NAMA Guaranteeing Negative Equity Portions of Home Loans


Oh God, just found the official NAMA PDF on this. It’s a doozie: … /p6/a55999

Page 4:

There are 11 alleged “Advantages” there and I have at least a quibble - and in most instances a major gripe - with pretty much every one.

On page 6 NAMA reveals that the scheme is offering a bumper 35 properties in total in Dublin:

Page 7 and 8 has a cute speech-bubble Q&A about “Myths”. “Myths” on left and the opposite of “Myths” (“Truths”? lol) on right:

No, I’m not making any of that up. That “80% of nothing…” one is real. They’re all real. Mythbusters continues on page 8:

Page 9:

So now we know it with absolute certainty: The lunatics are running the asylum.


This is not that significant. By selling at a price for equivalent asset, a seller is creating a ceiling as people will buy the cheaper one. If demand is sufficient, the goods get bought up, and newer transactions occur at higher prices. They are all competing for buyers, same story in a boom or a bust.

Let’s say you can attach a nominal value to the Naturally-NAMA-Know-They’ll-Fall-More-Guarantee. So it is worth X% of the property. That is like a builder throwing in wooden floors and appliances - you just need to view that property as equivalent to an empty gaff costing €270,000 or whatever.


Ummm. Yuh. I think Mr. A gets market theory. That’s his point.


These are Brendans points. As someone who is only loosely familiar with AAM, I am not impressed with his insight.

Brendan, meet NAMA. NAMA meet Brendan. You may have heard about NAMA, it was in the news a lot towards the end of the Fianna Fail era.

What floor? What economic argument is there for this? Nothing about this scheme fixes minimum values. It hopes to stimulate demand, in an almost non-existent market, but prices can still go either way.

When could they ever do that? Is there such a thing as a correct price, or is it merely a function of how much competing credit buyers can bring to bear? Where were you in 2007, when prices were even less correct than now?

I had planned to go unicorn hunting this week, but this NAMA scheme means that tracking those beautiful creatures is a fools errand!

Buyers will be mindful of the 17% fall in 2011 and the 12% fall in 2010. This market was certainty free.

Other sellers could make the same offer. NAMA is basically selling the property at 80%, with the possibility of a 20% bonus in five years time if the market holds up.

If I were a buyer in this scheme, I’d still much rather the price rose on my leveraged investment, money being what it is. This is the most blatantly shallow thinking here.

This statement is true of any human decision. Such is the nature of Unknowable things, that you can add it to any list really.


Why? It’s 90% leveraged. Very moderate uplift in gain. Need to compare to the capital you’ve prepaid and saved in the interim.


Trying to work out the angle here for AIB. Seems to me that they get to put an asset on their mortgage book which is 70pc of the purchase price but which pays down much faster than a normal mortgage (because the lucky buyer is paying as if the purchase price was 200k not 160k). If prices don’t fall, they are gifted with another asset after 5 yrs of 20pc of the purchase price (nice this as it doesn’t require any sales or marketing effort). Even if prices do fall by more than 20pc the bank is protected more than they otherwise would be because of the faster paydown. So they get a nice loan book with less competition at variable rates to help them get profitable again and repay the ECB. With a cash flow bonus at the beginning to mitigate the usual downside of being in the mortgage market.


FF accuse Nama of ‘interfering’ negatively in the property market… :wink:


It makes me laugh. Much as “Eamonn O’Cuiv denounces Fiscal Treaty at press conference announcing decision to stay in FF and not denounce the FT…”.


“Noonan told them to.”

The NAMA Bank are no longer operating as “rational players” in the market (to the extend they ever were). They are now politically-driven. If, for example, there was a concerted media campaign by the teachers’ union about how teachers couldn’t buy houses, you might find the banks suddenly offering a teacher-specific mortgage of some sort.

This isn’t too visible now, but just wait til the next election… NAMA has given the government of the day yet another way to manipulate the electorate.


It’s common knowledge in the area -2 estate agents in Balbriggan told me they were overpriced because the developer was not in trouble. Well, now we know -they are overpriced because of NAMA’s involvement.

It is funny really -buyer overpays but gets a guarantee for a 20% fall, so NAMA gets close to what it probably would have anyway (in fact a bit more), with an ‘option’ to benefit if prices rise.

The issue then for the buyer is whether they are overpaying by more than the 20% -probably, but not by a lot. And also a real risk that the valuation process might not work out fairly 5 years from now.

That said, they are lovely houses -I’ve been in the show houses. Naul is very nice, and an awkward commute to Dublin, but still commutable. Just a pity about the price, even after today’s reductions. I’d look for a house on it’s own for those prices.


just caught the end of this on Vincent Browne paper review, but one of today’s papers is claiming that 6m worth of houses have been sold by NAMA to date, not sure if this is the total or just the sales relating to this scheme. I suspect it is for this scheme the way the panel were commenting on it


Yes, that would seem to be the case, although in the space of two weeks they can really only have gone ‘sale agreed’ rather than having been ‘sold’. … 11529.html

#153 … 11529.html

Edit: Sorry Johnny, just saw your link above


16 units sold and a further 16 reserved according to the NAMA guy on the radio just now


“Reserved” in a new one on me. So not “Sale agreed”, more like “I like the look of that blue one on the left, can you set it aside for me til tomorrow”.


Not that unusual for a new development, wasnt in the past anyway, reserve a house for a purchaser until the booking deposit comes through. Doubt if any of them could be “sold” so quickly though, so would say it is 16 sale agreed and waiting for deposit for the 16 that are reserved.


Grumpy, are you any good at thinking, or did you just skip that entire step before you started typing?

If the price goes down, the asset you purchased has fallen in value. Under this scheme, you are compensated up to a 20% fall. No net gain for the buyer, but a loss of up to 20% is neutralized.

If the property grows 20%, for a 10% deposit, I’ve gained in net worth.

#158 … 9-May2012/


Pairc Na Ri estate in Athenry, Co. Galway is now on scheme

It seems that asking prices are not extremely high, with similar estate about 1km away selling for 60k to 120k for similar houses.

#160 … -counties/

Development Name									Unit Number

Castleoaks, Dublin Road, Carlow						 21
Churchfields, Clonlara, Co Clare						14
Tir Cluain, Midleton, Co Cork						    10
Castle Heights, Carrigaline, Cork					    3
Silken Park, Citywest, Dublin 24					   6
Carrickmines Manor, Glenamuck Road, Dublin 18			6
Pairc na Ri, Athenry, Co Galway						 18
Oakfield, Park Road, Killarney, Co. Kerry			6
Cluain Bhearu, Athy, Co Kildare						 4
The Weir, Castlecomer Road, Kilkenny					10
Castlerock, Castleconnell, Limerick					 20
Silverstream, Stamullen, Co Meath					   15
Fitzherbert Wood, Slane Road, Navan, Meath			5
Ardfinn, Strandhill Road, Co Sligo					 16
Elderwood, Castlebridge, Co Wexford					 26