NAMA Guaranteeing Negative Equity Portions of Home Loans



This is huge guys, I think it deserves its own thread here so people know just what NAMA are getting us into. We basically have the Irish government guaranteeing buyers (this could be FTB’ers, or even investors by the sound of it) that the Irish tax payer will absorb their negative equity. Buyers are essentially going to be given a free option. Prices go up, they win; prices go down, they don’t lose money.


Snap HouseBuyer, just posted the very same over on the Noonan orders NAMA to start selling thread. This is a massive distortion of the market and will fall once anyone challenges it in Europe, which they surely will. Frank Daly should sit down and have a serious chat with himself and try to come up with something better. How’s that business plan looking now?




Simple English.

The taxpayer will loan you 180K to buy a 200K Apartment owned by the taxpayer.

But you only have to pay back 140K (assuming prices keep falling).


What that tells me is the buyer will be in immediate negative equity to the tune of €40,000.

Without the NAMA loan, the property would sell for €160,000.
Consequently, some schmuck will be paying €200,000 for a property they would have paid €160,000 for, had the NAMA loan not existed.

The reason why they are doing this :

Translation - At current market prices, NAMA is looking at serious losses !

Yes … it’s almost like property prices are being prevented from falling to the market clearing level !



I.e. NAMA will start coming to the taxpayer looking for money in a couple of years.

What happens when NAMA doesn’t have the cash to pay back these negative equity guarantees?

Sounds distinctly like Brian Lenihan’s (RIP) mantra of “we had to do something” to get credit moving again. So they guaranteed debts they couldn’t afford and set up NAMA, which a slow motion disaster.

They should just say “NAMA in plan to kick property market”.


Another question, if the value of the property falls, who is in the line to take losses first? Is the buyers 20k burned first, or will NAMA’s 40k take the hit? That article seems to suggest that NAMA is first in line?


Hold on, so I can only get this loan for apartments sold by the government.

Is this not anti competitive? Does the EU have a role here?


Am I missing something here - how is it a 'Property Market" if these props of taxpayers money are in place to compensate for big bad NE - the fear of which seems to be greater than fear itself?
The only way normality - relative to the general economic times so it’ll be a shadow of former glory days - will finally appear is surely the removal of all such artificial supports, subsidies etc and the creation of a true supply/demand based situation.
A market in short!


Does it really matter? NAMA is a two way bet with both bets covered. If house prices continue to collapse, the costs (to cover NAMA and additional banking losses) will fall heavier on current generation taxpayer pockets. Particularly on people currently invested in property. But if they succeed in their aims and manage to prop up house prices, it will come out of our kids’ pockets through their having to pay higher house prices, and through their society’s capital resources being diverted there.


Our never ending attempts to control market forces never cease to surprise me. Having looked at NAMA’s website this morning I think they need some IT staff in there if they are to use it as a vehicle for peddling their dastardly scheme…


I think this is a good idea :nin
No one wants to buy an apartment any more and they are responding. Frank Daly knows all about property incentives :nin

I wouldn’t buy an apartment in a NAMA development at today’s market price without them underwriting a chunk of the purchase price. They have too much power in the market.

With a proper 20 year annuity mortgage this takes the risk out of apartment buying if you want to live in an apartment for the next 5 years.

But is it legal?




Like any confidence trick, you are undone by what you assume to be true…i.e. £200k valuation.

If you tried to sell the apartment after buying it from NAMA at £200k…What would you get? 160K by any chance?

This cannot work and will only push prices lower in my opinion. Imagine you are trying to sell a £200k apartment and NAMA was offering the same with £40k guaranteed against loss. You can’t compete with that. You’d have to drop your price.

NAMA is sitting on so much property and must be really sh*ting itself to come up with a “scheme” like this…simply a crude attempt prop up the balance sheet value of the assets it has charge over…And it won’t work.


Another thought, what if you buy one of these gaffs, then wait 5 years and then get the “independent” valuer in. You slip him a brown envelope, he declares the value of the property has fallen by about €40k, NAMA write-off the €40k, but you sell the property at the full price and pocket the €40k.


The only saving grace is that most FTBs will probably not want to touch with a barge pole most of the unbelievable shite that NAMA probably has on it’s books.


So what are you on about then Frank? This has zero chance of being allowed to go ahead.
(I hope I’m right)


Not one good idea has ebbed or flowed from this Government. None. This is all noise. All NOISE. Nothing is happening of merit worth or effect. You should fear for the future that is a visionless morass because you are not a feature of it.


Is this not a self fulfilling prophesy with respect to negative equity?
Let’s say a buyer has a €160k budget, €20k deposit + €140k mortgage. Even assuming right now that a €200k NAMA apartment is really worth €200k and that an open market €160k apartment is really worth €160k, it becomes a no brainer for anybody to take the higher value apartment for the same price. This will pull the rug from under the open market apartment, requiring it to fall in price to attract buyers, given the current scarcity in buyers. This in turn will pull the rug from under the NAMA sold apartment values as they react to the open market, almost guaranteeing the €40k NAMA sub will be lost, simply because there’s no incentive on anyone to ever try and preserve it.
If anything, once the NAMA sold apartments have fallen to €170k, maybe sooner, you can guarantee that anyone still holding one will get out as fast as they can before they start losing their own money.


Said it a few months ago… They have fxxxed up royally here…professional investors will use this as tool to bargain non Nama properties down 20%…mig massive fxx it up… The drops are just about to get bigger…no way will I look at buying a non Nama property without a min 20% off before start of negotiations…then use the engineers report to knock another 5-10% off…

It’s was the best news when I heard it in a long time… ftb’s should be hoping they open it for more than just apartments… What a fxxxup imagine the confusion there is going to be next august…lol…