stop blaming mortgage holders

[SteveW9]

because shop keepers in particular have and still are rippig us off.......the price of the most basic food items is insane

 

[Bronte]

.I have to laugh at Dunlin3 and Bronte saying that the ordinary person fuelled this problem. Did we go into developers and say "actually could you add and extra 100k onto the price of that house because i really dont think i'm borrowing enough from the bank.

Is it not reckless to borrow more than one could ever hope to repay. And actually 'some' buyers went crazy, what about all the stories of people queueing up overnight, trying to outsmart and outbid each other on new housing developments, with not a sod turned of shoeboxes. Everybody was to blame. But I do agree that those left carrying most of the can are mortgage holders. The only way the others (regulators/ bankers/ politicians) can be held to account is if the laws are changed and people stop voting for the same people at every election. And push the politicians to make changes.

 

[Luternau]

Is it not reckless to borrow more than one could ever hope to repay. And actually 'some' buyers went crazy, what about all the stories of people queueing up overnight, trying to outsmart and outbid each other on new housing developments, with not a sod turned of shoeboxes. Everybody was to blame. But I do agree that those left carrying most of the can are mortgage holders. The only way the others (regulators/ bankers/ politicians) can be held to account is if the laws are changed and people stop voting for the same people at every election. And push the politicians to make changes.

Its not everybody that borrowed more than they could afford. Sadly, its true that some did - but there are two sides to the transaction. Its not like they walked in with balaclava, gun and pen and demanded the money and signed mortgage documents. They applied for the money, filled in forms etc. Where was the credit review committee to determine if the earnings, savings history etc., stacked up, or where was the stress testing at say 2% more than current rates to double check affordability? If this was done at branch/HQ level as most buyers thought was happening, would prices have continued to climb-with lot of and lots of people getting turned down for 95% or even 110% mortgages? Its a 50/50 argument/scenario.

Sadly we dont elect bankers or Regulators, so there is no certainty that we will get the calibre of either that us as the taxpayers deserve. Thankfully, we do elect politicians and as per the last election, the people showed just what people can do when their politicians, particularally, their Government politicians, let them down.

Looking forward, just like the world changed after 9/11, the political landscape has changed here following the disastorous events leading up to that night in Autumn 2008 and its lagacy/aftermath. It will take time for everything to resolve itself, but I cant see us ever going back to the madness of the noughties. That in itself is positive. Time to work and look forward to Ireland being a better place - and mortgage holders have a role to play in this.

 

[jetstream]

Bronte, people queued for houses because they knew that the next phase would be increased. Yes there probably was the few investors there to make a quick buck but I was one of the people who bought because i KNEW that the price would increase the following week. People didnt take into account they or their partner was going to lose their job or that after Sept 2008 when Lehman Brothers filed for bankruptcy the financial industry as we know it was going to collapse. Governments and so called regulators failed and are still failing and now since the governments (taxpayers) bailed out the banks entire countries and continents are broke. But of course thats the mortgage holders fault because they just wanted to borrow more money for that house they wanted to raise a family. The banks have a duty to accept part of the blame for the situation they have people in. The Fitzpatricks and the Fingletons of society should be put under house arrest or kicked into Mountjoy until the legal investigation is complete instead of the ordinary person taken their place in prison.
Bernard Madoff is a classic example and he didnt even bring down a country.

 

[Bronte]

I was one of the people who bought because i KNEW that the price would increase the following week. .

Why was the fact it was going to increase your reason for buying? Please explain the thinking you had at the time?

 

[jetstream]

No i bought because that was where I wanted to live !! The phase before that was cheaper so no real thinking required there really unless you had your head in the sand during the boom years. I can afford my mortgage my point is that there are people on this forum who cannot afford to pay their mortgage and they are looking for support, assistance and advise, they dont need to be told what they did caused the problem so deal with it. I know people and they can hardly even afford food for themselves or family due to their mortgage. The banks/government/regulator FAILED to do their jobs. I agree, times where good and people didnt see this economic tsunami coming so they borrowed more that they should have, but why did the banks allow this and why was the regulator not doing his job and REGULATING ????

 

[Bronte]

You've contradicted yourself. Did you buy because it was your forever home or because you knew the price would increase?

 

[JoeB]

Yes, the Regulator should be in prison,.. if he hasn't broken any laws then the government of the day should be exposed as being babbling incompetents for having not made falling asleep at his post a crime.

I fully believe that it was the Regulator first and foremost who could have prevented these problems we now face.. and the government is responsible for not taking action when it was clear that the regulator was failing, and that we were clearly in a property boom. Instead, we had our foremost politicion rubbishing any sugestion of a downturn.

That is the crux of the problem,.. successive bad governments following bad policies, and blackmailing voters with giveaway budgets.

 

[jetstream]

Bronte how have i contradicted myself ?? I bought the house because thats where myself and wife wanted to live, I previously looked at Phase one and didnt buy and then bought Phase two which had increased and I presumed Phase three would increase which was the case. Where is the contradiction ? As far as i can seen you have no sensible information or anything constructive to say rather you just quote what others say and then ask them to emphasis on it.

