Expert Group opposes mortgage debt forgiveness.

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Deferred mortgage interest scheme plan - RT News

http://www.finance.gov.ie/documents/publications/reports/2010/Mortgagearrearsrep.pdf

"The final report from the Expert Group on Mortgage Arrears and Personal Debt says the group is not recommending a formal debt forgiveness scheme.

The report from the group, chaired by Hugh Cooney, issues recommendations on measures to help in dealing with the difficulties created by the country's growing level of mortgage arrears."


Interesting they are highlighting that 90% plus of mortgages are being paid as per contract.

Also against any formal debt write down for mortgagees with Negative equity.

Also recommend a review and potential amendments in bankruptcy laws.
 


HanleyS

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In the key recommendations in today's final report, the expert group says that a deferred interest scheme should be introduced for borrowers who can pay at least 66% of the interest on their loan. This would give distressed borrowers five years to get back on their feet.

Looks to me like their advocating forgiveness by the back door.

Karl Deeter's analysis:
http://www.mortgagebrokers.ie/blog/index.php/2010/11/17/what-are-the-real-arrears-figures/
 
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Cassandra Syndrome

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10% of mortgages aint. Thats between €11 Billion and €15 Billion. Add on those paying the mortgage from every possible source and who are living on beans? The Prime mortgage is another massive crisis. It on its own would wipe out the combined equity of all the Irish Banks. That before the subprime, commercial and NAMA and other property toxic loans.

The Irish banks debts have to be restructured and a lot of them have to be forgiven. Money needs to be freed up again for savings and investing, for consumption and production. Not for saving up for debt obligations, leaving no funding for investing, leaking further debt obligations to funding €500 Trillion external debt through consumption that leaves ver little left for domestic production.
 

hammer

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I wonder what will happen the 10% figure when we consider Budget 2011 - less disposable income and 2011 when the standard rate variable rate mortgage increases by about 2%

10% is a high base figure to be starting from :(
 

Freedom front

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10% of mortgages in trouble, When were that 10% of Mortgages taken out & what is the value of that 10%?

If the majority of the 10% of mortgages are in trouble were taken out between 2002 and 2007 then the value of mortgages in trouble is far higher than 10% value of loan book.

So the problem relates to the timing of when mortgage was taken out , which will determine the overall value of distressed mortgages, rather than the number of mortgages in trouble
 
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Property tax
Water charges
Job losses
Indirect taxes

This problem isnt going to go away.
 

hammer

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Also it is inevitable that prices will fall further.

Bearing in mind less disposable income and cuts in rent allowance and tax reliefs for tenants rents will fall further. If rents fall and mortgage rates increase - STRESS.

As rents fall underlying value of property plummets.
 

Nemi_

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The Irish banks debts have to be restructured and a lot of them have to be forgiven. Money needs to be freed up again for savings and investing, for consumption and production.
As we know, 'forgiven' just means 'paid by someone else'.

How do you free up money for savings and investing by taking money off the prudent and giving it to the imprudent - which is what any Mortgage Paid By Someone Else scheme would amount to.
 

Indiansign

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I wonder what will happen the 10% figure when we consider Budget 2011 - less disposable income and 2011 when the standard rate variable rate mortgage increases by about 2%

10% is a high base figure to be starting from :(
If the Irish banks are getting their funding solely from the ECB (as we now know to be the case), why would they need to push up variable mortgage rates again? The funding they are getting is presumably at 1%, so they are making profits on all mortgages, even the narrowest trackers. Am I missing something?
 

hammer

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Might be making profits, but not enough. After the budget is passed there will be increases probably mid January 2011.

Are the banks not borrowing now at 5% and closed out of the bond market ?

They are under severe pressure to take in deposits and the rates are circa 3%
 

Indiansign

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Are the banks not borrowing now at 5% and closed out of the bond market ?
Really not sure what the rate is, but I don't see how it could be anything other than ECB repo rate, ie 1%. As matter of interest, why do you think 5%?
 

ALAN42

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The ' Expert Group ' is correct . Moral Hazard only applies to little people . It does not apply to the rich , bankers , banks , developers or even countries .
 

xt40

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that comittee report is a waste of time.
Debt forgiveness is the only way that this country has any hope.
all this crap about people going bankrupt and getting a council house is pure nonsense. the people who are in the biggest trouble here are the middle class people who are educated and have ambition. they will not hang about here after being shafted.
if nothing is done , they will all emigrate leaving only the long term dolies and superdolies in the public sector.

as for moral hazard and who will pay, people didnt buy property in 2002-2006 with the intention of being bailed out. The gov need to grow a pair and tell the bank bondholders to face the reality that people cannot and will not be forced to pay the existing debts.


some possible choices for the bondholders/ecb
1 half their money back
2 principal back but no interest
3 running jump

according to this article, the IMF are advocating mortgage debt forgiveness for iceland i dont see much difference to here.

