I agree with you, however there needs to be transparency built into this process. There will be strategic defaulters, its not acceptable and there needs to be strong policy to safe guard against same. For every one of these strategic defaulters the tax payer will pay and there will be less money for those who really need the help.

@ Andrew, even a basic financial analysis of income and expenditure, as well as assets, will screen out those who may decide to default so as to get mortgage debt reduction. I agree that there should be rigorous and effective policies to distinguish between those in genuine need and those are able to afford to repay.

It is important that we don’t make paper tigers to distract us from the reality and scale of the current crisis.

This “strategic default” is not a moral issue – It’s basically business.
If you’re in huge negative equity, then it’s a fair tactic, imo. Do you reckon the banks would do any different themselves if they would gain significantly? – look at how they are trying to sneak people off trackers.

@ Gordon, in so far as there is a moral dimension at all, it was the massive and reckless over lending by the banks which caused residential property price hyper inflation.

My primary concern is with those who are unable to repay their mortgages in full or at all. This is a huge crisis. It’s full scale and depth are not yet fully evident.

On the second aspect, negative equity and people repaying large mortgages on properties which are diminishing in value, these people were the victims of a massive Ponzi scheme in the first place. Your point as to what the Banks would do if the banks were in this predicament is well made.

I have not yet met a strategic defaulter but I could see this phenomenon as more likely to occur with buy to lets. People tend to want to improve the prospects of remaining in their homes and to pay as much of their mortgage repayments as they can even if rationally speaking, they might be better off abandoning their homes and escaping abroad.

Whatever one’s view on this, whether pro bank or pro borrower, the banks will need a second bail out. The banks have a massive mortgage impairment hole in their balance sheets which hole is not yet fully revealed. The second shock wave is on the way.

Well said.

Agreed…it should be easy to weed out these strategic defaulters / cheats / chancers/ criminals / spongers !!!

but how are they cheats? they are just making a logical decision based on the best financial practise i.e. make as much as you can and hold onto it for as long as you can, isn’t that how capitalism works? so its ok for the banks to use capitalist tactics on their debtors but its cheating when the debtor returns the favour? banks regularly write off loans for each other, its like a great post i seen on the cyprus thread ‘socialism for the rich, capitalism for the poor’

Barry, “without a doubt”! I suppose that you would not be the first to need no evidence to support a proposition of factual certainty.

So peter are you taking the opposite position you are saying there are definitely none??

If so, I think most would agree that “Without a doubt there is a percentage” is much more likely than “without a doubt there are none.”

In the absence of hard data, reasonable speculation is all one has.

@ Paul, I cannot say “without a doubt” what the position is one way or another. Using Occam’s Razor, and relying on those with real experience, such as FLAC, I can express a reasonable degree of confidence in what is the most likely cause of mortgage arrears. The most likely cause is reduced income inadequate to meet the mortgage repayments. Inability rather than unwillingness to repay seems more likely to me.

I cannot with absolute certainty exclude the possibility that there may be some strategic default but the onus of proof lies on those who assert that it exists to locate empirical support for the proposition.

There is data to support inability to repay. There is no data at all to support unwillingness to pay. I prefer to look at the more probable and straightforward explanations.

We probably agree that can’t pay is the norm.

Won’t pay exists. It’s not a wild card flying spaghetti monster theory.

The question is : what level of wont pay is acceptable to those who will foot the bill and will the proposed system detect it.

@ Paul, strategic default is an unproven hypothesis. Since no abatement or attenuation currently exists or is proposed, I continue to consider it improbable and implausible. There is always the potential for outliers but allowing uncertain outliers to dictate remedial policy is never a sensible approach to social problems or legal problems.

We need to focus on the reality of the problem. If a few opportunists seek to exploit the situation, they can be screened out. The important thing is not to let the fear of a possible abuse prevent or inhibit effective solutions.

I am an old man and experience has taught me that a sceptical evidence based approach and rigorous reasoning deliver the best results.

Even looked at from an anecdotal perspective, no one seems to have encountered a real living strategic defaulter. So far they seem to be elusive. They may emerge when actual debt attenuation measures are introduced.

Never build a policy on exceptional cases. Opponents of mortgage debt alleviation measures are prone to talk about Shane Filan’s 3 million euro house and landlords with 20 apartments but I think that we need to look at the more typical and representative cases. There is a lot of unanalysed data in the banks but what is known so far shows that it is a problem of too little income and too much loan.

Very well written

You need to deduct rent, or live with your Ma.

