# Donohue: "long-term arrears imposing cost on others"



## Brendan Burgess (11 Apr 2018)

I wonder if the tide is turning even just a bit? 

From the Irish Daily Mail today


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## Brendan Burgess (11 Apr 2018)

Backed up by an editorial in the paper:


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## MrEarl (11 Apr 2018)

Hello Mr. Burgess,

Personally, I don't see this being much more than a politician being a politician. 

The Finance Minister remains the authorised representative of the majority shareholder at both PTSB and AIB, representing the interests of the nation.  It is within his powers to give clear instruction to the Board of Directors at both Banks, and take significant and definitive action against them, if his instructions as majority shareholder are not carried out. 

Will Pascal clearly commit to instructing both Banks to reducing their SVRs, to bring them (broadly) into line with the European rates, once the current round of residential loan portfolios are sold ?  

....I very much doubt it.  

Apart from not wanting to find himself in a difficult situation with two of the largest retail banks in Ireland, he also has a clear conflict of interest here - he needs both AIB and PTSB to be making significant profits and increasing their reserves, in order help sell the government's remaining shareholding in both institutions for best price.   If forced to prioritise, I imagine increasing the value of the Banks comes before getting SVRs reduced, given the EU wants the State to divest of the Banks asap.

The government could also have taken other measures to help speed up the process of dealing with those who have mortgage loans and pay nothing.  However, they have not dealt with the problem properly to date, simply because it's not something that the politicians want to be associated with.  Just imagine the headlines "Government responsible for 20,000 evictions !"


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## Delboy (11 Apr 2018)

Brendan Burgess said:


> I wonder if* the tide is turning* even just a bit?



It could be that tsunami


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## Sarenco (11 Apr 2018)

Delboy said:


> It could be that tsunami


Or the "deluge of deals" that Ross Maguire SC likes to talk about.  

Still, it's fun to watch the cracks starting to appear within the debt grievance industry as the various vested interests start to become apparent.


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## TheBigShort (12 Apr 2018)

I'm wondering if there is much of a correlation between the "14,000 in danger of repossession" and the remaining 256 ghost estates here?

https://www.askaboutmoney.com/threads/ghost-estates-down-from-3-000-in-2010-to-256-now.207928/

Notwithstanding the difficulties for the banks to pursue repossessions, my understanding is that such difficulties mostly arise where the mortgage holder is trying to hold onto the property. 

My guess is that these 14,000 properties are effectively junk. The mortgage holders know it, and the banks know it. The mortgage holders aren't paying because it is dead money, banks dont want to repossess because it is a write down of debt that that they won't ever get back on re-sale.


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## Delboy (12 Apr 2018)

My guess is that most of those 14,000 aren't junk. 

There's a massive shortage of accomm everywhere. I was in the West over Easter in a rural area and spoke to a few people (locals and blow ins!) who were having real trouble finding anywhere to live in a 15 mile or so radius. Any house that came up was rented out very quickly. Some houses getting rented privately without adverts.
And the few still being advertised were looking for big rent.

S O'R show on RTE radio 1 had a piece earlier this week from the Repossession cases in the courts. 
1 Landlord who hadn't paid his mortgage in years was a no-show. The bank were able to show that the house was rented and had been for a long period. The Judge gave a repossession order, albeit with a long stay of execution.
I'd guess there's quite a lot of that going on.


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## TheBigShort (12 Apr 2018)

Delboy said:


> My guess is that most of those 14,000 aren't junk.
> 
> There's a massive shortage of accomm everywhere. I was in the West over Easter in a rural area and spoke to a few people (locals and blow ins!) who were having real trouble finding anywhere to live in a 15 mile or so radius. Any house that came up was rented out very quickly. Some houses getting rented privately without adverts.
> And the few still being advertised were looking for big rent.
> ...



I'm not doubting any of that. 

But I would imagine there are a significant number of properties with mortgages outstanding on them, that have decreased in value to such an extent that the mortgage holders have stopped paying on the basis that the property will ever be worth anything near what they are liable to pay on it. 
Im wondering if there is a reluctance on the part of the banks to pursue repossession orders in these properties as it would amount to a debt write down that they won't be able to get back on re-sale. 
Perhaps another bailout for the banks is required? Nothing as bad as last time, but perhaps just a billion or three?


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## Brendan Burgess (12 Apr 2018)

Hi Shortie 

Negative equity is certainly a contributory factor to non-payment.  If you have a mortgage of €100k on a property worth €200k, you have a lot to lose through non-payment. And you have very little to gain, unless it's a cheap tracker. 

On the other hand, if you have €100k of negative equity, you are less likely to be worried about non-payment. 

I think that the increase in values has been the main factor in the reduction in arrears. People suddenly realised that they had an asset worth keeping. 

From our experience in the possession courts, about 20% of the homes for which orders were granted, were definitely empty or abandoned. It was probably more but couldn't be confirmed. 

I don't know where the Central Bank got the 14,000 figure. It was 14,000 accounts by the way which would represent around 11,000 homes as many homes have more than one account associated with them.

There are 10,000 homes where the arrears are greater than 5 years. Interestingly, 14% of these are paying the current repayment in full, so the arrears must be quite old in those cases. 

The behaviour of the banks is often hard to explain.  However, if they could repossess those 10,000 homes and sell them, they certainly would, whether they are in negative equity or not. 

It would be great if the Central Bank provided some meaningful analysis of the greater than 5 years in arrears category: 

Percentage where no payment has been made in 1 year, 3 years, 5 years 

Percentage in negative equity 

Percentage where formal legal proceedings have been initiated 


Brendan


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