IMF Says More Time Is Needed to Gauge Iceland Debt-Relief Impact - Bloomberg
 

Tea Party Patriot

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10% of mortgages aint. Thats between €11 Billion and €15 Billion. Add on those paying the mortgage from every possible source and who are living on beans? The Prime mortgage is another massive crisis. It on its own would wipe out the combined equity of all the Irish Banks. That before the subprime, commercial and NAMA and other property toxic loans.

The Irish banks debts have to be restructured and a lot of them have to be forgiven. Money needs to be freed up again for savings and investing, for consumption and production. Not for saving up for debt obligations, leaving no funding for investing, leaking further debt obligations to funding €500 Trillion external debt through consumption that leaves ver little left for domestic production.
99% of what you say is normally very sound on fiscal matters. However I do see a couple of major flaws here.

1. How do we identify the mortgage in genuine arrears as opposed to those who just refuse to pay when they see a bailout opportunity?

2. Should we reward the imprudent who took unneccessary risk and set a precedent for the future of having a bailout?

3. I do agree with you that there is a possible ticking time bomb, but if it explodes under a mountain of debt forgivness will the taxpayer be even able to cover it (see point 1 above for possible detonation)?

4. There is a major problem with liquidity for investment and savings however I do think that this needs to be tackled by a major resturcturing of the state coupled with attracting further external investment.
 

controller

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I would like to see the mortgage and job position of all those that helped put this report together, just to see what financial base they are starting off from,
 

libertarian-right

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This happened in Japan in the early 90s, when arrears kept building up throughout a 7 year period from 1990 to 1997. Obviously with our 4 year budget plan, this highlights that the banks are to suffer more losses as cuts/taxes push people into arrears or a defaulting situation. These deferred ideas kick the can down the road.
 

Nemi_

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the people who are in the biggest trouble here are the middle class people who are educated and have ambition. they will not hang about here after being shafted.
if nothing is done , they will all emigrate leaving only the long term dolies and superdolies in the public sector.
This is another of these situations where we're being invited to take a leap into the dark, without any actual evidence being produced to demonstrate how real these contentions are.

Some evidence.
more highly leveraged households tend to have heads of household who are younger, more often female and more highly educated than heads in households with lower mortgage burdens.
That suggests, to me, 'young profassionals', of whom Alison O'Riordan is the public face.

Do you think the economy will collapse if Alison gets a hump and stops providing us with challenging investigative reports on Irish society?

No case has been made for a Someone Else Should Pay scheme. But it does seem almost unquestioned in some quarters that people who matter in Irish society should be immune to problems.
 

Cato

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I think that one of the key and urgent actions needed is the reform of the bankruptcy laws. Just copy the English. They seem to have it right.

Another option might be to pass legislation that would mean that in the event of a mortgage on a principle private residence going south, the bank would only get the house and would not be able to chase the borrower for any other monies owed after the house is disposed of.
 

Asparagus

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Cure is better than prevention?
Let's wait until people are in dire straits....

Expert Group my ass....

spot an expert other than Elderfield?

Vested interest group more like.


Appendix 4: Membership of Group
List of Group Members
Organisation
Mr. Hugh Cooney (Chairman)
KPMG
Mr. Brendan Burgess
Independent Consultant
Dr. David Duffy
ESRI
Mr. Matthew Elderfield
Head of Financial Regulation, Central Bank
Mr. Pat Farrell
Irish Banking Federation (IBF)
Mr. Tom Foley
Independent Consultant
Mr. Paul Joyce
Free Legal Advice Centre (FLAC)
Ms. Patricia T. Rickard-Clarke
Law Reform Commission
Dr. John Thompson
Department of Finance
Mr. Brendan Fox (Group Secretary)
Department of Finance
Mr. Niall O’Sullivan
Department of Finance
Mr. Declan Keane
Department of Finance
Mr. Philip Nugent
Department of Environment, Heritage, and Local Government
Mr. Brendan Mac Namara
Department of Justice and Law Reform
Dr. Orlaigh Quinn
Department of Social Protection
Mr. John Shaw
Department of the Taoiseach
Mr. Stephen O’Connor
Special Advisor to Eamon Ryan TD, Minister for Communications, Energy and Natural Resources
1
 

neutral_lurker

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I am struggling to pay my mortgage.
I am not for debt forgiveness at all.I am also opposed to Nama and hope EU/IMF can change its operating terms.
I do believe having a breathing space if you lose you job would be helpful and an extended period to get yourself on track.
Changing bankruptcy laws would definitely help.
 


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