Should NAMA provide mortgage support for homeowners?

Should NAMA provide mortgage support for homeowners?

Should NAMA provide a mortgage support plan for homeowners?

A new home-ownership support scheme that would help protect Irish families whose homes may be threatened by the downturn was proposed yesterday after the second stage of the NAMA legislation was passed on Wednesday night.

Eamon Gilmore said “The people who are having difficulty today in repaying their mortgages are those who had good jobs a year or … two ago and certainly at the time they took out the mortgage”. He added that “The ESRI has estimated that the banks had 35,000 householders ‘in their sights'”.

The home-owner support scheme would allow NAMA to take an equity share in a home after negotiating a write-down in the outstanding debt with the bank or mortgage provider.

The property owner would pay the lower debt and would also pay a rental fee to NAMA for the equity share. The householder would then have a choice at the end of the process to buy back the NAMA equity share or to share the sale price with NAMA if the property was sold.

Have your Say

  • Should NAMA provide a mortgage support plan for homeowners?
There are 47 comments for this article
  1. Sarah Emerson at 1:31 pm

    No, there should not be support. how do you differentiate between can’t pay and won’t pay.

  2. Al White at 11:41 am

    Is it not about time that we all stopped whinging and suggesting that the only way to solve our individual problems is by central government.NOBODY made anybody borrow excessive amounts of money ,it was THEIR choice , it is about time that everyone including public servants and trade unions who accepted largesse from Bertie Ahern began to take PERSONAL responsibilty!!!!!!!!!!!!!!!!!

  3. m juby at 1:27 pm

    hi, just have to comment on this reasoning of letting hard working homeowners go to the wall without help.I am English but settled in Ireland eighteen years ago with my wife,where we raised a family. I have been so happy to contribute to rebuilding this small country of yours, how beautiful it is.Ireland has endured hundreds of years of hardship,and has been kept down low as a country, only to get the chance during the last decade to improve its lot. It was not greed generally, but a desire to have a fair crack of the whip and to leave a legacy for its children. And its been the hard working people of this country that have rebuilt it and in many cases built their own homes.Yes ,I fully agree that hard working people now in trouble need help to stay in their homes. Would you really allow your people, and its children to suffer for decades to come ,and drown in a mountain of debt,only to look back in time and remember when people used to say, will we get another year out of it? Surely it was a desire for better times and to enjoy peace and not just greed. Fair play to the Irish homeowner,and its hard working people. Just think of what Ireland has done over the last ten years and be proud of her .

  4. Paul O’Neill at 10:17 am

    I have to agree wholeheartedly with Daniel Duggan “Only a person driven by short term personal greed and lacking in any concept of what is in the long term best interests of their children, grandchildren and the country in general wants high property prices.” That is every single person who has been fooled into buying a vastly overpriced house( 20-40%)over the previous 5 to 7 years and it is these very people who now want to be protected from themselves. What guarentee do we have that once we as taxpayers bail out these morons that they won’t do the same again in the few years time. Let the capital system work. Those that are going to the wall should be allowed to go. Think of Carroll group, they tried to blag their way out of the huge hole they dug for themselves but the court wasn’t having any of it. A different attiude by the Gov is needed. They are helping the survival of the unfittest!

    • geri at 6:16 pm

      I just saw your comment online about NAMA and agreeing with Daniel Duggan. I’m delighted you are both in fabulous economic positions.
      You want the people who can’t afford their mortgage repayments to “go to the wall” …. ?!?!
      I hope you’re in a job Paul, because it’s your taxes that will end up paying for them to be re-housed I’m sure, maybe even buy a council house next door, who knows what kind of stragglers you’d get, they might even rob you blind.

      Anyway, it’s not about short term personal greed. You will find that a few years ago, rental monthly prices exceeded mortgage monthly repayments, so alot of people were dupped, and yes maybe foolish to have made a purchase. No one wanted to pay an extra 20-40% increase on the price, but did it stop you buying a pint of milk or a gallon of petrol…. let me think, oh yeah ALL THE FRIGGIN PRICES WENT UP ! Woopie

  5. Daniel Duggan at 9:55 am

    James is spot on, NAMA is a scam designed to put an artificial floor under overpriced property but due to the gullibility of the Irish public it will become law. Only a person driven by short term personal greed and lacking in any concept of what is in the long term best interests of their children, grandchildren and the country in general wants high property prices.
    A house that rents for €1000 per month is probably worth about €100,000 in today’s market but will this come to pass?

