stop blaming mortgage holders

[ClubMan]

Ryandd - if you previously approached your lender and (presumably under MARP?) got them to put you on interest only to alleviate your financial pressure then I presume that you completed an [broken link removed]? If so you should make sure that this is up to date and if possible post at least a the key indicative summary figures here to help people to offer informed comments and advice. Thanks.

 

[Chris]

@chris, suggest you read first and then consider rational behaviour. Your combination of hindsight and self-righteousness is quite a heady naive mixture as your understanding of mental accounting, human behaviour and rational actors is manifestly flawed. In time we may become more German than the German's.

While I haven't read the full article in detail I don't think that the author is equating actual human behaviour with rational human behaviour; I would certainly agree with that. People often behave in very irrational ways especially when bubble manias kick in and everyone tries to follow the crowd. But that does not excuse the bahaviour, when not all humans in all countries behaved that way.
I am not applying hindsight or self- righteousness to any of this. I also bought a house in 2004, but did so in a very rational way by limiting myself to an 85% mortgage of an amount no more than 3 times our combined earnings. Even if I had not sold the house in 2008 we would have been able to service the mortgage on one income and we had a rainy day fund that would cover at least 12 months should both of us be out of work. This was the rational and correct thing to do, but many people in this country including many people I know did not think the same. I have posted here before about how people I know ridiculed me in 2004 when I told them it was dangerous and irresponsible to not take the same approach as we did.

My point - probably badly made - was that even if you were cautious and applied sensible multiples back in 2005 (or earlier) you would still have been caught because no-one could have foreseen how bad this was going to get. Applying discounts based on what has happened would have meant that no-one would have bought.

I don't think that the point was necessarily badly made I just think that your calculations were flawed. People were taking out mortgages for up to 7 or 8 times combined income. Friends of mine who bought in the 90s said that at the time the maximum you could take out is 3 times the higher wage plus one time the lower wage. This is the way it has always been in Germany and very similar in Switzerland (two countries that do not suffer from recurring real estate bubbles). But somewhere along the way people and banks decided that higher multiples were perfectly prudent, when even without hindsight they weren't.

In fact taking out any mortgage or debt back then based on the PROBABILITY of reduced income/redundancy was, in hindsight, reckless.

This is where I disagree. I think that foresight should have told people that if you take out a huge loan for a very long time then you have to make provisions for adverse financial conditions. Way too many people did not look at the possibility of downside risk at all; it wasn't a case that they acknowledged it, but decided it wasn't a high risk, they simply did not take it into the equation at all.

Incidentally, Chris, the "official" voice of Mc Williams and a few others like him were advised to commit suicide by the most official voice of all -our beloved leader at the time - for daring to suggest any negativity.

Yes, you are right about the people who tried to warn us being silenced and ridiculed, but that does not excuse the fact that more people did not listen to them.
While Ahern was the most official voice of the country that does not equate to any level of competence in economic matters. Politicians of all kind lie through their teeth to make themselves look good and will only listen to voices that tell them they are on the right track. That is not something that is new to our current times. You cannot trust politicians and you shouldn't believe anything until it has been officially denied.

 

[SteveW9]

steve -in reponse to the post prior to yours:-

- use of terms like " should have add the cop-on" , "looking to taxpayers to bail you out" are misleading and slightly offensive...

1) Are you saying that people should have known that buying property was such a risky business? That is, there was no need for the clever banks to issue any sort of warning to inexperienced buyers, as opposed to banks constant persuasion to buy? Did more than 1% of the population believe that property would crash over 50% and that unemployment would reach record highs ?

2) "bail you out" -I've never clearly understood this term .I think that you used it in the sense " pay for your debts" or "give you money ". Why take that extreme tone to people in difficulty? Some help, not "bail-outs" is what most need - help that need not cost "the tax payer" any more than not helping those in mortage trouble.

3) Your point about the "tax -payers" is assumedly because most banks are now owned by the taxpayer. The banks were stupidly guaranteed by the govnt and because of this crazy guarantee the banks were taken over . Absolute madness. But no way the fault of the individual person in trouble. If someone is looking for help ,or burden sharing from the bank this should not be denied because the govnt crazily took over the bank. Should banks deny loans to businesses because they are risking the "tax payers" money ?

Steve -you started your post "in fairness". It was anything else but fair.

oldnick
1) "Are you saying that people should have known that buying property was such a risky business?" ...errrr YES when the cost of a house is 15 times the average wage then people should really know that its a risk unless they are idiots. All you had to do was read up about every other property bubble in history....they all have a similar outcome.

2) Explain to me where the money to help people with their mortagegs will come from if it's "help that need not cost "the tax payer"" ??

seem to me Nick like you have a vested interest in this.

 

[SteveW9]

In fact looking at a previous OLDNICK post: I can see that he does indeed have a vested interest.
He has many properties and is probably exposed to serious negavtive equity see below:

"If I had a 100k and no debts then I actually would consider buying property.

The following is based on my own personal portfolio...

Reasonable two-bedroomed apts in Dublin city-centre (don't get a onebedroomed) are available for ca. 100k. they rent at ca. 12/13k p.a.

