Article in the IT
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The State agency is in preliminary discussions with Bank of Ireland and AIB to see if they would provide financial support to buyers of properties controlled by debtors in Nama or by receivers. It expects to have “a more detailed engagement” with the banks over the coming weeks.
Say NAMA owns No 1 Main St, Joe Public owns No. 2 Main St.
Joe Public has No. 2 up for sale at 100k (his mortgage is 100k) but a buyer can buy No 1 from NAMA for 80k so Joe will have to drop his price to compete.
If he does drop his price, Joe is now in negative equity to the tune of 20k and can't sell.
This plan favours buyers but screws sellers it seems?
Joe defaults because he can't sell - NAMA takes his house. A pretty vicious circle.
[broken link removed]
The State agency is in preliminary discussions with Bank of Ireland and AIB to see if they would provide financial support to buyers of properties controlled by debtors in Nama or by receivers. It expects to have “a more detailed engagement” with the banks over the coming weeks.
- The plan would involve a buyer paying a 10 per cent cash deposit and one of the banks lending a further 70 per cent of the value of the property.
- If the property rose in value, then the buyer would draw down an additional loan – agreed at the time of the purchase – to cover the 20 per cent difference after several years.
- If there was no recovery, Nama would write off the 20 per cent.
- The proposal – which is known as “staple financing” – is one of several options being explored.
Say NAMA owns No 1 Main St, Joe Public owns No. 2 Main St.
Joe Public has No. 2 up for sale at 100k (his mortgage is 100k) but a buyer can buy No 1 from NAMA for 80k so Joe will have to drop his price to compete.
If he does drop his price, Joe is now in negative equity to the tune of 20k and can't sell.
This plan favours buyers but screws sellers it seems?
Joe defaults because he can't sell - NAMA takes his house. A pretty vicious circle.