Haircuts and Nama and game over

[Propforward]

Building land values outside Dublin have fallen by as much as 90pc from their peak levels, according to CB Richard Ellis Group.

Development land in Dublin has dropped on average by “at least” 50pc, CB Richard Ellis said in a report today.

Land values down 90pc from peak - Property & Mortgages, Personal Finance - Independent.ie

Looks like the haircut for NAMA was a much lighter trim than expected...

Can anyone explain how NAMA can possibly work??
I am convinced it is the biggest heist in the history of man but can anyone give me an idea of just how it can possibly realistically breakeven.

[charley]

there is no intention of selling any of the NAMA properties so you can value them at whatever you want ,in ten years time they will be handed back to the developers with no money changing hands and we'll then be paying back for property the state doesn't even own,

[cyberianpan]

Land values down 90pc from peak - Property & Mortgages, Personal Finance - Independent.ie

Looks like the haircut for NAMA was a much lighter trim than expected...

Can anyone explain how NAMA can possibly work??
I am convinced it is the biggest heist in the history of man but can anyone give me an idea of just how it can possibly realistically breakeven.

Why is there an issue here- what was the proposed Nama haircut ?

cYp

[flavirostris]

I am convinced it is the biggest heist in the history of man but can anyone give me an idea of just how it can possibly realistically breakeven.

There'll be a gobsheen called Hal/tonic along shortly to explain how not only will it break even but it will leave us all with more cash in our pockets as well

[Cassandra Syndrome]

Can anyone explain how NAMA can possibly work??

It works like this.

You are part of the Neo Feudal system and you have been creating imaginary money out of thin air and feeding yourself for nearly 10 years from extorting real money from the peasants who have been creating real wealth, but by using this imaginary money. You then run out of imaginary money but your fellow neo feudalists who are implicit in this scam back up your imaginary money by using even more imaginary money. All this imaginary money can be aggregated into one massive collaterialised debt obligation derivative worth 54 Billion Euro and banished to a private room out of sight to cover up all the immoral activites that took place (AKA a Special Purpose Vehicle). The 54 Billion Euro derivative gets paid off plus interest by the peasants outside the ivory towers working in the fields creating real wealth.

Fools, MUWOHAHAHAHAHA!!!

[H.R. Haldeman]

Peter Matthews' analysis on NAMA looks very solid to me (as a layman, not an economist):

NAMA: What’s Wrong? Banking Expert Peter Mathews on fixing Ireland's Banking Crisis

He sees NAMA making no less than a €12b loss (and that's being generous), on top of being a terrible way to restore the position of the banks.

[Aristodemus]

When Lenihan was putting forward the idea of NAMA he said that to recover the monies there would only need to be a modest growth in property prices of 1% per annum over 10 years and he ridiculed people who thought that the market would not rise by such a small amount. Looked at in isolation that may be true but he was basing his assumption at the time on the notion that property prices had bottomed out. Needless to say they hadnt, and indeed its arguable they still have not.

[Dreaded_Estate]

Why is there an issue here- what was the proposed Nama haircut ?

cYp

It was rumored to be about 30%.

According to the supplementary information released by the DoF, Land accounts for 36% of the NAMA loans.

If Land prices are down circa 75%, rather than the 90% from this article, then the discount on all other loans would only be 4.7% if the 30% discount for the total portfolio is true!

If the fall in land prices is 90% then we would need to pay a 3.75% premium!

If the fall in land prices is only 50% then we would be applying only a 19% discount on all other loans!

[cyberianpan]

It was rumored to be about 30%.

According to the supplementary information released by the DoF, Land accounts for 36% of the NAMA loans.

If Land prices are down circa 75%, rather than the 90% from this article, then the discount on all other loans would only be 4.7% if the 30% discount for the total portfolio is true!

If the fall in land prices is 90% then we would need to pay a 3.75% premium!

If the fall in land prices is only 50% then we would be applying only a 19% discount on all other loans!

It was a loan haircut average of 30%... with not all loans backed by land... with an average LTV of 77% , not all loans made at peak value either, and many of the loans outside Ireland (27% GB&NI) - see here for the official detail.

Also the 90% refers to rural, and at the time it was flagged these would likely be returning to agricultural value, nor has anyone suggested the rural loans made up a preponderance of the overall amount

And of course the figures were estimates, awaiting final valuations (which have been underway a while now)

cYp

[Dreaded_Estate]

It was a loan haircut average of 30%... with not all loans backed by land... with an average LTV of 77% , not all loans made at peak value either, and many of the loans outside Ireland (27% GB&NI) - see here for the official detail.

Also the 90% refers to rural, and at the time it was flagged these would likely be returning to agricultural value, nor has anyone suggested the rural loans made up a preponderance of the overall amount

And of course the figures were estimates, awaiting final valuations (which have been underway a while now)

cYp

I know all that cYp I was just using the figures to illustrate how far off the mark the 30% estimate is/was.

If you want you can split out the Irish land from the rest and assume that non-Irish land loans have a similar discount to the rest of the portfolio.

A 60% discount, which I think is about right, for Irish land loans would mean that the rest of the portfolio would only be getting a 19% discount. Which is far too low IMO.

Would you disagree?