  6. James at 2:39 pm

    NAMA is a scam, designed to put an artificial floor under decimated propetry market in the vain hope that our bailed out banks will lend after nama recapitalisation.
    Government policy is haphazard and our finance minister is being pulled in several directions by numerous vested interests which inevitably leads to incoherent policy.
    1. The government is being advised that a deflationary spiral is the only way for us to regain competiveness and then jobs. it says on the one hand that as an economy we must cut costs. On the other hand it espouses nama a vehicle designed to keep house prices artificially high and its success dependent on house prices rising in the near future.

    this is not joined up thinking as these two policys are cleary uncompatible.
    My fellow citizens I have come to the sobering realisation that this government hasnt got a clue and to even think that they will bring in effevtive measures to help out ordinary mortgage holders in nama is just wishful thinking.
    batten down the hatches this winter.

  7. grainne Koberl at 3:42 pm

    I think it is a great idea and would love to see it implemented. It is a win win situation. The banks are going to gain nothing by turfing someone out of their home as it is not worth what they paid for it anyway and they would not be able to sell it. They should work with us to pay back the money as best we can while allowing us to stay in our homes. Even if they only allowed the mortgage to be extended in term ie 40 – 50 years. A vacant house is no good for anybody…we all need to work together to get out of this mess and that is the young, the old, the wealthy and the not so wealthy. We are a small country so lets work together.

  8. lisa at 11:56 pm

    Fantastic

  9. Fitz at 12:40 pm

    Seems like a very sensible solution. Rather than just bailing out developers this would actually support homeowners!

  10. alison melia at 10:17 am

    Yes definetly!! It would save myself and my child getting kicked out of our home! My house is worth €70k less than what i paid for it 2 years ago and im in arrears, cant sell the house or afford the repayments. I would do anything to keep my house but to have reasonable repayments.

  11. Ian Aherne at 12:00 am

    We are becoming like a nanny state!!! The only way that NAMA should help a house owner is when if they cannot afford to pay their mortage then they should hand back the keys to the banks and the banks should swallow the difference after they sell. Alternativley, once the keys are handed back then the ex-owner should be allowed continue to live their and rent the property to service the remaining outstanding amount.

  12. Peadar at 1:43 pm

    Michael Baker makes good points and I think that there is strength in numbers and that getting political is the way to have an effect – we dont want to be like as lambs to the slaughter which is what we will be if nama does not work and there is no guarantee in its present proposed form that it will. This is a massive amount of money and it will be affecting generations to come. Part of nama should include a major forestry and fishereies development programmee in Ireland involving the banks making a committment in the long term. Fisheries and forstry are labour intensive so creating many jobs particularily in more rural and isolated areas and will develop and grow aritmethically if managed and developed by the right people – from the private sector.

  13. Peadar at 1:42 pm

    I agree with R.Butler and would reiterate that those who lose their homes will then have to be paid rent allowance etc.,
    I s there not one political leader in the country who can shake all the crony monkeys down out of their trees and make them face the music – one who will not reward them with bonuses, golden handshakes and cars etc etc etc.
    For a country with such a rebellious past history – where have all the rebels gone – its dreadful to see the level of politics in Ireland having descended to such low levels of self interest – there must be a steel leader out there somewhere ???

  14. gar at 11:16 am

    i couldn`t disagree with you ,paul o neill, more…. i have worked hard all my life, pondering the insanity of the boom ,and waited for it all to bust ,and i waited ,and i waited and yet all the house prices kept going aswell as my age (30) , never have i used credit in my life not even a car loan until i bought my house ,now i have a mortgage on a house whose value has seen a 40% drop ,so i feel that i should pay for other peoples greed is unfair, and some of ur comments hurtful.I have no problem financially paying my mortgage yet and have considered that just handing the house over to the banks as i feel i am just being ripped off.I don`t think i will have any trouble in paying my mortgage but if i do run into difficulty i would certainly like the idea of some help.

  15. Michael Baker at 8:50 am

    Is there anyone of you reading this in a position to set up a basic website?
    To collect signatures of those who agree with my proposal in the posting headed
    Hear no Evil see no Evil. There is strength in Numbers and everyone should have their say
    These can then be forwarded to the Government before a decision on NAMA is taken.
    Michael Baker

  16. Michael Baker at 8:50 am

    Hear no Evil see no Evil must have been the government policy and it hasn’t changed much yet.
    Something has to be done to get us out of this mess and perhaps NAMA is the answer.
    I am not educated enough to fully understand the implications of NAMA but I am wise enough to know that I am paying the bill for the actions of the three wise monkeys (the government). The Government were given every warning, including those from the EU and the ERSI who we pay to give advice and then ignore it. (Ask the three wise monkeys why)
    Let us stand together and bail out the country, there is no one else to do it. We can do it in the usual way like lambs to the slaughter led by the three wise monkeys (The Government) or we can demand that it is done on our terms.
    Terms to be added to NAMA
    • All mortgage holders should have their property devalued and the banks should share the loss in equity. I.e. if a property is now worth less than the loan, the bank should devalue the loan to eliminate negative equity.
    Why
    • This now puts the bank and the debtor in a realistic position and will remove the temptation for debtors to hand back their keys or default.
    • It also gives the banks realistic equity that can be realised in the case of default.
    • It is the mortgage holder who is paying for NAMA and is now in a better financial position to do so.
    • The property owner will now be in a realistic position to trade up helping the housing market to recover.
    • House sales equals more revenue for the state.
    • House sales equals more revenue for the banks.
    • The lowering of income tax can them be implemented
    • Lower mortgage payments and income tax means more spending in the high street.
    • More spending will boost the economy.
    Michael Baker