Thanks Dermot.
Highlights the importance of defaulting. :)

no probs Gordon and the logic if I may say so!
Get your point emily but I was making the point as if someone had bought a house during the boom, took one look at the system as being crooked , didn’t pay their mortgage and just saved their mortgage instead !
They would now be in a position to move into a debt free house and the bank would be left with the old house plus they wouldn’t have to hire a solicitor to do a will etc. etc.

@ little red thumb boy, only genuinely distressed home owners will likely get any relief. The tricky situation will be those who had to rent out their homes and rent elsewhere for whatever reason.

Peter.
Surely it’s not that straight forward.
If the banks determine that they’ll make more money from giving someone relief, than that’s what they will do.

@ Gordon Lucas, it would be expected that any bank would take a sensible cost benefit analysis and see in each case what delivers back the best deal. I don’t think that the banks have yet managed to develop that outlook. The bank personnel are reluctant to allow a short term hit to the balance sheet by writing off significant debt but hopefully a more pragmatic view will soon develop. Better a half a loaf than no loaf but banks can be surprisingly lacking in hard headed pragmatism in these situations. That can lead to even higher losses.

I hope that you are proven right.

At the moment the political emphasis and drive is on home owner mortgage relief but in due course that may extend out to investment property and buy to lets.

Hold on, let me get out my thesaurus…

@ ADEBAYO, chuckling. I will try to do better. Prof. O’Connor is b**sh**ing.

Ha :) , good point all the same pal.

Who’s prof oconnor btw? I’m a bit slow today

@ ADEBAYO, I had to give you a green thumb when I read your comment! Good communication is simple communication. Thanks.

Hahahahah I’ll take anything goin mate

@ ADEBAYO, you certainly are not slow. I should have referred to Professor Gregory Connor of Maynooth who said that strategic mortgage default in Ireland is likely greater than 35%.

Those who have experience of actually handling mortgage default, FLAC, New Beginning and the Irish Mortgage Holders Association say that they have not found any real evidence of mortgage default.

At the same time, I can understand why many people would prefer to think that many people can afford their mortgages and prefer not to pay in the hope of qualifying relief.

You’re right man, mortgage situation is frightening. So many people Savin face who are 10% away from bein the wrong end of the monthly budget. Saving? Nobody can save, it’s survival mode and property tax will tip the edge, strap yourself in

But we are tough

Adebaaaaaaayooooooo!

On a far more serious note Mr. Flynn: where did you get your headband ?

I don’t normally let people into ‘the real me’ but I’ll tell the truth.. I got it from a prostitute.

Those who get a right down will be the bigger mortgages ,
Personally the bank resuming responsibility for a percentage of the mortgage seems right,
May give future profits to the bank, but those people not paying dont get to own all their home ,
Future profits , of course , will mean , big bonus for our bankers for doing f… All

@ shay O’Reilly, I could see a case for proportionately less write down on larger mortgages on the trophy type houses. There may have to be a maximum ceiling. In addition any mortgage debt reduction would have to be conditional on sale of other major assets. It has to be reduction only in case of necessity.

I hate the idea of banks getting equity in homes and exploiting that equity in the future. If the banks improve at all, those in charge will be voracious in their demands for lavish bonuses. Banks ultimately are the true parasites but the technique of a successful parasite is not to kill the host that feeds it.

It surprises me that some people don’t seem fully to appreciate that it was the banks, not the borrowers, who were at fault.

Agree to the amendments mentioned,
It would be sickening if bankers ended up getting bonus as a result
But such is life ,

that’s where I saw it before , when I was on a trip to brussels no less!

That’s a great idea…..you first though.

o.k.

You had Brendan Burgess on RTE yesterday insinuating that
“loads of mortgage defaulters were living in massive mansions”
and
“that they were just not bothering to pay their mortgages”
And this guy runs the askaboutmoney website ???
Throwing low digs at distressed homeowners.
From a man who advertises bank products on his website?
Thousands have committed suicide due to the criminality of your bedfellows Mr Burgess.
Disgusting
Truly Disgusting!

Did you see his definition of democracy on V.B. ; It was a masterclass in how a mouth drowns in its own B.S.

and with the new plan, banks will try to sell this property cheaper to get rid of them, then we are facing more devalue on our property now. forcing myself to pay for €260 mortgage that is now valued at barely €200 lost 30,000 down and now facing to much more mark down? What is fair for me to do?

