Mortgage debt forgiveness is essential to recovery

Joined
Sep 10, 2008
Messages
3,566
Dr Constantin Gurdgiev, lecturer in finance, TCD;
Prof Brian Lucey, school of business, TCD;
Dr Stephen Kinsella, lecturer in economics, University of Limerick;
Ronan Lyons, Oxford University and Daft.ie;
Karl Deeter, Irish Mortgage Brokers;
Dr Shane Whelan, actuary, UCD school of mathematical sciences;
Prof David Madden, school of economics, UCD;
Dr Brendan McElroy, department of economics, UCC;
Dr Valerio Poti, lecturer in finance, DCU;
John D Masson, lecturer in economics, UCC.
Economists Constantin Gurdgiev, Brian Lucey, Stephen Kinsella, Ronan Lyons, Karl Deeter, Shane Whelan, David Madden, Brendan McElroy, Valerio Poti and John D Masson suggest a way to help mortgage defaulters
THE BURSTING of the boom has left tens of thousands with debts they will never be in a position to repay. These debts are poisoning the balance sheets of Ireland’s banks, preventing the emergence of an economic recovery, as well as causing untold social misery. As a society, we must face up to this.

Two main problems exist: first, hundreds of thousands of people now find themselves in negative equity, where the value of their primary residence is less than the loan secured on it; and second, more than 100,000 also find themselves in difficulty paying the interest costs on their personal home loans.

With house prices continuing to fall, interest rates set to rise, after-tax disposable income falling and unemployment remaining high, there is a massive socioeconomic problem to be addressed.
Mortgage debt forgiveness is essential to recovery - The Irish Times - Thu, Nov 11, 2010


Ive been saying it for months, debt forgiveness is the only solution. We need to reform our bankruptcy laws to allow anyone in debt to be debt free within 3 years.
 
Last edited:


Munion

Well-known member
Joined
Aug 17, 2006
Messages
317
Got my 3 bed in Adamstown valued during the week. Paid €375,000 for it in 2006, current value €225,000 although if I did try to sell now i'd be doing well to get €200,000 for it if I could get anything at all.
 

cozzy121

Well-known member
Joined
May 26, 2009
Messages
5,117
Got my 3 bed in Adamstown valued during the week. Paid €375,000 for it in 2006, current value €225,000 although if I did try to sell now i'd be doing well to get €200,000 for it if I could get anything at all.
The price of having bertie as our leader.
 
B

birthday

Dr Constantin Gurdgiev, lecturer in finance, TCD;
Prof Brian Lucey, school of business, TCD;
Dr Stephen Kinsella, lecturer in economics, University of Limerick;
Ronan Lyons, Oxford University and Daft.ie;
Karl Deeter, Irish Mortgage Brokers;
Dr Shane Whelan, actuary, UCD school of mathematical sciences;
Prof David Madden, school of economics, UCD;
Dr Brendan McElroy, department of economics, UCC;
Dr Valerio Poti, lecturer in finance, DCU;
John D Masson, lecturer in economics, UCC.


Mortgage debt forgiveness is essential to recovery - The Irish Times - Thu, Nov 11, 2010


Ive been saying ot for months, debt forgiveness is the only solution. We need to reform our bankruptcy laws to allow anyone in debt to be debt free within 3 years.
What personal loans do these signatories have themselves. In other words have they a vested interest in making this 'proposal'?
It is a little unclear but are they suggesting that just because someone is in negative equity that there is automatically a problem?

What about those who can afford to pay off their loans? Plenty can.
Why on earth should they bother when Joe next door who went for the new car and two holidays is let off?


Perhaps something will need to be done but moral hazard will need to be the primary concern and something a little more sophisticated would be expected from this group
 

Social Conscience

Well-known member
Joined
Oct 27, 2010
Messages
1,273
This will happen with the opening of the 'When Pigs Fly' bank branches across the country.
 

Nemi_

Active member
Joined
Aug 20, 2010
Messages
252
There are many, many quite basic flaws in this article, which I find it hard to credit given the co-signatories.

It silently conflates being in arrears of debt with negative equity. If debt forgiveness for people unable to repay is what’s proposed, then negative equity is a different matter. Why is the debt forgiveness only for property? Should a renter who took out a big car loan and credit card debt not equally be forgiven?

(Note: lest anyone get a heart attack – I’m not suggesting anyone should be forgiven.)
For persons in negative equity, or where the loan is so large that it is becoming distressed, we suggest some degree of individual debt forgiveness and restructuring.
There is absolutely no rationale for forgiving the debt of someone who can service their loan, just because they are in negative equity. Or, put another way, exactly the same argument can be made to compensate Anglo shareholders for the depreciation in the value of their shares.
The losses that will be crystallised in the banks can be filled with additional Nama bonds – now that we have Nama, we may as well make some use of it.
But, hang on, the bonds Nama gives for bank loans are in exchange for the loans plus their collateral. The equivalent for mortgage holders would be that the State pays such-and-such a bank 50% of the value of their mortgage (or whatever), pursues them for 100% and ultimately takes the house if they can’t pay.

