Irish Moral Hazard Organisation (IMHO)

Barney Gumble · **Joined:** Feb 9, 2010 **Posts:** 9020

So Hall thinks that borrowers should not have to repay their mortgages if it's inconvenient, but thinks that kids should have to pay motor tax and insurance to cycle.

Ok then.

Mantissa · **Posted:** Fri Nov 18, 2016 11:20 pm

Presumably there's no chance that the campaign is being supported by the insurance industry?

mortgageboy · **Joined:** Oct 11, 2012 **Posts:** 699

And what about dem bleedin pedestrians, walkin all over de paths an' roads and not payin a cent in insurance or tax?

FreeFallin · **Posted:** Wed Sep 27, 2017 10:30 am

He'd gone quiet for a while but boy, is he back!

Families who can't pay mortgage to rent back their homes in new deal
Campaigner's housing body gets €100m from AIB for scheme
http://www.independent.ie/business/pers ... 72747.html

Quote:

Debts of those taking up the scheme will be written off, once they surrender their homes to iCare. People who get on to the scheme will have to qualify for social housing.
But they will get an opportunity to buy back the homes in the future if their personal circumstances improve, the Irish Independent has learned.

BB takes it apart here (he was on the NT breakfast earlier and wasn't happy!)
http://www.independent.ie/irish-news/ne ... 73432.html

He goes into some more detail on his website here
https://www.askaboutmoney.com/threads/n ... ib.205228/

Quote:

This is a kick in the teeth for responsible mortgage holder and the taxpayer generally

What about responsible borrowers who have made huge sacrifices to keep up with their mortgages? They have cancelled their health insurance and their holidays. They have taken up a second job or worked overtime. They may have got rid of their car. They may have borrowed money from their parents. And they may well still be in negative equity in a house which they would have expected to trade up from some years ago. What is their reward? – a mortgage rate which is twice the rate being charged elsewhere in the eurozone.

What about people who haven’t paid their mortgages? In any other country, their home would have been repossessed and sold on to someone able to pay the mortgage. They would join the social housing list and get allocated accommodation based on their needs and their place in the queue.

But in Ireland, the bank is prevented from repossessing the house. Now instead of joining the social housing list, they skip the 100,000 queue and not only get a house, but get the house of their choice in the location of their choice.

We the taxpayer will pay their rent for them. (These houses will be leased back to the local authority who will pay iCare. If the tenants don’t bother paying their rent, as 30% of council tenants don’t, then tough on the council/taxpayer – iCare will still get their money.)

And to add insult to injury, in 10 years or so, they will be able to buy back the property at a 40% discount to the market value.

Buy it back at 40% of the value after having the arrears written off at the initial stage and being charged a reduced rent.
Also a good point is made about rent arrears. Tax payer will be taking a hit on this too.

Pat Kenny discussed this too after 9am this morning with Chris Donoghue. PK mentioned how this was a not-for-profit scheme and so Hall wouldn't be making money out of this.
But what about Direct Fees, charges etc? Do they apply to this and even the IMHO when they joined up with AIB and EBS?

Eschatologist · **Joined:** Sep 13, 2012 **Posts:** 5194

FreeFallin wrote:

And to add insult to injury, in 10 years or so, they will be able to buy back the property at a 40% discount to the market value.

I can't find a source for this quote. Where did you see it?

FreeFallin · **Posted:** Wed Sep 27, 2017 10:47 am

Eschatologist wrote:

FreeFallin wrote:

And to add insult to injury, in 10 years or so, they will be able to buy back the property at a 40% discount to the market value.

I can't find a source for this quote. Where did you see it?

Apologies, I mixed up the Indo report with his comments in AAM (will edit my post above to make that clear)
https://www.askaboutmoney.com/threads/n ... ib.205228/

Eschatologist · **Joined:** Sep 13, 2012 **Posts:** 5194

FreeFallin wrote:

Apologies, I mixed up the Indo report with his comments in AAM (will edit my post above to make that clear)
https://www.askaboutmoney.com/threads/n ... ib.205228/

Thanks.

I assume Brendan has pulled the 40% figure out of his hole based on predictions of future price rises? From what I recall he doesn't have an amazing track record.

Putting aside the fairness aspect, the problem generally with these bulk schemes is unless they're designed to be ridiculously generous, they tend to be targetted at the average of a cohort, so the winners will take it and the losers won't. So you then end up with a smaller bunch of even more hard cases.

Why doesn't David Hall just buy up all of the non-performing mortgages? Then it's his problem to sort them all out.

FreeFallin · **Posted:** Wed Sep 27, 2017 11:16 am

Eschatologist wrote:

FreeFallin wrote:

Apologies, I mixed up the Indo report with his comments in AAM (will edit my post above to make that clear)
https://www.askaboutmoney.com/threads/n ... ib.205228/

Thanks.

