NAMA Guaranteeing Negative Equity Portions of Home Loans


#61

Why would you like to stop it? This will probably accelerate price declines in the 2nd-hand, non-NAMA FTB and rental markets?


#62

Think that’s already happened - there was an elderly gentleman losing his gentlemanliness in a very undignified manner in the bank today


#63

Have a look here ec.europa.eu/competition/consume … _en.html#1

Seems that the first step would be to contact the competition authorities at national level, as it does not affect more than one member state

So perhaps the Competition Authority is the first step?


#64

Or a protected civil servant on €450K p.a.

What price a man’s dignity? A half-mil a year? (Or only €200K+ p.a. for most other NAMA execs.)


#65

It would be a similar situation if everyone just dropped the price 20%.
Except people would have lower mortgages.


#66

Not a huge amount (unless you want to line in Limrick) based upon the Nama website of properties (less than 1000).


#67

Has anyone managed to view the list os properties? Can you provide a link?


#68

So what do you think folk in Limerick do for accomodation?
Ever consider perhaps just maybe they want to live in a 2 bed apartment? :unamused:


#69

Dougal: C’mere Ted, Ted, Teddy, Ted. God, I love being a priest. We’re all going to heaven lads, wheeeyyyyyy!

(video banned from youtube by Channel4)


#70

Good questions.

Although if it did exist it would probably be on here already.


#71

NAMA list is here since earlier today

nama.ie/Publications/2011/En … cement.pdf

Far from specific though.


#72

They just can’t stop meddling. This isn’t a new idea. The Ulster Bank had a secure step mortgage which tried something similar a few years back.


#73

+100 how true, the only problem is how long can i keep fobbing off the missus…


#74

Yep. Very light on details.


#75

Let us remind ourselves what NAMA is. Is it not a Private venture now?

Things are so hazy. This SPV owned privately yeah…??

NAMA is not something we should tolerate as a kind of authority our exchequered hearts and minds. So lets treat it with the clarified contempt it fully deserves. Folk you often forget we have more spectators here than posters. You’re words with insightful recaps do help your words are important.


#76

Whenever the story about Anglo lending people non-recourse money to buy its own shares raises its head the media (correctly) gnashes its teeth wildly. This scheme is comparable, with the State engineering a lending situation to try to support the price of an asset it owns.

"There isn’t much that I have learned
Through all my foolish years
Except that life keeps runnin’ in cycles
First there’s laughter, then those tears."

— F. Sinatra


#77

#78

Kind of complicated way of looking at it. And anyway, the type of options strategy you want to price depends on the discount or premium achieved to the current market price.

It would not be accounted for as a derivitive. NAMA is making a loan which would be subject to impairment review. If the sale price exceeds the current market price, there is immediate impairment. If it is at market value, then you carry the asset and if values go down, you write it down. If they go up, you dont.

It is not large speculative betting. It is selling an asset with limited downside risk to the initial consideration. Happens all the time commercially in transactions, earnouts for eg.


#79

If you were going to close on a nice shiny property this Friday… then you’ve just changed your mind pretty sharpish I’d imagine.


#80

I’ve had a whole rollercoaster (anger, uncertainty, more thinking then, back to anger, this time accompanied by frustration and disgust) of emotions, first reading about this news story, then the thread on it.

My reasons for being angry are these;
Daly has now admitted that NAMA is loss making already, so by the time NAMA winds up you can add another 10B+ to the how much are we in the bunker for thread.
Instead of accepting this honestly and trying to make the best of it, we are going for the denial approach.
If they took exactly the same scheme and phrased it like this; we value this property at 200k, however given that when you buy this we will have thousands left to sell, we appreciate your concerns that this selling pressure will cause the market as a whole to decrease. Therefore we will offer you a 20% discount, but we will seek to clawback this discount if this feared general market price drop does not occur.
Then at least it would be legal (clawback schemes already exist for affordable housing) and honest, but of course this would mean they’d have to record accounting losses, and under no circumstances can the truth that everyone already knows be crystalised on the books.

It’s even more dishonest than this though, because they want to make a profit, and they’re making a loss at ‘current market prices’, so there’s no way this 200k will actually be current market valuation. This scheme is a waste of time and money, yet another way to hide from reality. Daly has lost all credibility in my book, and this little scheme even if it does make it through the legal framework designed to prevent such schemes, will make little difference to the end result of property prices reaching clearing price. All it will do is delay it still further.

ps that ‘Bull spread’ valuation from Gregory O’Connor is a long way off the mark. 5% annualized volatility? Compared with actual changes of (CSO figures);

June 05-06 +14%
June 06-07 +8%
June 07-08 -6%
June 08-09 -18%
June 09-10 -13%
June 10-11 -13%

I’d also bet 100/1 that he’s not using any skew in his model, or even given a second’s thought to the assumptions that the underlying has to be an efficient instrument with lognormal returns, but these are nuances I could get over if his tone weren’t so preachy. However, getting the volatility wrong by a factor of 3 is careless to the point of being unforgivable.