What precisely are these authors suggesting here?

This letter is poorly thought out, and deserves to be ripped apart line by line.
 

Telemachus

Well-known member
Joined
Apr 8, 2004
Messages
6,480
Website
en.wikipedia.org
We should have more threads like this:

Pyramid Scheme participants debt forgiveness is essential to recovery.

Anglo/AIB Shareholders debt forgiveness is essential to recovery.

Property speculators who are doctors say debt forgiveness is essential to recovery.

Can I get all the money back I paid in rent also in the last few years while im at it.

Who exactly is expected to pay for this debt forgiveness?
 
Joined
Sep 10, 2008
Messages
3,566
We should have more threads like this:

Pyramid Scheme participants debt forgiveness is essential to recovery.

Anglo/AIB Shareholders debt forgiveness is essential to recovery.

Property speculators who are doctors say debt forgiveness is essential to recovery.

Can I get all the money back I paid in rent also in the last few years while im at it.

Who exactly is expected to pay for this debt forgiveness?
Your already paying for it.

If the bank needs money from bad loans they get it from you the Tax payer.

The only difference with Debt Forgiveness is that it allows the recovery to happen quicker which benefits everyone.
 

cytex

Well-known member
Joined
Nov 10, 2010
Messages
3,485
isnt the debt forgivness of the banks what got us into this mess .

How is debt forgiveness going to do anything but get us into a further mess .

?????????????
 

DeputyEdo

Well-known member
Joined
Aug 9, 2010
Messages
3,449
mortgage debt forgiveness my arse.
Why should people be let off paying their debts because they spent mad money on a house in the boom years?
 

Fed Up

Well-known member
Joined
Feb 22, 2010
Messages
499
This is horse manure.

I paid rent for years and took public transport because i could not afford a loan for a car or house.

I.E. I DID NOT ACT LIKE A FINANCIAL ARTARD!!!!

Of all the things that have p1ssed me off in this country, the idea that I must pay for people in big houses while I pay rent will be the one that finally tips me over the edge and take my skills to a country where they are appreciated.

And yes, this is me feinism on my part but at this rate, I'll be the sole taxpayer left in this hole so let me make this perfectly clear in lay mans terms.

************************. THAT. SH1T.
 

goosebump

Well-known member
Joined
May 23, 2008
Messages
4,940
Debt forgiveness can happen in one of 2 ways:

1. Force banks to reduce the debt
2. Taxpayer funds the repayment of the debt

Given that our banks are, and will continue to be, technically insolvent for some period of time, and that the taxpayer hasn't got 2 cents to rub together, and that no one in their right mind will lend money to us, this proposal has about as much chance of getting off the ground as the Spruce Goose.

But then, Brian Lucey is one of the signatories.....
 

Flimflam

Well-known member
Joined
Apr 21, 2009
Messages
312
Like all other articles on the subject, it is lacking in specifics. Who exactly do they want debt forgiveness for?


Say you have 5 people who bought houses at the same time in the same estate for 300k. Houses are now worth 200k. Let's say all still have jobs and the same wages they had three years ago.


Household 1. 100% IO mortgage, paying bank

Household 2. 100% IO mortgage, can't/won't pay bank due to other loans (CC, CU, investment property etc)

Household 3. 100% mortgage, paying off capital so in less NE than the two above

Household 4. 80% mortgage, paying bank and in less NE than all of the above

Household 5. 50% mortgage, paying bank and not in negative equity


There are obviously many more variables than the above. People who aren't working. People who could well afford to buy at the time but can't now. People who shouldn't have been given a mortgage in the first place. People with a second property etc etc.


So who's debt are they talking about forgiving here? All of them, some of them or none of them? And how much debt do you forgive?
 

Telemachus

Well-known member
Joined
Apr 8, 2004
Messages
6,480
Website
en.wikipedia.org
This is horse manure.

I paid rent for years and took public transport because i could not afford a loan for a car or house.

I.E. I DID NOT ACT LIKE A FINANCIAL ARTARD!!!!

Of all the things that have p1ssed me off in this country, the idea that I must pay for people in big houses while I pay rent will be the one that finally tips me over the edge and take my skills to a country where they are appreciated.

And yes, this is me feinism on my part but at this rate, I'll be the sole taxpayer left in this hole so let me make this perfectly clear in lay mans terms.

************************. THAT. SH1T.
+1

That 80k figure of people leaving Ireland forever next year might reach 500k with ideas like this being promoted.
 
Joined
Sep 10, 2008
Messages
3,566
Like i said

Your already paying for it.

If the bank needs money from bad loans they get it from you the Tax payer.

