Another angle to this.

Why insist on the recipient of a mortgage writedown leaving the house?

Now bear with me for a moment.

Suppose there is a couple with a couple of kids living in an area they like. Kids settled in school. Parents settled in the community sports clubs etc. The house was bought in the boom. Equity from previous home put into current home and a mortgage obtained for the balance. Both earning good money when house purchased. They didn't want to be property 'flippers'. They thought long and hard about where they were going to buy after looking into schools clubs etc.

Now the recession comes along through no fault of this couple. The banks and bondholders are guaranteed leading to a massive depression in economic activity in Ireland leading to himself/herself loosing their job. Again, not their fault. They make adjustments to their lives. No more holidays. No more changing cars every second year. Cut back on eating out and socialising. They even got rid of Sky and pared back to the bone on phone bills and utility bills.

I think you'd all agree that this couple have not really put a foot wrong here. They have not been reckless. Now their new reality is that the bank want to turf them out of the house because they can no longer meet the full mortgage payment. They can meet the interest and a little more but not the full amount. So the bank pulls the plug. IN a scenario such as this I feel it would be perfectly acceptable for the bank to get 3 seperate independent valuations put on the home. Average the three and settle on a current value. Now, write off the balance with the proviso that if the house is sold within 10 years the profit should go towards paying back the amount written down.

I don't see any point in kicking the homeowners out, writing off the debt anyway and having the state pick up the tab for housing the family in local authority housing. Common sense would go a long way in this whole affair.

Postscript : This would be a one off exercise only for family homes bought between 2003 and 2007 so future problems are not associated.

Anyone know the situation on the following

Large detached house worth €500,000

Mortgage debt say €2 million.

How the **** could you get to keep the house ?

Would you seek say a write down of €1.5m and the bank can do nothing about it or say both parents were unemployed could you get a write down of the entire €2 million ?

What is that term again

ESTATE PLANNING

Originally Posted by cabledude

An average family home in the boom time was, depending on the part of the country, in or around 3-4ook. This is the only debt that should be written down. Not car loans.

That's easy for you to say, how about those folk in 3 million or so debt? You lot with 400K are just 'I'm alright Jack', just begrudgers against those with nicer unpaid-for houses.

Originally Posted by Raketemensch

That's easy for you to say, how about those folk in 3 million or so debt? You lot with 400K are just 'I'm alright Jack', just begrudgers against those with nicer unpaid-for houses.

I'm neither..

Originally Posted by cabledude

Another angle to this.

Why insist on the recipient of a mortgage writedown leaving the house?

Now bear with me for a moment.

Suppose there is a couple with a couple of kids living in an area they like. Kids settled in school. Parents settled in the community sports clubs etc. The house was bought in the boom. Equity from previous home put into current home and a mortgage obtained for the balance. Both earning good money when house purchased. They didn't want to be property 'flippers'. They thought long and hard about where they were going to buy after looking into schools clubs etc.

Now the recession comes along through no fault of this couple. The banks and bondholders are guaranteed leading to a massive depression in economic activity in Ireland leading to himself/herself loosing their job. Again, not their fault. They make adjustments to their lives. No more holidays. No more changing cars every second year. Cut back on eating out and socialising. They even got rid of Sky and pared back to the bone on phone bills and utility bills.

I think you'd all agree that this couple have not really put a foot wrong here. They have not been reckless. Now their new reality is that the bank want to turf them out of the house because they can no longer meet the full mortgage payment. They can meet the interest and a little more but not the full amount. So the bank pulls the plug. IN a scenario such as this I feel it would be perfectly acceptable for the bank to get 3 seperate independent valuations put on the home. Average the three and settle on a current value. Now, write off the balance with the proviso that if the house is sold within 10 years the profit should go towards paying back the amount written down.

I don't see any point in kicking the homeowners out, writing off the debt anyway and having the state pick up the tab for housing the family in local authority housing. Common sense would go a long way in this whole affair.

Postscript : This would be a one off exercise only for family homes bought between 2003 and 2007 so future problems are not associated.

As examples go, this is clearly at the more reasonable end of the spectrum.

But you make the assumption that anyone having their home repossessed would automatically become homeless and a burden on the State, as if there is no middle ground.

Someone who is living in a home that they cannot afford should do what everyone else does - move to somewhere they can afford. That might mean a smaller house, a different postcode, rental rather than ownership, or even, in some cases, moving back in with the folks for a while.

Every cent written off is coming out of someone else's pocket, so write-offs shouldn't leave people in houses that they couldn't afford if they lived within their means.

Originally Posted by ivnryn

I can see that protecting the family home in bankruptcy is reasonable as a general principle for other debts (3 million is pretty insanely high, maybe 2X the average home price would be reasonable).

However, the whole point of a mortgage is that it is secured on the family home. If you allow people to declare bankruptcy and keep the house, then there would be no point in ever giving out mortgages.

Tell that to politicians looking for votes in the next election. The number of home owners in distress is a big multiple of those seeking a mortgage and the latter won't make the connection between bankruptcy relief and a drying up of mortgage credit.

Originally Posted by human 19

An interesting point from the article. I would be interested i knowing how true it is

"Cynics could be forgiven for concluding that a sizeable number of our politicians must have run up debts of millions of euro during the boom and are putting in a high threshold to cover their own speculative losses. It is striking that far from objecting to the €3 million threshold the pressure from backbench TDs was to raise and not lower the limit."

Backbench TDs without responsibility for governing tend to sacrifice taxpayers to vested interests and populist auction politics.

Originally Posted by cabledude

Another angle to this.

Why insist on the recipient of a mortgage writedown leaving the house?

Now bear with me for a moment.

Suppose there is a couple with a couple of kids living in an area they like. Kids settled in school. Parents settled in the community sports clubs etc. The house was bought in the boom. Equity from previous home put into current home and a mortgage obtained for the balance. Both earning good money when house purchased. They didn't want to be property 'flippers'. They thought long and hard about where they were going to buy after looking into schools clubs etc.

Now the recession comes along through no fault of this couple. The banks and bondholders are guaranteed leading to a massive depression in economic activity in Ireland leading to himself/herself loosing their job. Again, not their fault. They make adjustments to their lives. No more holidays. No more changing cars every second year. Cut back on eating out and socialising. They even got rid of Sky and pared back to the bone on phone bills and utility bills.

I think you'd all agree that this couple have not really put a foot wrong here. They have not been reckless. Now their new reality is that the bank want to turf them out of the house because they can no longer meet the full mortgage payment. They can meet the interest and a little more but not the full amount. So the bank pulls the plug. IN a scenario such as this I feel it would be perfectly acceptable for the bank to get 3 seperate independent valuations put on the home. Average the three and settle on a current value. Now, write off the balance with the proviso that if the house is sold within 10 years the profit should go towards paying back the amount written down.

I don't see any point in kicking the homeowners out, writing off the debt anyway and having the state pick up the tab for housing the family in local authority housing. Common sense would go a long way in this whole affair.

Postscript : This would be a one off exercise only for family homes bought between 2003 and 2007 so future problems are not associated.

Everybody would look for a writedown and it would take the wisdom of Solomon to tell who was deserving.

I really don't understand why we have to constantly look for a mad, cack-handed 'Irish solution to an Irish problem.'

The UK bankruptcy laws are perfectly reasonable and have stood the test of time. They are certainly fair to debtors, which is why the likes of Ivan Yates have moved over there. Why not just copy those?

Anyone with overwhelming debt loses everything, including their home, but they get to start over in 12-18 months debt-free and with a clean slate.

This idea of trying to figure out who is entitled to a 10% write-off and who should get 15% just seems unworkable to me.