After an Irish Times article on Friday speculating that the government are set announce plans for state mortgage payments, an FGer on Newstalk saying the only solution to mortgage arrears was to just take the hit and write it all off, and then more of the same on Claire Byrne on Saturday i could take no more!
Hence the birth of the Irish Moral Hazard Organisation (IMHO)
In its current form it is just an open letter objecting to the idea of tax payer funded write downs, mortgage payments etc etc. We’re hoping that people will lend there support by simply using the link on the site to sign the letter. Every time somebody signs it, another copy is sent to firstname.lastname@example.org
We would welcome any suggestions, additions to the letter, the site, etc etc. This is not intended to be a David Hallesque ego trip but is intended to reflect the views of the silent majority so welcome all contributions from that parish, and I figured the pin was a good place to start.
We’d particularly welcome any suggestions of additional emails to add to Kenny and Noonan as recipients.
Given the IT article suggests the government are meeting this week ahead of an imminent announcement the more signatures we can get the better, so if you agree with the content of the letter please sign it, it only takes two minutes.
If we get any decent number of signatures we’ll grow the resource with links and critique of ongoing nonsense, and try and push it out to media.
I’ll paste text of letter below so you don’t even have to go off site to read it! We accept it is very long but not sure how to condense it. Looking forward to your feedback!
An open letter to those who appear to believe that solution to the mortgage arrears crisis is anything other than the obvious:
Dear Taoiseach Enda Kenny, Finance Minister Michael Noonan, CEO of Irish Mortgage Holders Association David Hall, The New Land League’s Jerry Beades and any other individual or organisation who thinks we should pay our neighbours debts:
When blatantly self interested loons such as Jerry Beades and his ilk were dominating the airwaves wittering on about writing off their debts whilst retaining their assets, those of us who believe in paying our debts and living within our means could simply dismiss them as nutters, only likely to be taken seriously by the financially illiterate living in fantasy land.
However it beggars belief that our Taoiseach and Finance Minister now appear to agree with these chancers, and are considering using taxpayers funds to pay the mortgages of those who cannot or will not pay them for themselves:
“…it is also understood the Government is considering a separate scheme that would allow borrowers to retain ownership of their properties but offer them ongoing State support to help them pay their mortgages.”
Source: The Irish Times, April 10th 2015.
In light of recent reports on the government’s intentions, a group of like minded individuals decided it was time our own voices were heard. We collectively refer to ourselves as the Irish Moral Hazard Organisation (IMHO) for obvious reasons.
We are varied bunch, but all of us have three things in common:
- We are taxpayers
- We are voters
- We share the old fashioned but unfashionable belief that if you do not pay your mortgage your house should be repossessed
Hence if you are spending our money and seeking our vote it is hoped you’ll take our views into account.
All of us have already paid a price for delinquent borrowers through increased taxation, and some of us have also paid an even heavier price via huge losses on bank shares. If you write off the losses people have made on property will you repay the losses on our share portfolios and other consequential losses of the property crash?
Some of us are mortgage holders who have been diligently paying our mortgages, often with great difficulty; a difficulty that will only increase if we’re asked to pay our neighbours’ mortgages as well. Should we continue to pay our own mortgages or will the state pay a portion everyone’s mortgage?
Some of us are living in rented accommodation and we make sure we pay our rent on time every month, not only because we believe in paying our way but the fact that the landlord could evict us swiftly for non payment keeps us honest. Do you think if the same threat of swift eviction hung over mortgage holders we would have had such a huge arrears problem in the first place? Why are our principle private residences of lesser importance than a mortgage holders? They don’t actually own their house until they’ve paid for it.
Some of us have sold properties we could no longer afford due to changes in circumstances and moved to smaller houses or less expensive locations that we could afford. Having made this emotional decision do you think it is right we should subsidise those who refuse to move to a house they can afford?
No doubt the staggering numbers of people who are over 720 days in arrears has not escaped your notice, but have you reflected on the irony that many people are essentially living for free in houses they cannot afford?
Some of us are seeking to buy properties and sick of the incessant intervention preventing a normal functioning property market. Some of us can afford to live in those houses and would like the opportunity to buy them at a price set by the free market.
We frequently hear that the recent property price increases do not reflect another bubble because the banks are no longer giving out easy credit, rather it’s a supply a problem. Again only the financially illiterate are unable to see that the supply problem would be solved by repossessed houses coming on to the market, and the current occupants of those houses are enjoying the fruits of very easy credit – they’re not paying for it all! It is most definitely a bubble driven by cheap credit.
We frequently hear the bubble prices being used as some sort of rational benchmark, eg “only 20% off boom prices”. If you now believe in a wide scale write off or subsidy of mortgage debt has it not occurred to you that these prices were never real in the first place – i.e the people you are proposing helping simply outbid each other to prices they could not afford, prices the market could not bear? Do we not have an obligation to ensure this never happens again? Can you not see your current thinking is going to ensure artificially high prices once more?
The government is currently posturing about the high SVR rates the banks are charging, rightly pointing out they are the highest in Europe. Has it not occurred to any of you that perhaps one of the reasons foreign banks are not flocking to our shores to introduce lower rates may be because government policy is that mortgage security is worthless?
SVR rates are not the only percentage where Ireland is highest in Europe. In September 2013 Irish mortgage arrears over 90 days was over 15% of the total balance. The next closest country was Greece at under 5%! (Source: Moodys/DeutscheBank) Has it not occurred to any of you that perhaps one of the reasons mortgage arrears are so high in Ireland may be because government policy is that mortgage security is worthless?
We keep hearing that a raft of repossessions will result in a tsunami of homelessness. Why? Will all the repossessed properties be knocked down? Of course not. They will be sold on the open market to people who can afford to buy them. Some will buy them to live in thereby freeing up existing rental accommodation or sell another property to the market. Some will be bought by investors to add the rental stock. Those who have to move out of their repossessed houses will rent or buy a property they are able to afford. Is that so difficult to understand?
There may be some that absolutely cannot afford to rent anything and in that case the state will help them and rightly so. This is exactly what would happen in a normal functioning property market and exactly what does happen in every other developed country.
By all means encourage the bank to take the hit on any shortfall after the sale of a property – if they were not prudent enough to ensure the value of the security covered the loan then they’ll learn that lesson quickly enough in the future, and maybe that will be a further future disincentive for aggressive lending. But by allowing distressed mortgage holders to retain ownership of the property, it is grossly unfair and irresponsible to reward some individuals in society for their recklessness whilst simultaneously punishing others for their prudence.
On a micro level repossessions are an emotive issue, but on a macro level they are essential. It’s an unpalatable truth but in order to sort out or country it’s a truth that needs tackling.
Repossession will lead to devastation for some individuals and some short term sensational headlines but the lack of them will lead to major long term problems for our entire country. Beware the law of unintended consequences.
We are currently a small number of like minded individuals but we believe we represent the silent majority. We are placing this letter online and inviting those who agree with us to add their names and support.
If the government are seriously proposing state payments for problem mortgages as an electioneering tool you should crunch the numbers again. We won’t be engaging in shouty radio debates with the deluded, nor picketing mansions in Killiney, but we will vote with our feet.
Enda Kenny and Michael Noonan, we implore you to do the right thing. Allow mortgage contracts to be enforced, either the borrower pays or loses the asset; the agreement mortgage holders sign up to.
If you do this you will solve the arrears crisis, the problems in both the rental and sales property market, banks will recover, SVR rates will come down, and the majority of voters will reward you for it.
The Irish Moral Hazard Organisation (IMHO)