After insurance,maintenance and some fees they get ca. 10k p.a. pre-tax.
this is ten percent - over twice more than the best bank interest.

Now, whether they'll continue to fall in value is another matter. But decent apts in city-centre locations have stablised in sales price in the last several months.

My 4 bedroom house in top condition D.20 is worth ca. 250k -but my rental income, after costs and before tax, is,again, 10k - a return of only 4%.
But one has to consider whether well located 3/4 bed houses will gain value .A speculative matter we can't discuss."

 

[demoivre]

Who is to blame for, the well documented view, that antibiotics are overused in Ireland ?

The foolish patient for demanding the antibiotic in the erroneous belief that antibiotics will cure illnesses that they don't or

The GP for prescribing the antibiotic ?

It seems fairly obvious to me that if the GP doesn't do the prescribing the patient doesn't get the drug ! I assume from some of the arguments on here that it's only the patient in this instance who should be held accountable or am I missing something?

 

[theGodfather]

I took out a mortgage in 2006 and have only discovered that i hadnt beeen getting mortgage interest tax relief at source (TRS),,,i have now claimed for 4 years ( its as far back as I am allowed to go by revenue), do i personally get a refund or does it all go to my lender. anyone enlighten me????????????/

 

[Chris]

Who is to blame for, the well documented view, that antibiotics are overused in Ireland ?

The foolish patient for demanding the antibiotic in the erroneous belief that antibiotics will cure illnesses that they don't or

The GP for prescribing the antibiotic ?

It seems fairly obvious to me that if the GP doesn't do the prescribing the patient doesn't get the drug ! I assume from some of the arguments on here that it's only the patient in this instance who should be held accountable or am I missing something?

This is a very good analogy, and in my opinion it is both the patient and the GP. Incidentally I believe that a lot of drugs should not be prescription only, but that is a totally different topic.
In terms of lenders and borrowers both sides are also to blame. But this should only result in the imprudent borrower and the imprudent lender losing out, not everyone else too.

 

[theGodfather]

I read on one of these posts that people lied about their means to obtain mortgages,,,
If i lied about my symptoms to my doctor and he prescribed medication that harmed me on the basis of my lies,,,,
What about due diligence......for lenders and doctors??????????

 

[oldnick]

Dear SteveW9 -please try not to jump to wrong conclusions .

Fortunately, i bought my fully-paid up Irish properties 10-30 years ago. No negative equity and they're all worth more than when i bought them
But ,yes, actually i was an "idiot " (to use your term about those not realising how risky property pruchasing was) because I didn't sell the lot five years ago. But that doesn't make those who were far younger and inexperienced than me "idiots".
Strangely enough, Steve , young people desperate to get on the housing ladder and being constantly pushed by experts to buy property probably didnt read much about previous property bubbles. The experts-banks etc- were the ones who should have known.

Also,SteveW9 -please try to read a post before misquoting..
I clearly said "help" does not mean paying people's debts - there are many ways to relieve the problem without handing out cash.

And I never said "help that need not cost the tax-payer". It may well cost the tax-payer, but I said it need not cost the taxpayer any more than not helping those in trouble. At last the govnt is neginning to understand that ignoring the problem will have devastating economic and social consequences. (Anyway, please don't put a fullstop half way through a sentence and then quote it; there is a difference between "She's pretty" and "she's pretty awful !").

Look -these arguments are going round in circle so to sum up our different positions as understood from our posts:-

You are someone who knew that property could crash 60% , the banks would collapse and unemployment would reach record highs. Those who didnt realise this are idiotic, so if they're in trouble now they dont deserve our help.

I am someone who is much more comfortable than those in trouble but still worry about the costs/losses/problems going on at present . But I blame those in charge and the financial experts ,not those who are in trouble. I have no "vested interest" in helping them other than it will help this country on the right path - and for that I do have a vested interest.

 

[Greensquare]

Oldnick, you say above that help "may well" cost the taxpayer. I think thats being a little vague. The banks are broke and so any "help" of any kind (debt forgiveness etc.) will have to be financed by those people in this country who are lucky enough to still have a job and are paying tax. Considering the rates of Income tax we already pay, I think that suggestion is very unpalatable to most people.

Remember, just because people still have a job, doesn't mean that they're not struggling. Raising Income tax further to "help" people who have lost thier jobs and can't pay the mortgage, will put people who have jobs under more financial stress. Thats just moving the problem from one sector of society to another.

Unfortunately there is no magic pot of Gold that the government have in reserve for a rainy day, & the country doesn't have a rich Uncle we can tap for funds. We are pretty much on our own, individually & as a country, with this mess.

 

[bugler]

Who is to blame for, the well documented view, that antibiotics are overused in Ireland ?

The foolish patient for demanding the antibiotic in the erroneous belief that antibiotics will cure illnesses that they don't or

The GP for prescribing the antibiotic ?

It seems fairly obvious to me that if the GP doesn't do the prescribing the patient doesn't get the drug ! I assume from some of the arguments on here that it's only the patient in this instance who should be held accountable or am I missing something?

I would say what you are missing is that not being a homeowner does not equate with being ill.

Being without property is not a sign of sickness.