The only difference with Debt Forgiveness is that it allows the recovery to happen quicker which benefits everyone.

Some people have to stop being greedy and looking out for themselves only, for the good of the country and all our futures this is the only choice.
 

goosebump

Well-known member
Joined
May 23, 2008
Messages
4,940
This is horse manure.
The argument is that the spending power it would free up would lead to growth and benefit us all (yippee!).

I don't buy it myself.

Granted, some people got caught right at the top of the curve, and were really unlucky, but the vast majority of people who are in debt are people who spent too much and never put anything away for a rainy day.

Given their record of profligacy, there is nothing to suggest that they will be more sensible with my money than they were their own.

If there was something we could do to assist people who got sucked in in 2006/07, and whose mortgage is their only debt, and who have liquidated their assets, I would be glad to contribute, but I just can't see how it is logistically, or financially, possible.
 

goosebump

Well-known member
Joined
May 23, 2008
Messages
4,940
Like i said

Your already paying for it.
Only in relation to AIB, which accounts for a small fraction of residential mortgages.
 

fagen

Member
Joined
May 19, 2008
Messages
90
Dr Constantin Gurdgiev, lecturer in finance, TCD;
Prof Brian Lucey, school of business, TCD;
Dr Stephen Kinsella, lecturer in economics, University of Limerick;
Ronan Lyons, Oxford University and Daft.ie;
Karl Deeter, Irish Mortgage Brokers;
Dr Shane Whelan, actuary, UCD school of mathematical sciences;
Prof David Madden, school of economics, UCD;
Dr Brendan McElroy, department of economics, UCC;
Dr Valerio Poti, lecturer in finance, DCU;
John D Masson, lecturer in economics, UCC.


you notice anything no David McWilliams i wonder why????????????????
 

Propforward

Active member
Joined
Nov 7, 2007
Messages
149
This is horse manure.

I paid rent for years and took public transport because i could not afford a loan for a car or house.

I.E. I DID NOT ACT LIKE A FINANCIAL ARTARD!!!!

Of all the things that have p1ssed me off in this country, the idea that I must pay for people in big houses while I pay rent will be the one that finally tips me over the edge and take my skills to a country where they are appreciated.

And yes, this is me feinism on my part but at this rate, I'll be the sole taxpayer left in this hole so let me make this perfectly clear in lay mans terms.

************************. THAT. SH1T.
Me feinism is often a good thing.
And if you get over the moral issue of people with houses being bailed out then you might see that in the end it would be in your best iinterest.

You see while people where getting sucked into the maeslrtom of property lunacy - they demanded pay rises and demanded goods and services - you the renter benefitted from this as your own salary increased and teh demand for whatever industry you work in meant that you had a job that was fairly secure.

Now - lets take your me feinism and look at mortgage default / forgiveness.

If i owe the bank 500K for a shoe box in west dublin and find myself in difficulty i can go to the bank and ask them to forgive me or i can default.
if i default then my bank will take the house in say 18 months and sell it for 300K.
I'll owe them 200k but you know what - screw them i'd rather get a council house and live on the dole for the rest of my life.
Now the bank has 200K loss immediately on its hands and it can bear it.
But say 99,999 others do the same.
Then you the tax payer will now pay 1./ All the crystalised loss, 2./ dole for all the people who can't / won't work 3./ houses for them all

whereas lets look at a bit of debt forgiveness - where the government uses a pre default posture to renegotiate all personal debt down to 60cents on the €. You end up paying nothing more in tax and 80% of people get to stay economically viable.

The governmnet could even apply a moral hazard levy on everone who avails of the forgiveness so that they pay a % of all gross income to the government until they retire.

Me Fein - its in your best interest see.
 
Joined
Sep 10, 2008
Messages
3,566
Dr Constantin Gurdgiev, lecturer in finance, TCD;
Prof Brian Lucey, school of business, TCD;
Dr Stephen Kinsella, lecturer in economics, University of Limerick;
Ronan Lyons, Oxford University and Daft.ie;
Karl Deeter, Irish Mortgage Brokers;
Dr Shane Whelan, actuary, UCD school of mathematical sciences;
Prof David Madden, school of economics, UCD;
Dr Brendan McElroy, department of economics, UCC;
Dr Valerio Poti, lecturer in finance, DCU;
John D Masson, lecturer in economics, UCC.


you notice anything no David McWilliams i wonder why????????????????
Been there done that

David McWilliams: Debt forgiveness is our only chance of recovery

Without comprehensive debt renegotiation -- both personal and institutional -- Ireland will not get out of this hole. The idea is called 'co-responsibility', where the debtor and the lender are both responsible for the debts they have jointly created.
David McWilliams: Debt forgiveness is our only chance of recovery - David McWilliams, Columnists - Independent.ie
 


New Threads

Popular Threads

Most Replies

Top