 

[Purple]

jetstream, the world and it's mother knew that Ireland had a massive property bubble. If you make one of the biggest financial decisions of your life without doing your homework then as an adult you have to take responsibility for that. I agree that the government/regulator/banks were at the very least grossly incompetent but that doesn't negate the culpability of the mortgage holder who took out the loan. If you didn't know in 2006/2007/2008 that the market was going to crash then you must have had your head in the sand.

Where it all breaks down is that the banks haven't shouldered their share of the moral hazard; they loaned money to people who were likely to default against properties that were definitely going to drop in value. Any normal business that traded so recklessly would go bust and rightly so but these jokers are still carrying on. In the normal course of events the banks should be able to take all of the mortgage holders assets to clear as much of the debt as possible and take a hit on the balance. That’s the way it works in business and that’s the way it should work in this scenario but there’s no way a mortgage holder should be able to cry off on the basis that they were too stupid to know what they were doing.

 

[oldnick]

+1 jetstream.
I don't know what bronte is on about with those odd, repetitive comments made in such a rebuking manner.

 

[oldnick]

purples post . "...no way a mortgage holder should be able to cry off on the basis that they were TOO STUPID to know what they were doing!"

-- Again, we have another of those "I knew exactly what was going to happen and if you didnt you're stupid" comments.

NOBODY knew that there would be a 50-60% plus property crash and a banking collapse and a worldwide economic crisis. These are all inter-connecting events that are causing many people in this state so many problems, not just the property crash per se.
(- which I don't think even the clever guys who knew prices would drop believed it would be of such magnitude)

Finally, few posters are stating that they are entirely blameless for borrowing too much on high prices, nor that the actions of the govnt, banks,auctioneers, developers et al entirely negates the borrowers responsibility. But it certainly means a sharing of the blame - and ,in my mind, the cost.

And in case I get more comments, as in a previous post, about how I must have a vested interest in supporting people in trouble, or I must be in negative equity myself ......... I'm not in negative equity. I didn't buy in ireland in the last decade. I don't owe on irish property loans. And I benefited from easy cheap business loans in the crazy days of 2000-2005.
I just find the know-it-all comments which I have described as Tea-Partyish as utterly without understanding or compassion.

 

[Purple]

purples post . "...no way a mortgage holder should be able to cry off on the basis that they were TOO STUPID to know what they were doing!"

-- Again, we have another of those "I knew exactly what was going to happen and if you didnt you're stupid" comments.

NOBODY knew that there would be a 50-60% plus property crash and a banking collapse and a worldwide economic crisis. These are all inter-connecting events that are causing many people in this state so many problems, not just the property crash per se.
(- which I don't think even the clever guys who knew prices would drop believed it would be of such magnitude)

Finally, few posters are stating that they are entirely blameless for borrowing too much on high prices, nor that the actions of the govnt, banks,auctioneers, developers et al entirely negates the borrowers responsibility. But it certainly means a sharing of the blame - and ,in my mind, the cost.

And in case I get more comments, as in a previous post, about how I must have a vested interest in supporting people in trouble, or I must be in negative equity myself ......... I'm not in negative equity. I didn't buy in ireland in the last decade. I don't owe on irish property loans. And I benefited from easy cheap business loans in the crazy days of 2000-2005.
I just find the know-it-all comments which I have described as Tea-Partyish as utterly without understanding or compassion.

I didn’t know exactly what was going to happen but I did know that we were in a bubble and I did know that the bubble would burst. I didn’t expect a 55% drop (and still dropping) but a 25-40% drop was a reasonable expectation. It was also reasonable to expect the Irish economy to tank after our construction bubble burst as it was reasonable to expect interest rates to increase and tax receipts to collapse. All of that was obvious, totally obvious, unavoidably obvious. If someone makes what will probably be the biggest financial decision of their life without doing their homework then they only have themselves to blame if and when things go pear-shaped.

My house is worth less than I paid for it in 2004 but I got a really cheap mortgage so the total cost of the property (the total mortgage repayments over 30 years) will, I think, still be reasonable. I knew when I bought that it would drop in value and said as much to my wife but the fact that we were trading up and we were getting a cheap tracker meant that it seemed like a reasonable thing to do. In hindsight it may have been better if we’d sold in 2004 and rented locally but they are the risks you take. If things get bad and we lose our home because one of us loses our job etc then I won’t blame anyone but us; we made the decisions and took out the loan and so, as adults, we are responsible for the consequences of our actions. We do try to mitigate our risk by being well insured but that’s for another thread.

This isn’t about being entirely or partially blameless; if you take out a loan that you then can’t repay then you are 100% responsible for how that impacts on you.
As I have said already it is also the case that if you give a loan to someone who then can’t repay it, who was a bad credit risk to start with, and secure it on an inflated asset then you are 100% responsible for how that impacts on you. That’s where it breaks down; the banks haven’t suffered the consequence of their own stupidity.

