We got a 100% Mortgage because they were throwing money at us!

[odie1kanobe]

It's an irrelevant point, a decoy, a distraction.

People's ability to repay is currently in the toilet, and it will continue to be for several years. Is this widespread inability to repay caused by the widespread negative equity? Yes, to a very large extent it is, although ther are many other factors. But regardless of WHY people are unable to pay the fact remains that they ARE unable to pay.

And when people are unable to pay, negative equity becomes a big problem. And when we have been ties to the fate of the banks by an untrammelled guarantee, it becomes the biggest problem.

Your blindness to that is a big issue, as you are agitating for a policy that will cause the banks to collapse bringing us with it.

NE is irrelevant and is not caused by inability to pay.

As someone who had NE in 90's in UK it was completely irrelevant as l could pay mortgage.

NE, like a huge increase in house price from when originally bought until you wish to sell has little relevance.

[Libero]

NE is irrelevant and is not caused by inability to pay.

As someone who had NE in 90's in UK it was completely irrelevant as l could pay mortgage.

NE, like a huge increase in house price from when originally bought until you wish to sell has little relevance.

What if you want to move house, say to a new place of work?

NE causes some problems then, doesn't it?

It also limits in practice how a borrower can respond to mortgage rate increases, compared to a borrower who isn't in NE.

[donalmc]

The majority of people that cannot make payments could make interest payments. Better than nothing.

I wouldn't be too sure about that. If you bought your house in the last five years the large majority of your repayments go to interest - believe me I know.

What to do about the past is difficult; however going forward we should adopt the American system of non-recourse loans (where the loan = the house and not the sum borrowed). This means there would be an incentive on lenders not to take part in fueling the next boom.

[councilkid]

I wouldn't be too sure about that. If you bought your house in the last five years the large majority of your repayments go to interest - believe me I know.

What to do about the past is difficult; however going forward we should adopt the American system of non-recourse loans (where the loan = the house and not the sum borrowed). This means there would be an incentive on lenders not to take part in fueling the next boom.

Sounds good but i thought the financial crisis started with the American sub prime market?

[feargach]

NE is irrelevant and is not caused by inability to pay.

It's only irrelevant to some players in the game. It's very relevant indeed to the bank. It's relevant to any worker who might have a strong work, family or romantic reason to move house (at least 95% of people are potentially in this situation).

Negative equity, however, does cause more negative equity.

A person in negative equity will only offer a very low price for a house, if he offers any price at all.

By lowering the offer, he contributes to a lower market price for houses in general.

By lowering the market price, more people are put into negative equity.

Inability to pay also causes prices to fall.

Imagine somebody who bought in 2002 and lost his job six months ago. He may not be in negative equity, but he is in arrears. As he is desperate, he accepts a price that is a lot lower than he wanted, that is €100,000 lower than the asking prices of every similar house in the area.

So inability to pay has caused the revealed market price to lower by €100,000 per house in that area. That aggressive downward move has placed dozens of households in that area into negative equity, because of one man's inability to pay.

[feargach]

What do you propose we do?

If somebody is unable make the payments then they lose the house. Simple as.

No, it's NOT "simple as", there are further consequences that f&%k us all.

I will amend that statement so it is accurate.

"If somebody is unable make the payments then they lose the house. The bank takes the house and sells it for whatever they're offered. This will translate to a €100,000 loss per house. They can pursue the newly-homeless ex-householder for the money, but that will be fruitless."

Does that REALLY seem "simple as" to you? Really?

Now, if this only happens to 200 people per year, then there's no problem, except for those individuals.

But if it happens to fifty thousand mortgages, then the loss per mortgage will be €150,000. There simply isn't enough people to buy up those unpaid-for gaffs.

And 50,000 mortgages is a lowball figure. Try 75,000.

Still "simple as"?

How can the banks survive losing all that money in a short period?

They can't. They'll collapse if that happens. Then you have to pay their depositors, because you have guaranteed them.

[The_Truther]

People who have taken out huge mortgages that they are not fit to pay is their own fault aand nobody elses.Nobody twisted their arms and said you have to take out a big mortgage and buy a big house and a big car that you can`t afford.They should have known that the boom times were not going to last forever as it never does.

[feargach]

People who have taken out huge mortgages that they are not fit to pay is their own fault aand nobody elses.Nobody twisted their arms and said you have to take out a big mortgage and buy a big house and a big car that you can`t afford.They should have known that the boom times were not going to last forever as it never does.

It's their fault.

I hope that is a great comfort to you when you find that you have to pay all the depositors at the banks when they collapse.

You'll be broke, and you'll work until you die, but you'll be happy because it's their fault so there's nothing to worry about.

[MPB]

People who have taken out huge mortgages that they are not fit to pay is their own fault aand nobody elses.Nobody twisted their arms and said you have to take out a big mortgage and buy a big house and a big car that you can`t afford.They should have known that the boom times were not going to last forever as it never does.

I presume you have a mortgage or have at least had a mortgage?

[The Mayor of Casterbridge]

It's the drug dealer's fault for offering me the first hit. The economy collapse was Lehman's fault. I drink too much because the booze is so cheap. I borrowed too much because the banks made it available. I didn't vote but I hate FF. I didn't use a condom, but how dare she be pregnant.

There's no personal responsibility anymore. Everything that goes wrong is always someone elses fault.

"Its not my fault that i got nothing done. Its those damn TV networks for filling their schedules with such fantastic programs". H Simpson