I assume Brendan has pulled the 40% figure out of his hole based on predictions of future price rises? From what I recall he doesn't have an amazing track record.

Putting aside the fairness aspect, the problem generally with these bulk schemes is unless they're designed to be ridiculously generous, they tend to be targetted at the average of a cohort, so the winners will take it and the losers won't. So you then end up with a smaller bunch of even more hard cases.

Why doesn't David Hall just buy up all of the non-performing mortgages? Then it's his problem to sort them all out.

Why would Hall risk that when he can get the taxpayer to fund his latest whiz.

As for Burgess, he's 1 of the few commentators out there who regularly and consistently questions schemes like this. And he regularly raises alarm bells over the non existent level of repossessions which eventually allow leeway for the likes of Hall to come with this 5hit.
You could always ask him about the 40% figure?

Barmiest Loon · **Joined:** Oct 23, 2011 **Posts:** 624

From AIB's website announcing the set up: (https://aib.ie/icare-housing)

Quote:

If a customer is eligible for, and completes, the Mortgage to Rent process, then:
Ownership of the customer’s home transfers to iCare Housing
The customer becomes a long-term tenant of iCare Housing
Any remaining residual mortgage debt, following property sale, is fully written off
The customer has the option to buy back their home, at any time, at the price that iCare Housing paid for the property including any discounts negotiated between iCare Housing and the Bank.

I get that David Hall is doing this all for charity and that it's only going to help those eligible for social housing, but, now that the above is deemed acceptable debt write off by both one of the main banks and the government what is to stop somebody doing the same for profit. I.e

Big Bad REIT purchases a loan book and says:

Voluntarily surrender your house, ownership transfers to Big Bad REIT.
Customer becomes a long term tenant of Big Bad REIT at market rental value.
Any remaining residual mortgage debt, following property transfer to Big Bad REIT, is fully written off.
If customer agrees now with no messing and no missed rental payments, customer has the option to buy back their home, anytime after 5 years, at the price + 10% that Big Bad REIT paid for the loan including any discounts negotiated between Big Bad REIT and the Bank.

The small print:
a) If you turn this deal down and we immediately begin repossession proceedings with no write down.
b) If you accept this deal and miss a rental payment we will evict you like any other tenant.

Certainly if I was running a vulture fund with a pile of delinquent mortgages I'd be looking at this, happy that David Hall and the government had set a precedent.

I'd go as far as to publicly ask the government to endorse the plan, lauding Big Bad REIT for write downs.

Happy days. Get a cracking yield + possible 10% return on investment or a guilt free repo.

FreeFallin · **Posted:** Wed Sep 27, 2017 2:20 pm

Barmiest Loon wrote:

I get that David Hall is doing this all for charity...

Is he?

TRS30 · **Joined:** May 22, 2013 **Posts:** 213

[quote="Barmiest Loon"]

b) If you accept this deal and miss a rental payment we will evict you like any other tenant.

quote]

Evicting for non payment of rest can take as long as eviction for non payment of mortgage.

FreeFallin · **Posted:** Wed Sep 27, 2017 2:33 pm

Exactly, rent arrears for LA tenants are huge. Evictions are rarer than hen's teeth

Barmiest Loon · **Joined:** Oct 23, 2011 **Posts:** 624

TRS30 wrote:

Evicting for non payment of rest can take as long as eviction for non payment of mortgage.

It won't take 6 years and crucially, it is not as expensive.

In Ireland, I'd rather own the title to a property and try to evict a tenant than own the loan and try to evict the title holder.

Barmiest Loon · **Joined:** Oct 23, 2011 **Posts:** 624

FreeFallin wrote:

Exactly, rent arrears for LA tenants are huge. Evictions are rarer than hen's teeth

But in my proposal Big Bad REIT are only dealing with private tenants. Let David Hall deal with the Local Authority tenants.

tommyt · **Joined:** Jun 28, 2010 **Posts:** 318

If Icare is an Approved Housing Body (AHB) as mentioned this morningon the radio I don't know of any other Irish AHB who are in the business of selling stock (ie their only asset which they can leverage for future borrowing to fund new development) and typically AHBs views on succession rights to a tenancy are more rigidly enforced than Local Authorities.

Also assuming Icare is an AHB then their tenancies come under the auspices of the Residential Tenancies Act and tenants can be evicted via the RTB process not the Courts for arrears or anti-social behaviour- Third parties will also be in a position to seek compensation from Icare under the RTAct if they do not satisfactorily address complaints of anti-social behaviour attributable to their tenants.

Sounds like we are not getting the full story....

Irish Moral Hazard Organisation (IMHO)

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