This isn’t about blame, it’s about responsibility. Both sides are 100% responsible for how their own bad decisions impact on them.

 

[jetstream]

Sell said Oldnick .

Purple, I dont have a problem paying my mortgage as i have already said. The point that i am trying to make is that the system was not regulated and therefore all the mentioned parties could do whatever they wanted.....banks/governement/regulators and the individual that borrowed, and nobody saw a 60% fall in the price of property.
What i find frustrating is individuals blaming the mortgage holders who are taking the full force of this situation and not blaming the system.

 

[Purple]

What i find frustrating is individuals blaming the mortgage holders who are taking the full force of this situation and not blaming the system.

I don't see anyone doing that. I do see people blaming the banks for decisions they made themselves.
"The System" is just people making decisions; it doesn't force people to make bad ones.

 

[jetstream]

A society without policing ends up in anarchy, the same applies to any "system" without regulation and we are now seeing the effects of it.

 

[Purple]

A society without policing ends up in anarchy, the same applies to any "system" without regulation and we are now seeing the effects of it.

I don’t think one follows the other. Plenty of markets are un-regulated. Anyway, the financial services market is heavily regulated, that wasn’t the problem. The problem was bad regulation and incompetent regulators. No matter how good of bad the system may be it still doesn’t force people to make bad decisions. It may allow them but it doesn’t force them.
At what stage do people have to take responsibility for their own actions? The state doesn’t regulate the grocery market to make shops liable if people eat or drink themselves to death. It doesn’t make shoe shop liable if a woman buys a pair of 6” heels and then goes mountain climbing in them. It doesn’t make motor dealers liable if an 18 year old buys a fast car and them kills himself and his friends racing along some back road in Donegal. The state should never attempt to legislate or regulate away a citizens right to make lawful but bad decisions. The citizen controls the state, not the other way around.

 

[jetstream]

. The problem was bad regulation and incompetent regulators. .

So we can agree on something however if the Financial services market is as you say heavily regulated why did the banks require bailouts?

AIG, Lehman Brothers, Morgan Stanley, Fannie Mae and Freddie Mac all heavily regulated my the Securities and Exchange Commission but that didnt do much good either.

Mortgage holders should not have to take fully responsibility and therefore the pain should be shared with the financial institutions for those people in difficulty with their mortgage. The banks have received taxpayers money and will continue to receive it.

 

[in the mire]

So we can agree on something however if the Financial services market is as you say heavily regulated why did the banks require bailouts?

AIG, Lehman Brothers, Morgan Stanley, Fannie Mae and Freddie Mac all heavily regulated my the Securities and Exchange Commission but that didnt do much good either.

Mortgage holders should not have to take fully responsibility and therefore the pain should be shared with the financial institutions for those people in difficulty with their mortgage. The banks have received taxpayers money and will continue to receive it.

Hi Jetstream, I agree with everything you said, The banks took a risk on lending money to a house purchaser, as they would if they were lending to a business etc. So the failure of the risk should be shared, Look at Greece, Bond holders basically gave them money willy nilly without going through the greek books to see if the money can be repaid, Those bond holders are now going to have to take a severe cut on their return because the risk they took failed. so what is the difference between a country failing to repay a loan and getting it restructured and Joe the plumber failing to pay his loan repayments. I was amazed to hear Brendan Burgess (when reading more last nite i discoverd he was chairleader for boom)on radio yesterday supporting as such the joke of a report (keane) published yesterday and also saying there should be no blanket write off of mortgages etc. I agree there should be no blanket write off but the heavy burden must be lifted off joe the plumber so he can (1) pay his mortgage (2) contribute financially to his community as he will have more disposable income to spend thus contributing to job creation. Look at Japan and their lost decade, every one was so much in debt there was no spending for 10 years because the government failed to deal with the debt problem properly. All reputable financial commentators in this country say the same will happen to this country, meanwhile the so called "I pridicted the world financial tsunami" and " I bought my house pre bubble" brigade will be trying to figure out why growth is nil in this country for years to come. the "new begining" will get my support any time.

 

[Purple]

So we can agree on something however if the Financial services market is as you say heavily regulated why did the banks require bailouts?

AIG, Lehman Brothers, Morgan Stanley, Fannie Mae and Freddie Mac all heavily regulated my the Securities and Exchange Commission but that didnt do much good either.

One of my jobs is to do internal audits on our quality management system. I can spend loads of time and tie to loads of other people’s time auditing but if I look at the wrong areas or don’t understand how things are meant to work or don’t see trends in the information I gather then I’m not doing it properly. There’s a difference between good auditing and lots of auditing. My the same token there’s a difference between light/heavy regulation and good/bad regulation.

Mortgage holders should not have to take fully responsibility and therefore the pain should be shared with the financial institutions for those people in difficulty with their mortgage. The banks have received taxpayers money and will continue to receive it.

The banks should be able to take all the individuals assets, up to and including their pension and family home. After that if the debt is not fully discharged then the lender should have to take a hit for the balance.