Mortgage Debt Forgiveness - The Options

It is the consensus view amongst broadcasters and the various “experts”, talking heads, etc that appear on their shows.

I wonder why.


Nice proposal - FROM 2008!!!

Remember - No one saw it coming!

Have they even MENTIONED repossession and firesales? No. It’s not even on the bloody radar.

pat seemed to think,if there was the threat of reversing the stamp duty in jan '12,it would cause us all to rush out now and buy.tit.neither did any of them mention that houses are still to expensive.

What needs to happen is people need to think about things in a 180-degree way.

Currently the commentariat will bang on about moral hazard, saving the banks and debt forgiveness - with all the focus on the here-and-now.

This is completely the wrong way of looking at this.

Fuck the banks - they’re not part of the solution.

All the damage was done in the bubble years. This is just the fallout.

What we need to do is start jailing fuckers for the damage they did in the bubble years. Accountability for the damage inflicted.

Start doing that and all the poisonous, illegal stuff will start to be revealed - and those who were criminally defrauded can start to seek retribution.

We’ve had a massive fraud perpetrated on the population through a housing bubble. Any efforts to seek some small relief from the fraud only ends up legitimising it.

Fuck the banks.
Let 'em die.
Jail the corrupt.
Learn from our mistakes.
Grow up.

To be fair, Jim Power did obliquely - in saying that he thought the stress test loss provisions were too low. This is a function of clearing prices. He didn’t get a chance to say this, though. Might scare the horses or something.

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Could this be the first part of a debt restructuring program leading up to a more structured form of sovereign default?

I cant believe that the vultures who run this country (for the EU/IMF) would do anything that is not in their own best interest. On that basis, this decision (as looks likely now) will have been taken from a position of greed or fear.

Im now guessing its fear at the thought what may happen should a messy default land (hundreds of?) thousands of angry debt monkeys in an Argentina type scenario.

The greed option doesnt really make sense. It has to be fear.

The IMF run banks are not the Vincent de Paul.

There is nothing wrong with debt forgiveness in instances where one is really dealing with a lost cause, ie the borrower will never be able to repay the loan and/or would have to suffer immense hardship for 30 years servicing debt they cannot afford. Its the backbone of any capitalist system
However, normally debt is not just wirtten off. The borrower has to give something up to the lender in return. In the the case of companies, that usually involves giving up equity in the business.
So, to write off debts, where the bank takes ownership of a certain % of the home may make sense. Its still a great deal for the borrower.

Lets say a home was purcahsed with 100% mortgage for 500k and is now worth 250k. If the bank just wrote off 250k…then the borrower would be in profit if the home rose just 10% in value (say 25k)…ie they make 25k instead of losing 225k. That would be a joke.
However, if the bank worte off 250k and retained 50% ownership in the home…Then the borrower would have to wait for the home to be worth 500k again before they could sell it, get 250k for their 50% and repay the bank. Net net the bank gets all their capital back…250k from its 50% stake and the 250k reduced loan repaid

In the interim, the borrower saves interest payments on 250k, which they cannot afford anyway

This to me seems logical and fair

If bank write off 250k of debt in return for equity in house worth 250k then surely bank own 100 per cent of equity
Do debt for equity but amount you paid for house is irrelevant.
If I owe bank 500k and house worth 400k then in bank write off 100k bank gets 25 per cent of equity.
And maybe penalty or buffer of 20 per cent so for 100k write off it costs me 45 per cent of the notional equity I own in my house

Debt for equity has to involve a penalty and be based on realistic valuation so that it only appeals to people who can’t pay and not those who won’t pay

You are of course quite right here Tyler…but the not-so-hidden subtext behind all this yelling for debt forgiveness in the meeja is that the infantile and greedy debtmonkeys want all the debts to magically disappear, but they also want to retain ownership of the assets - and any income streams from those assets in the future.

Denial all the way. That’s really what these people want, a free lunch, no matter how they try and dress it up.

Absolutely agree :slight_smile:

Absolutely agree again. However, we can only hope that the architects of this scheme realise that without some kind of quid pro quo, the Prudent (or lucky, take your pick) Punters who are struggling but succeeding in meeting their mortgage payment would rise up in arms and finally refuse to be screwed and squeezed anymore.

My litmus test will be pretty simple. If Alison O’Riordan is in favour of a particular proposal, then it’ll be an unworkable, unfair bailout fudge. If she’s against it, then it’s probably a workable solution.

This is from yesterday

(edited to number it and reparagraph)

Oh you of little faith :stuck_out_tongue:

Think you may have a point tho :-GC

Does this mean that those who simply stop paying on the grounds that they expect to be bailed out are in trouble?

I robbed some of that for a new sig, spot on!

None of yer fancy shtuff, just lob the debt in there boss.

How many Grecian statues are considered immodest?
How many decorative columns may one have on their verandah?
How many brushed aluminium appliances and Italian marble work surfaces make a family home into an abomination?


And don’t forget all the lifestyle debt that has been rolled up into mortgages in the past 10 years.