  17. Peadar at 8:48 am

    Why does the Government – those purpotedly runnung the country – not show the ability to communicate with the people of the country. Nobody seems to know exactly what is going on – what sums are involved and what the eventual outcome will be.
    I believe that anybody at risk of losing their home due to the adverse economic situation that has eveolved should be helped in a human way by a caring Government – if only we had one. Why not allow people to pay according to their means and increse when they can. If a family loses thier home then the state will end up paying rent allowance etc.,
    We dont have innovative and creative political thinkers – politice in ireland has becopme abysmal with lack of imagination creative innovation and leadership. I think if those who have lost or are at risk of losing their homes formed an organisation of solidarity and became political they would certainly gain the support of the general public especially those in the public sector. Why should anybody be at risk of losing their family homes when the banks and the carpetbaggers are the ones who created the problem in the first place.

  18. R Butler at 5:56 pm

    Yes Nama should help householders. What is the point of hundreds of reposessed houses flooding the market and falling into disrepair. Anyone who thinks giving the banks money will free up money for more mortgages is living in cloud cuckoo land

  19. Vincent Mockler at 12:06 am

    i definitely think that NAMA should protect the people whose houses are threatened with repossesion, as those people took out a mortgage in good faith when there was more money about and when there jobs were more secute.
    After all it would be nice to see the Government supporting the people for once who voted for them, rather than giving support to the more elite and wealthy in society.
    Thanks
    Vincent.

  20. paul at 10:35 pm

    No If we carry on with this Obama-style of making everybodys pain disappear it will prolong the the problems that have accurred we have accumulated too much debt it will not be solved by diverting debt on to everybody through bailouts.We need to learn lessons and not repeat the same mistakes property is not a one way bet booms dont end in soft landings bailouts prolong the recession not magically make it disappear were been told lies again by the same people politions and banks, economists, vested interests Hope we dont get fooled a second time by the same group

  21. Al White at 4:49 pm

    the answer is yes,if the builders and developers are not paying back the full amount they borrowed plus interest but are still living in grandiose palaces then the ordinary citizen in the average semi D should also benefit and the difference in negative equity and original cost should be written off to keep society fair

  22. Steph at 4:27 pm

    “people who are in difficulty through no fault of their own” may have known their houses were overpriced, could possibly even have been celebrating when the bank agreed to give them too much money to buy the overpriced home, but even expecting a downturn, which is inevitable, there is no way anyone expected the government to start dipping their hands in our pockets or that there would be job losses on such a large scale.
    Tax increases are one thing but tax increases, pension levy and more tax increases? They are extremely inventive when they want money from us but are a real shower of bumbling idiots when it comes to providing real services that we pay them for. Why did the government not see this coming when you and I could? I don’t think the taxpayer should have to pay for any of this mess (we used to be consumers now we are taxpayers!) but also the fact that the banks will be raking it in on the backs of all those who can still pay is extremely unfair. So if NAMA steps in and the banks end up getting less than they expected for all those 500k+ mortgages they happily sold off, and individuals are in a more comfortable situation whose can complain about that?

  23. sholly at 4:02 pm

    “people who in difficulty through no fault of their own”.

    The people who took on huge mortgages on overpriced property (everyone knew it was overpriced, prices in Dublin were more than Manhattan)were fully informed adults who should take responsiblity for their actions. When people buy shares that subsequently lose value they don’t expect the government to subsidise their loss, they took a risk and it didn’t pay off. Why should taxpayers like me who did not buy (even though they could have) have to rescue banks and property owners?

  24. Steve at 3:50 pm

    Yes,Nama should also have a mortgage support program incorporated into it.With Nama buying a share of the equity of the house,this will make it easier for the homeowner to pay the outstanding amount.Dr Dan McLoughlin,chief economist at Bank of Ireland today noted that our economy will likely grow in 2010.As the economy picks up steam,employment will go up along with house prices.This is a good idea which has government and the financial industry working together in unison so that they can make life easier for people.

