NAMA Guaranteeing Negative Equity Portions of Home Loans


All of these moves by NAMA - selling apartments to Cluid, providing loans, guaranteeing NE - are all just ways of disguising the losses the taxpayer is being made to pay, breaking it up into chunks so that the appalling truth is less apparent.

Take the supposed ‘200k apartment’. NAMA probably reckon the value is really 170k now and will end up much lower eventually. They are economists, they understand supply and demand. But how much has it really cost the taxpayer? For me the important thing to note is that we really bought these apartments when we bailed out the banks - whatever loans the developer had against them and can’t pay back were transferred to public ownership, leading to ultimate foreclosure and takeover of the assets. Everything that’s happened since is just softening the blow in a slow and expensive process

Example with very rounded off figures:
The developer has 50 apartments that were asking 500k at the top of the bubble. Now say the developer expected to make 25% markup on those, so we can assume the cost was 400k each. They are now worth allegedly 200k. Really, in a fire sale in a market with no credit, they would struggle to make 150k each.

So, if there was no NAMA, no Clúid, no HFA, no rent allowance, or no market distortion of any sort, and the now state-owned bank was to take these apartments and put them on the market in one fell swoop, what would happen?

The developer loan of 20 million (400k cost x 50 apartments) would realise a return of 7.5 million (150k x 50 units). An immediate and visible loss of 12.5 million for the bank aka the state aka the taxpayer.

Instead of doing that, part of the 12.5 million loss is booked at the bank, part of the loss is booked at NAMA, part of it at Clúid, part of it in covering NE losses. Of course the process is so convoluted and expensive to administer that the losses will in reality be much more than 12.5 million. All the while, the cost of living in Ireland is artificially high, damaging our competitiveness and recovery, because property values are being propped up.

Am I alone is seeing it this way, or is it self-evident?


That is my take on it Firstbass. They are playing a political game to our detriment.

All these wild losses would be a bit easier to bear if I could just buy or rent my own place at a decent price. They’re giving us the worst of both worlds.


What price does a cash buyer pay for this €200,000 apartment?

What happens if some people buy at €200,000 in a development, but NAMA can’t shift all the units at that price? Do they then reset at €180,000 and try again with a lower NE buffer?

How can it be legal for there to be artificial State support in selling properties which are in direct competition with un-supported private sellers across the road? If the plan is to make these mortgages available to everyone for any property, then where does all the money come from? What will Aijai say?

Frank Daly:

At least he is being honest, but my God, it’s like the moment Dorothy pulls back the curtain: they really don’t have a plan. We’ve known this all along, but to hear it stated so baldly is still sobering.

My opinion: this crackpot scheme will be still-born. Either it won’t happen or it won’t work.


NAMA needs a motto.
I propose:
"Stupid is as stupid does."


How did the auld Secure Step mortgages work out for UB?


Frank Daly:

“I know some people will be concerned that if somebody has a house for sale, they will be saying, my property is never going to shift now that Nama is assisting the shifting of these other properties, I can understand that, but what do we do? All sit back and do nothing?”

This has been politicians approach to every problem thrown at them and what they cannot realise is

Even apart from the instability due to
speculation, there is the instability due to
the characteristic of human nature that a
large proportion of our positive activities
depend on spontaneous optimism rather
than mathematical expectations, whether
moral or hedonistic or economic. Most,
probably, of our decisions to do something
positive, the full consequences of
which will be drawn out over many days to
come, can only be taken as the result of
animal spirits - a spontaneous urge to action
rather than inaction, and not as the
outcome of a weighted average of quantitative
benefits multiplied by
quantitative probabilities.
J.M. Keynes, The General Theory


Unless its really quite smart/shrewd on Nama’s behalf!

Say the apartment is really only worth €100k long term, and you get someone to buy it for €200k with an eventual/immediate €40k discount.


IMHO, a totally ridiculous course of action to take.

A number of “news” reports on this morning’s radio stated that the move was intended help first time buyers “get onto the property ladder”. It still amazes me that people who consider themselves professional journalists will resort to the marketing hype of “property ladder” when discussing the private residential property market.

How any action that can lead to an increase in prices helps people get into a market is an economic theory that I’m obviously unable to grasp and would appreciate any help available.

Another ill thought out strategy from an organisation who’s creation was ill tought out.

Blue Horseshoe


if NAMA wants to get prices back up then it should knock most of what it has… simple supply and demand

there will always be demand for good houses but there is always a supply of shoe boxes


I can stay out of the government manipulated housing market longer than they can stay solvent.


How would a complaint to the EU competition authority work out, it is clearly a market distortion.


I retain my original opinion of NAMA:

and on this plan:

(Sorry for quoting myself).


Have a look at the HCL action thread?

The first thing is to put together a coherent set of objections from a property consumer perspective - since we as individuals are consumers of property. Then put together a pro-forma complaint and post it up with contact details. Each person then sends it off.



No, yes.


Don’t apologise. You sound far more sensible than Frank Daly does today!!!


That’s what I want to know. Let’s say that NAMA sell 50,000 properties to buyers, with NAMA providing €40k of finance in each case. That’s a €2 billion credit line that must be drawn down from somewhere. Do we just pull that from the IMF bailout, or do we go to the market asking it to provide cash despite the lack of collateral.

The more you scrutinize this, the more unworkable it looks.




It seems to me the only reason NAMA are doing this is so they can shift the properties without banking a huge loss. Presumably this NAMA contribution will be used in some creative accounting exercise or put into the accounts equivalent of never never land?

NAMA want the party to go on 8DD


Maybe I’m missing something but I understood that NAMA wouldn’t have to finance anything right now. Presuming the €200k nominal apartment price is the carrying value of the property on NAMA’s balance sheet after buying in the loan from a deadbeat bank then they have already financed it when they purchased the loan. The €40k shortfall only needs to be financed (by the government rather than NAMA) when the bonds used to buy the loans from the banks fall due and the government hasn’t received the ‘expected’ return from NAMA.


Just to get down in words the point I will , no doubt, be repeating ad nauseum this weekend.

This is not a 200K property that the buyer is paying 160K for today with 40K of price falls protected. It is a 160K property that the buyer is paying 160K for and which NAMA has an option over any profit up to 40K that may accrue over the next 5 years.

There is no 40K. NAMA is the seller. NAMA would simply be writing off 40K which they never gave you to give them.

Seems a lot like the Affordable Home Scheme meets Guaranteed Rental Holiday Homes.