homechoiceloan - used sensibly?

There are a lot of people caught in a contract valuation trap (wrote about it here: short.ie/3bsmyj )

So it would make sense for the state to use something like homechoiceloan to allow the market to function rationally in the few areas where it is trying to, this is not ‘propping up’ prices, instead it would stop seizing up in places where it doesn’t have to do so. - not a bad thing - the fund, if used in this way could help up to 25,000 people instead of 2,000. The Trib covered this (see below).

tribune.ie/business/news/art … ice-funds/

would this idea really prop up prices? if people tried to take advantage of it then negative equity is pre-requisite and no rational person would jump in for that in order to avail of the fund would they?

When is it rational to keep prices high that were the result of irrational exuberance?

Stop pulling the piss. HCL is wrong, wrong, wrong.

Within the last two hours I’ve spoken to a Neighbour who bought out the Council share of an affordable housing property with notional market value set at 240K. Their estate agent is now telling them to drop selling price to 190K and it “might” sell. That’s 50K negative equity off a notional price but a very real mortgage.
HCL is the affordable housing scheme for the greater masses.

Why, why, why would you want to consign thousands of other people to the same millstone round their necks.

read the links, it isn’t ‘keeping prices high’ i think prices should be allowed to drop to market clearing levels. what this would do though is stop private individuals from going bankrupt, they would get a bridge so that when sued for forced completion they don’t lose everything.

homechoiceloan of itself is a bailout that isn’t working, and that’s good. but seeing lots of people go pointlessly bankrupt on deals they are tied into is not sensible.

Going bankrupt is sometimes a good thing.

giving people access to more credit is the equivalent of a Quack doctor treating a disease through blood-letting and arsenic.

should that be up to you or me or the person involved? This would just put people through suffering they may not need, and certainly don’t want. The majority of buyers in the current market are doing so for a reason -relocating with jobs etc- it doesn’t make sense to see them crushed.

It is absolutely irrational for money, be it public or private, to be used to pay for property at a price that does not reflect the market value and consequently repayment cannot be reasonably assured. No private operator would ever contemplate this, why should a public operator? Looking down the line at the inevitable defaults I am sure the home owner can very easily make the case to a Judge that the State knew full when the lent the money that the property did not have a value commenserate with the mortgage provided, and could prevent repossession, and indeed have the mortgage element above malrket value set aside.

You’re right, it won’t keep prices high. It’ll merely do the worst possible thing and further delay the market recovery.

The market will only recover when prices drop to normal levels. When houses are selling for approximately 2.5 times normal income then normal people will be able to afford them and banks will give them the money with which to buy them.

The scheme you’re proposing does nothing but force another round of “greater fools” into the market at gunpoint. They’ll be forced to buy at 2006 price levels and pay it back for the rest of their lives. Of course no bank in their right minds would ever give them the money for this which is why we have to invoke the government.

I’ve read many of your posts and have enormous respect for the way you’ve gotten a handle on the facts and gone against your own industry at times but don’t pretend for a minute this out of concern for the financial dealings of private individuals. Even if we take it as a given that people will be subjugated to bankruptcy if unable to complete this contracts the whole point of bankruptcy is to recognise when someone is completely unable to meet their debt obligation and discharge it rather than keep it as noose around their neck for eternity. This scheme creates a pseudo-bankrupt class of people who need the government to step and settle their debts and then chase them forever for it.

No thanks.

We live in a free nation where people make their choices and deal with the consequences. Builders who overbuilt and buyers who overbought will both fail.

aAAH FOR FUCKS SAKE! I am really getting tired of this line of argument.Although it doesn’t surprise me. Parachutes for some, punish those who were prudent. THANKS

hey kerrynorth: the flaw in this is in this point - you can either give them the money from HCL or give them the money via welfare/dole. if you get bankrupted that is the outcome.

MB in your example , you say that the builder has an unconditional contract and that he has no reason to renegotiate, but at the end of your example , both the buyer and the builder go bankrupt, shouldn’t that at least give the builder a reason to contemplate re-negotiating

If the old valuation set the market price then surely the new valuation resets it?
House prices are not based on what a person was willing to pay for it for the last 10 years house prices have been set on a bubble.

The new houses are not priced correctly if the valuation views them as overvalued.

This proposal is fundamentally flawed because it not only props up artificially high house prices but it also gives the seller be it a developer or an unfortunate 06 onward buyer an out. Passing their pain on to someone else.

Well Mortgage Broker! This is fucking rich! I am as a taxpayer already fucking bailing out enough people. I ain’t doing it any more. You borrow money, then pay it back! I have sacrificed an awful lot over the years, and I’ll be fucked if I am bailing out those who wanted everything immediately and borrowed for that.

Bringing me to the point I was going to make. I’d prefer the €500m diverted to social welfare to support people as and when needed. Your proposal is a daft blunt implement which bails out only the developers regardless of whether they can muddle through on their own or not. That 500m will be desperately needed for economic triage in our society.

i think it is important to keep focused on the fact that this would only apply to people who are already tied into contractual obligations. helping the market to function to some meaningful level where it actually wants to is vastly different than the multi-billion bailouts being proposed elsewhere.

the potential fallout warrants minor input, if not i don’t really care because its not me that is going bankrupt, if it was an isolated instance i wouldn’t care either, but this is something that is going to be getting more prevalent and ultimately we can use the funds in HCL for something like this, or pay extra tax in the future

In any sane world all of those contracts would have a “subject to the purchaser being able to secure finance” provision. Let’s not act all concerned about the poor purchasers now that there’s potentially €500m on hand to “help them out” when they’ve been screwed over for years with contracts that lets builders deliver whatever they want on any timescale they want with no recourse.

Sorry, but I don’t understand. Can you explain please?

builders are in the trenches, the issue for them is how big the debt will be to the bank, any ‘renegotiation’ is basically taking the money from their own pocket to give to the buyer, at least if it is in court then they can argue with the banks that it is being pursued etc. and credit control will go easier on them.

That is an absolute facile argument that points out the weakness of your argument. There is absolutely no direct linkage in a persons ability to meet the terms of a contract to purchase and their employment situation in these cases - you do not lose your job as a direct result of bankruptcy in such a scenario.

If we bailout the individuals as you propose here, where does it stop? Do we bailout the BTLs who are about to go bellyup in the next few years? Do we bailout everyone who falls behind in their mortgage? Do we bailout the pension funds at the cost of tens of billions? When does it stop? When Income Tax is 75%, sovereign debt costs eat up half the exchequer income, or maybe when the last public hospitals close?? Where does it stop MB??

that would be useless because if you wanted out of a deal you’d just miss a few payments on a credit card, make yourself uncreditworthy and undo a deal. hence that clause doesn’t and won’t exist.

it would be nice but you can’t remove the stick of hardship for not meeting contractual obligations.

This isn’t going to help the market to function. This is going to help a failed part of the market to function.