NAMA Guaranteeing Negative Equity Portions of Home Loans


#81

You get the feeling that Frank D and co are looking at the double dip in the US and the history of what happened in Japan and are starting to realise that their reputations are going to end up shredded. This latest abortion is so obvious a manipulation it will fail. It is only going to make millonaires of whoever does the “independent property valuation”.

If these clowns really cared about the national interest they would understand that price recovery only comes once prices have fallen to a level where everyone can overcome their fear of losing money that ain’t 20pc down from today. They should hire Allsops and dump properties regularly till prices cannot fall further. That would make our economy more efficient and eventually change the psychology of the property market, as it did in London c. 1994.

What is interesting is the period chosen - 5 years. Tells you how long Frank has to go to retirement.


#82

That should have happened in summer/autumn 2008 at the latest. Instead we’ve wasted 3 years of various vested interests trying to defy the laws of gravity, and we face yet more futile messing and meddling. We could have a sustainable competitive economy by now and be fully in recovery mode, with people getting on with their lives, buying/selling houses, investing in their families future etc., which would be good for everyone’s state of mind.


#83

Discussion on this coming up on Radio 1 now


#84

#85

Am I missing something, covered for 20% for 5 yrs, do they expect property falls to start slowing down and does it make sense to anyone that this will happen given our current disaster of an economy? Whose gonna buy all this property and whose gonna rent it especially as funds are so tight that the rent allowance from de social is bound to be cut in future. XX


#86

Including property investors buying their own properties back from NAMA at a discount?

Quids in lads, heads we win, tails the taxpayer loses… 8DD


#87

Looks like this is going to be rolled out fairly soon. Usual bank holiday release of news relating to sneaky underhand tactics


#88

Should we expect a deluge of poorly built shite to hit the market soon?


#89

Wow! what a brilliant idea! Maybe this will encourage Super Valu to introduce a cash back scheme for when your milk goes sour! :open_mouth:


#90

Still completely baffled by this.

If HCL had to be changed by the EU so that it was available for all properties and not just new ones as originally envisaged, does that mean the NAMA scheme will have to be similarly universal? Surely it does.


#91

the madness goes on and the taxpayer gets screwed over XX


#92

I suspect the difference is that NAMA owns the properties. In which case it can offer rental guarantees, new cars, lipstick lez’s in every room as it likes.


#93

I fixed that for ya.

Is the scheme available to NAMA stock only or to all property?


#94

But isn’t the issue that NAMA = The State (SPV’s notwithstanding!). If I am trying to sell an apartment in Docklands Location X, and NAMA releases a bunch of apartments on preferential mortgage terms at Docklands Location Y across the road, how is that not the State directly undercutting me/engaging in unfair competition?

Notwithstanding that though, if the scheme only applies to NAMA’s own properties then surely the effect will be negligible. In fact, it may be worse than negligible if the aim is to kickstart the morkesh - it might actually be hugely damaging.

I suppose that depends in the first instance on which piece of spin you buy: that NAMA doesn’t actually control that much property, or, that it controls a lot. If it’s the former, then in absolute terms the scheme can’t amount to any kind of game changer. And if it’s the latter, that means we’re about to see a flood of NAMA properties hitting the streets.

Then there’s the question of what kinds of properties NAMA has on its books. Presumably they don’t include more than a handful of family homes. So that entire sector of the market is out and we’re left with a new tranche of apartments coming online in a city already awash with unwanted and unsold apartments. How on earth is that going to rouse the market? Isn’t it more likely to have the opposite effect? And what on earth happens if NAMA splash big with all these apartments and NE mortgages…but nobody bites? Suddenly you have this big hullabaloo about this plan to kickstart the market that ends up a damp squib. Terrible PR that’ll be.

Also, won’t the prices of these properties be going on at “full price”? That is, selling for €200,000 headline, but with the understanding that you might only pay €160,000 down the track. But the headline is still €200,000. Not sure that will seem appealing to the already limited market of people who want an apartment.


#95

Yes,

However the seller of the property has to underwrite it :slight_smile:


#96

The Dublin apartment market has a long way to fall yet :slight_smile: regardless of Nama.

Irish people want to live in houses and in Dublin we have plenty of apartments and not so many houses.


#97

Will this end up like the affordable homes?

Where the local councils don’t like making decisions so when the market moves (downwards) the effect is that the affordable homes remain at the same price, never to be sold.

Will there really be much uptake of these? Many out there don’t like the long term prospects of the country, will this really encourage them to leverage their salaries 25-35 years into this uncertain future?


#98

The only flaw in this argument is that families can actually live in apartments too and some Irish people aren’t hung up on living in a house. Granted here are not many 3 bed apartments in the city, but there’s enough for it to be a viable alternative for many people.

If the price differential is enough, it becomes attractive. So I don’t seen how it’s possible for house prices to rise while apartment prices fall


#99

Or at least if they do, it will be a very shortlived phenomenon, as some buyers will gravitate towards the cheaper (relative to houses) apartments. Some people will only ever live in houses of course, no matter what the price. But prices are set at the margin.


#100

Am I the only one who can see some merit in this idea for NAMA?

I am not bullish about property, anymore than the rest of you, which is why NAMA sitting on these shoeboxes up to now has been stupid.

  • If NAMA does not offer this guarantee against N.E., people are less likely to buy. If property falls, NAMAs assets are only worth the new low price.

  • If they offer it and property stabilises, or only falls a little, the cost of the guarantee to NAMA is zero or small.

  • If it falls by 20% or more, NAMA has to pay back the 20% maximum, so they keep only 80% of the agreed price. But if they hadn’t offered the guarantee, the buyers would have waited, so NAMA would have had to sell at the future low price anyway.

So from the point of view of the financial success and goals of NAMA, this does not strike me as a bad idea at all.

It will not appeal to a potential buyer who thinks falls will be at least 20% in the next few years, but if you think that, you are not a buyer at all if you remotely consider yourself a rational actor. Even Property Bears (i.e. us Pinsters) may find the scheme appealing in a few years. Let’s say the scheme runs for a least three years, by 2015 the prices may be such that you feel comfortable they are within 10% of the bottom, and this scheme covers that, so you buy then.