52,000 write downs 26,000 repossessions

independent.ie/irish-news/mo … 43445.html

ht indo and fitch

Sure!

Just like they predicted Irish house prices would fall a further 20% this year.

broadsheet.ie/2013/12/17/fitchmas-greetings/

Fitch didn’t so much pour cold water on the recent ‘recovery’, they pissed all over it.

This is what “should” kill the “recovery” in Dublin

However it is exactly because of this that I’ve filed it under will believe it when I see it

There will be no repossessions as the Irish banks dont have the capital for it.

The Central Bank will work with them to produce ‘phantom repossessions’ by altering the classifications (the rating agencies know the implications of Irelands zero foreclosure rate and ts uniqueness in modern banking which is a problem for the Government)

If they even stated to repossess BTLs it would be a start. Repossession is only one part of it. If they go to sell them on they will have to provide credit to credit worthy buyers. This side of the equation is also lacking.

Anyone who believes they’ll actually repossess 26,000 homes (including family homes) must have missed the last 5 years or so, or has recently been hit on the head.

Surly 26k homes repossessed is a very conservative figure. Why is it only 1 in 5 homes over 3 months in arrears. If this was the amount to be repossessed I can’t see it having a huge effect on supply as the period for these repos would no doubt be spread over a few years 2-3 at least which would mean only be about an extra 10k homes for sale in a 2-3 yr period pa. To put that 26k in perceptive it would have been the no. of homes built in a 4 month period in 2006/7 except they will be reposed over Probably a few year period.

I’m not so sure. The Irish banks will almost certainly need more capital next year and they will struggle to raise it without being seen to be tackling their distressed mortgage books. This will become even more important if/when the Fed and ECB cheap money is tapered off. Besides that, a large chunk of the books is simply not performing at all, i.e. no payments are being made. If the banks have not already provisioned properly for these loans then they will be forced to do so following next year’s asset quality review. Once these bad loans are properly provisioned for then there is no longer any incentive not to repossess. And then there is Ulster Bank and the other foreign banks who don’t have the same balance sheet issues. My guess is that repossessions will take off next year and peak in 2015/16. And the threat of repossessions will result in an exponentially greater number of voluntary sales and trade downs. Stein law states that if something cannot go on forever, it will stop. And the can kicking of the Irish banks cannot go on forever, can it??!

Seriously will people stop referring to the bubble - of course it would have a huge impact (not that it’s going to happen) - 10k houses would be about 42% of the total house sales for the entire year to date for the entire country. 10k extra houses would flood the market especially if it was 10k for a couple of years in a row. Again not that it will happen.

Most of these homes will be in deep negative equity and will already have arrears that have been capitalised on the banks balancesheet. They will include homes where the borrower got a mortgage to cover stamp duty and even fit outs.

Let’s say the average loss is circa 150k - that is almost 4bn of loss to the banks by repossessing. That is the system deep on trouble on more time. And remember there are over 90,000 homes that have stopped paying interest. Never mind the hundreds and thousands of loans that are only surviving because their tracker is no so low.

Find it amusing that folks are expecting a wave of repossessions. Lads, it’s been 7 years since the crash started. If action was going to be taken, it would have been taken by now.

Ah something eventually will be done, just in Ireland things move at glacial speed. I can’t see people not paying their mortgages keeping their homes in the long run.

See page 52 of the attached report on Irish Bank Mortgage Books
davy.ie/content/email/mortgage20120817.pdf

Of the 100bn of Irish retail mortgages, almost 70% date from the peak of 2005-2008.
The stamp duty losses (which many Irish banks funded) alone would wipe most Tier 1 today.
The mark-to-market on this book (just based on today’s artificially inflated prices) on even a small part of it would come close to wiping out Tier 1 above 5%.
The effect of dumping so much stock onto the market (where the sale volumes are tiny) would take out the rest of the Tier 1.
That is why Ireland has been unique in modern finance history with almost zero foreclosures 5 years into a banking crisis.
That is why the ECB under Draghi has so dramatically changed their strategy with Ireland and has given us unlimited amounts of 0% debt to keep kicking the can.
Even the foreign rating firms are starting to realise the very artificial nature of Ireland’s finances.

New court to begin work next autumn → irishtimes.com/news/ireland/ … -1.1552787

The procedures are being put in place, the bottlenecks are being removed, all they need now is a bank resolution trust to wind down the banks (where tracker mortgages will go to die) and credit unions.

Commission limited to observer status in new EU bank restructuring body → irishtimes.com/business/econ … -1.1623725

ECB says EU bank resolution plans may be too complex, poorly funded → uk.reuters.com/article/2013/12/1 … 8020131216

I am speculating that Ulster bank and PTSB are being held up until the resolution mechanisms are in place to start the process. Whether AIB will escape depends on political manoeuvring as the establishment wants to hold on to its “pillar banks”

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It is government policy to support two pillar banks in Ireland – AIB and Bank of Ireland. If they need more capital (which they will), the Government is committed to providing it. From God knows where.

Is that accurate, I remortgaged in 2006 but my mortgage was taken out in 1998.

Ok but sooner or later they will have to mark-to-market. They can’t stay zombified for ever. Hear what Dragi said yesterday in the European Parliament about - “needs for adjustments for provisions and risk-weighted assets”. Next year’s AQR and stress test will be bring about a whole new ball game.

irishtimes.com/business/sect … -1.1629952

I’m skeptical of seeing repossessions, it’ll be a big shift if we do because of the fear of flooding the market and of undoing the recent low-volume uptick. Ultimately, something needs to be done to improve the quality of banks’ loan books…

Perhaps the banks could take an approach like the Israeli Defence Force and bulldoze the houses of those over 12 months in arrears. The plan I have formulated and will be forwarding to the banks would involve the surprise visit of bank officials to the property with dozers. Occupants are not allowed to remove private possessions, but will be given an opportunity to exit before demolition. This policy would mean that the houses would not arrive onto market, and would add one additional person/family to the house hunting side of the equation. Also, because it’s a fully recourse loan the borrower is still on the hook for the full loan amount (this is why you allow the occupants to exit before demolition, even though it opens the possibility that they may make objections or cause an embarrassing scene on the street… their estate may not be able to clear the loan).

After a few of those, the deterrent value could be quite powerful and compliance with loan terms might improve. It would also provide jobs to plant-hire and demolition companies. Really, at some levels it’s a bit like the car-scrappage schemes, or the destruction of cattle that was implemented back in 2001.

I genuinely don’t think the general public would object as long as it was clearly communicated how this would contribute to the sustained long-term increase of housing costs (a very popular policy, clearly linked to declining competitiveness and standards of living).

I would be nice to see some of the empties littering the countryside brought back into use instead of sitting their like follies. I guess many of these 1/2 finished properties could be sold off with little effect.

The trend has been rural to urban migration since the 19th century, so unless there is industry, even cottage industry in these areas to support the population then the price of completing the building to comply with regulations that meet the inflated specification exceeds the money people are willing or able to pay. Cheap rural accommodation would not impose a substantial overhead on the population who live there. People who live and work in rural areas generally earn much lower incomes and we are no longer in the era of free and easy credit for Joe bloggs to build his McMansion in the countryside.

The main problem selling them off is the debt that is attached to that property, due to the bailout liquidating that debt crystallises the loss and the taxpayer burden, that nettle is going to be grasped and I recommend sooner so we can start putting the idle resources back in use and paying it off.