actions of developers inept governement and yes those who bought property and fueled the fire.


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## Demo

mistakes? said:


> Why do so many people still feel that anyone should be concerned with paying back debts to banks in full?
> The banks ripped us the customers off completely and they still act as if they are above us.If I rip off a customer no one will say its my customers fault for buying the product ,they will blame me ,the seller for selling a faulty product.The banks sold us products,we bought what was offered to us (Mortgages on over valued property)If they didn't make it available we would not have bought it.As a 24yr old carpenter I was able to get a 350K mortgage for a house in the This post will be deleted if not edited to remove bad language end of no where (My Father knew it was madness but I wouldn't listen) , why did the bank not know it was madness?
> 
> We as taxpayers are know picking up the tab so why do people still insist on saying paying the banks back is the right thing to do.The banks are now being paid back through my over inflated taxes instead of through my monthly direct debit, but they are still being paid back.And for this privilege of covering their mistakes I know have a big black mark on my ecb.I do not see why I should pay higher taxes to cover the banks mistakes and still have to try and deal with my own debt.


 

Are you for real? I had to create an account just to reply to your post...

How did the banks rip you off? you ripped yourself off by borrowing money you could not afford to pay back. Man up and take some 
responsibility for your own actions. Just because the banks were stupid to lend you the money you were more stupid to ask them for it, they didn't rip you off.
As for your customer comparison you are way off, it would be better to say you make a deal with a customer and then expect them to meet their end of the deal.


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## wbbs

Mistakes, I dealt with many young customers like you in my day and I was sick to the teeth of telling them A. prices don't always keep rising and B. you might lose your job but I was wasting my time, they wouldn't listen.   Now I know the bank approved the loans but really a bit of personal responsibility wouldn't go astray.   I once had a 21 yr old in front of my looking for her 3rd top up on her new build mortgage, her exact words were 'I want my tarmac and I want it now', I though she would stamp her little foot any minute.


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## horusd

mistakes does have a round about point, it did take two or more to tango. Should it all be down to him, or now us as the bank owners? The people who actually co-made these decisions have ridden-off into the sunset with public money in their back pocket, including the bondholders. Whilst mistakes is left entirely with the problem, and a very long term to think about it. 

There are issues of moral hazard and personal responsibility, but there are also issues of good public policy. Is it good for Ireland to have so many (mostly  wealth-generating young ) people massively indebted, with no chance of escape?


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## balmed out

Im sorry horusd but i cant see any validity in mistakes opinion whatsoever. The government does need to put a few measures in place to try to control the problem but at the end of the day there is already too much of a strain put on taxpayers at the moment to be allowing people get outs of their mortgages.


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## PaulinesPens

wbbs said:


> Mistakes, I dealt with many young customers like you in my day and I was sick to the teeth of telling them A. prices don't always keep rising and B. you might lose your job but I was wasting my time, they wouldn't listen. Now I know the bank approved the loans but really a bit of personal responsibility wouldn't go astray. I once had a 21 yr old in front of my looking for her 3rd top up on her new build mortgage, her exact words were 'I want my tarmac and I want it now', I though she would stamp her little foot any minute.


 
Wait, wait, wait a minute? Could you elaborate? 

"A 21 yr old" ???


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## Savvy

ManChild said:


> Why not let people who are in negative equity or who have substantial unsecured debts they are struggling to pay back draw down some of their pension if they have one? This would only be allowed if they proved they had the debt and the funds drawn down were used to pay off that debt. This would be a one time only option and subject to limits (% or €).No use in a 40 year old not being able to put food on the table or stressing about the mortgage/unsecured debt repayments if they have a lrge sum of money saved (in my case in excess of 150k) sitting in a pension pot. The gov can access my money when they are stuck but I cant doesn't seem right to me!



I think this is one area where something could be done. 

Good for Government as they get to tax the early withdrawl from fund
and pension holder gets to increase their cash flow by paying off expensive borrowings and maybe even towards paying down negative equity in situations where people need or want to move home.
As you say the government get to skim money from something you'll not be able to touch until retirement.


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## wbbs

Yes a 21 yr old.  Partner was slightly older, worked in construction.


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## PaulinesPens

Going to start with the "when I was..." but at that age, my concerns were working, paying the rent and drinking recklessly. Tarmac and mortgages? 

Whatever happened to the youth of today? <tongue out of cheek>


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## Bronte

mistakes? said:


> As a 24yr old carpenter I was able to get a 350K mortgage for a house in the This post will be deleted if not edited to remove bad language end of no where (My Father knew it was madness but I wouldn't listen) , .


 
Could you elaborate on this, so that we can understand the thinking of a 24 year old.  Why didn't you listen to your father?


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## JoeB

There has been no morkable solution put forward, has there?

It's too simplistic to say ' debt forgiveness'.

How does iut work?, who gets it? and how do you get approved?

Does it matter how much you owe?, or who to?
Does it matter if your house was ever affordable on your income?
What if you lied on your application form, (ie inflate your income?)
How does the government make sure that you're not lying on your application form now?


I don't think there'll ever be a working solution.

Yes, the banks should never have been bailed out, and in my opinion there should be criminal charges brought, (to many and sundry) and prision sentences handed down. There is no-one left who can take the responsibility as we've bailed out all the private companies, and government ministers etc seem immune from prosecution.


So there's loads of money left owing, and no-one to pay it back. I can't see a solution.


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