A bank is not a doctor. Buying a property isn't a recognised treatment for any malady that I am aware of. But I haven't been keeping up with the medical journals lately.

Perhaps you could do better, and come up with an analogy that portrays the typical mortgage holder as a starving orphan.

 

[oldnick]

greensquare -
Yes "may well cost the taxpayers" is a little vague.
Nobody knows the cost of helping the ones in real trouble, and nobody knows the cost of not helping them. That's why it's "vague".
Sorry for not being precise as regards the solution to this crisis. When I can do that I'll stand for President.


Anyway, to repeat what i've twice said before in this thread :-

1) If we (the govnt the taxpayers whatever) don't "help" (i explain the word help in this context below) then the social and economic costs to the country could be very high. The banks don't want to foreclose on thousands of homes, the govnt does not want to house thousands of families. Not helping will be disasterous.

2) But by "help" does not mean handing out cash. As per the committee on which Brendan Burgess was on , as per countless suggestions , as per common sense - there are many ways to help those in trouble without it being a harsh cost on the rest of us...
.. 50 year+ mortgages, interest only mortgages, "breathing space" part-payment of interest, shared equity deals, and/or a combination of these plus other ideas.....

In fact it may be cheaper for the country to help than do nothing for those in deep trouble.


Anyway, I -and I really don't think many people on AAM have - asked for simple "debt-foregiveness" . Have you now got that ?

Do posters really read what others write?

 

[Ryandd]

I just want to come back in to say that I continued to pay my mortgage when made redundant stupidly thinking I would get a job before it had ran out, I didn't ask for help from the social to pay it as maybe it was pride. But I don't want to take anyones hard earn cash to help with my problems and I think most people in my situation feel the same so please don't be too harsh because we at one stage were paying tax and understood that it was contributing to society less well off, Im am now that person less well off and I hope the waiting game of banks sabalising doesn't cloud the real issues as I feel they have been put aside.

 

[UFC]

no ordinary hard working decent person could have known what was coming

I am an ordinary, hard working, decent person and I thought it was beyond obvious there was something wrong (back in 2004/2005) when I realised I would not qualify for a mortgage for an ex-council house in a horrible estate in Ballyfermot, even though I am a software engineer earning a good wage.

I guess I am lucky though, because I can smell bull**** a mile away so didn't believe any of the crap from bankers about Ireland being "different" or the price of property only going up.

So I then went and researched property bubbles and within about 5 seconds could see we were in the middle of a huge property bubble.

Honestly, and this will sound harsh, but if you didn't do independent research before making the biggest purchase of your life, you can't really blame anyone else for your problems.

 

[UFC]

I do of course have sympathy for those who have lost their jobs and are struggling, but from what I've read on this forum and others, it seems many people are defining "struggling" as being in negative equity and not being able to trade up to a nicer house in a leafy suburb.

 

[Bronte]

It seems fairly obvious to me that if the GP doesn't do the prescribing the patient doesn't get the drug !?

There are quite a number of people who demand antibiotics and won't leave the GP be unless they get them.

 

[Kev]

Wish GP would stop prescribing unnecessary expensive inappropriate drugs for people in care homes in order to keep them sitting quietly sitting in chairs all day long as they are always understaffed. Drugs are mostly paid for by the tax payer or the residents.

UK has now come to decision now to stop these drugs because they are feeling they are now stop wasting money where it is not necessary. Instead of these unnecessary drugs dished out in care homes it is strongly recommended to have a good exercise classes every day for their residents/patients.

This would be much better for the economy and the people in care homes. Care homes in Ireland and I have personal experience of them due to a close relative being in one. The GP and consultants are dishing out these drugs like sweets. Been in contact with consultant and GP pointing out that these drugs according to manufacture instructions should not be given to patient/residents with dementia to no avail still on them today. These drugs are not used as a last resort as GP’s says they are widely used in care home UK and Ireland.

http://www.guardian.co.uk/money/2011/apr/19/care-homes-sub-standard-practices


http://news.bbc.co.uk/1/hi/health/6506327.stm

 

[bugler]

Now that's a good analogy!

 

[mcwhirter]

I'm afraid they have to share part of the blame. They fuelled the demand, many lied about their income. It was a state sponsored ponsi scheme. Some people recognised it as such, many did not.

Oh how I wish I had not moved here from my home country, what a mistake that was.
I didn't lie. I was completely honest, went down the correct path. Lender offered me a mortgage of 450k. I thought how could I pay that?, and took a 330k mortgage, now house is worth about 100k less than mortgage.
It's a family home, I can afford repayments just at the moment, but negative equity is causing a barrier to moving (trading down, not up!)
I can imagine thousands like me out there, honest but being treated like dirt.
Mortgages at the time were cheaper than renting too, main reason why I bought. Making a quick buck wasn't my main reason to buy, thank you.

The politicians that CAUSED this issue can die a long painful death as far as I am concerned.
They are not exactly helping the situation are they!!

 

[Bronte]

I can imagine thousands like me out there, honest but being treated like dirt.

Who is treating you like dirt? Presumably you live in a nice home and you can afford the repayments, is not being able to trade down a big deal?