@ theantilooter, most distressed borrowers are so focused on keeping their homes that they don’t think about the aspect of repaying a large mortgage on an asset which is diminishing in value and will continue to diminish as the austerity and property measures take full effect. I can see a different psychology coming into play in the case of buy to lets.

Of course, people who bought residential from 2000 to 2007 bought in a false Ponzi like market, they were scammed. I am in a tiny minority in Ireland in the viewpoint that residential property is still over valued in Ireland and that it will continue to diminish in value. Having been well and truly scammed by the banks and their supporters, I can well understand that there is no moral dimension to defaulting in repayments to banks.

“Through no fault of their own…”?
Thats a slap in the face for those of us who made a conscious decision to limit our borrowing and buy a modest house (or indeed not to buy at all) when certain others were buying or building far in excess of their needs.

@ mattoid, you were astute and prudent. You were not taken in by the so called experts. You are now safe and secure. Respect and admiration. The victims were taken in and if they had a fault at all, it was to believe the politicians, media, professional advisers and bankers.

Distressed borrowers need help and it is smart to help them or the consequence will be social and economic exclusion as well as a long term recession.

The wise virgins argument sounds reasonable but it does not help towards a solution.

I commend Mr Richardson on his wise and practical comments. This artificial controversy is being organized to drive a wedge between various mortgage holders. Divide and conquer, as in the public service pay talks. If we, who ate hanging on by our fingernails, can be encouraged to attack each other, then the heat is off the REAL culprits/enemies. Solidarity is what these blackboard fear.

Crap predictive text!!! ‘ are’ and blackguards – not what appeared.

@ Sheik Yabouti, solidarity in the face of adversity is the best strategy of all and perhaps the only strategy for survival. We need to look after each other and not accept that any sector should be victimised. You express it exactly right. If we turn on each other, the blackguards, the culprits escape and the victims are further victimised.

I was lucky. Due to age, not special wisdom, I have only three years to run on my mortgage. I truly believe that others who bought since 2000 have been the victims of a dysfunctional property market which was driven by self interest and sectional interest. The victims deserve help and in helping hem we will avoid an ingrained and prolonged recession. Everyone can benefit, directly or indirectly, if we can manage to look beyond on our own self interest.

It really is about solidarity and thank you for drawing attention to this.

Many thanks for your kind comments. I am old. Eight years ago we finished paying our 25year mortgage and,thus, are not directly affected by ‘the mortgage crisis’. Nonetheless, my partner in life is now retired on a very small occupational pension, and I now work only part-time owing to health issues. I will have to work until I am 67 years old, I am advised, to earn my state pension after over forty Yeats of work . My employment was always too low paid to afford a private pension. Having now seen what has happened to people who worked hard and made prudent provision for themselves, I’m glad I couldn’t afford to do the same. I would feel so cheated. I find myself re-reading ‘The Ragged Trousered Philanthropists’, written in the last century and reflect on how little has changed. The power, wealth and perks of themasters are possible only by our acquiescence. Lech Walensa did it in Poland. Solidarity is the only answer. Resistence will NOT be futile, provided that a sufficient number resist.

@ Sheik Yahbouti, we are not far apart in age or in financial circumstance. I must read the “ragged Trousered Philanthropists. Most of us have been exploited and our Governments do little or nothing to protect us. The reality is that wealth is becoming concentrated in the hands of the super wealthy and the rest of society is being sucked dry. The robber barons are thriving and many people prefer to be concerned that a financially struggling and heavily indebted home borrower might receive some assistance.

The cost of not helping those with financial millstones around their necks is too expensive.

My old phone interprets my misspelling of mortgage debt as “morgue debt” . Perhaps it is not far from the truth.

Enjoying this debate. Watching, lurking,in the shadows…

Ah sure you’re far too good looking to lurk un-noticed!

It’s a cross I carry…

I warn you, it’s an old book about class struggle, which may not be to your taste :-) I suppose I’m just pee’d off at the nonsense and myth of the ‘social contract’ which my and other generations fell for. It’s a pretty one sided affair at this time.

@ Sheik, or it may be to my old fashioned tastes!

The notion of the social contract is a good and admirable one. It was a pity that the Government and the Regulators broke that contract. The people held to it. We have been sold out.

@ Chris Rudden, well said. The Banks got us into this disaster. They are unlikely to do the right thing voluntarily. They have to be instructed.

The banks cannot ever be trusted again. They destroyed this economy and have left us with a legacy of years of financial hardship and destroyed lives, not to mention forced emigration.

But can you blame them , if indeed they are, look what our glorious leaders are doing ;monkey see, monkey do!