  25. Rita at 2:54 pm

    Don’t like the sound of Nama being involved. Its literally out of the frying pan into the fire and you still will never own your own home

  26. Christopher Brennan at 2:37 pm

    First of all, to Daniel Duggan. Karma is a b#*ch. The attitude that you have for those that are in trouble really is despicable. Firstly, I do not know whether you rent or own, nor do I care, but if you have any knowledge on rentability of homes in the greater Dublin area you would know that rents on a single two bed home built on the side of a four bed house by the landlord in the Palmerstown area of Dublin three years ago was over 1,000 euro a month. Mortgage on the four bed house alone would be less than 850 a month. Therefore if you were able to keep your job and not suffer too much in terms of pay cuts the mortgage would be a better economic decision than paying excessive rates of rent that year on year only go UP!

    Secondly NAMA shouldn’t only just take over a simple equity share. It should ensure that the householder is paying whatever they can and never be evicted even if they are paying a substantial fee less for a period of a few months. The whole Government purpose of NAMA is to buy bad loans from the Banks to free up money that can (supposedly) be lent to companies in trouble to keep them afloat and to stave off more unemployment while as a consequence keep the economy bouyant that property prices do not fall any lower than they have and eventually have the property prices come as near to their 2005-2007 highs so that they could be sold off at a profit. If 35,000 people are evicted from their homes there’s another 35,000 vacant homes that no-one in this country is able to afford. Put that with the expected 12,000 homes that will be built this year you will have 47,000 vacant homes on those figures, nevermind the thousands of houses that are lying idle now at this moment. What you have is a gaping hole in the public finances as no-one will buy at boom prices and those that are evicted will only be pulling at the state coffers for unemployment benefits and rent relief while NAMA eventually sell off these assets at a substantial LOSS. If the government can find so much of our money to bail out the rich, surely they can find out enough of our money to bail out our poor. And Mr. Duggan, we’d be poor either way whether it was excessive rents or excessive purchase prices anyway but at least if you were able to pay off a mortgage in full in your lifetime you wouldn’t worry about being an old age pensioner being kicked into a nursing home costing the state over 1500 euro a week because your old age pension doesn’t cover the thousands of euro you would have to pay in rent. Whichever political party dresses up in green, feather in cap and bow in hand in the next election, they’ll get my preference over the Versacé suited yes men of Fianna Fail (and co-incedentally the “Greens”).

    • Ger Murphy at 6:04 pm

      Well said Christopher – I was just thinking that myself -(re:Daniel Duggan’s comment, and a couple others above too).

      I too hope that DD gets whats coming for his blatant disregard for his fellow country men & women. Maybe he’s fiddled his way through the boom and sitting on a nice little nest egg of euros.

      I purchased the house purely based on the fact that rentals were exceeding the monthly mortgage repayments, so it made sense at the time. I dont feel self pity (as DD suggests), but would like to know where does he suggest we “go” to get ouselves out of this pickle – maybe he can offer me a few hours in charm class 🙂

  27. Karen at 2:09 pm

    Tony just summed it up there.It is the average man and woman on the street who built this state and yes they are now being thrown on the scrap heap.I have no difficulty paying my mortgage right now but this could change in the next couple of years,I will try everything if and when that happens.However if it came to the absolute crunch I would simply walk away and would have no hesitation in doing so.

  28. Dermot O’Flynn at 2:03 pm

    No.
    Nama is shaping up to be a bureaucratic collusus: impossible to shut down – rather like the Land Commission which lasted for most of the XX century!

    Keep its brief tight – and provide SUNSET legislation to wind it up by 2020 at the latest!

  29. Tony at 1:47 pm

    Hi There,

    yes i believe that any help that our so called elected officials and goverment can give to the ordinary goe public should be given ASAP i am totally fed up with this country as a whole but i know we deserve the government we voted etc… but we are a laughing stock of europe with the most corrupt politicians worse than any mafia boss and this is no joke.

    we need to get back to basics and help and support our own Irish people who built this state and are now been forgotten and left to rot.

  30. Anita at 1:43 pm

    Absolutely! NAMA should support those in the unfortunate position of not being able to meet their current mortgage commitments. After all, these are the very people and intuitions (the banks) that ran the country into this horrific debt and are now being bailed out by the ordinary people of Ireland. They are not being bailed out by property developers or high profile clients… The amoral actions of the banking community along with irresponsible and greed focused property development and an inefficient political system has returned Ireland to a Banana Republic which will take decades to recovery from. Anita

  31. Richard at 1:33 pm

    the financial crisis is a result of capitalism run wild with limited checks on the banks, builders and general boom-mongers over the last few years. a 10 year old knows capitalism is cyclical boom-bust, but our government apparently did not. they have a central bank ,contact with the ECB adn all the strings to control the economy. the lessons from history are there. prediciting the time and scale of the crash was impossible, but that it would happen was inevitable. Now the “fix”, NAMA should learn the lessons of history and involve some screwing of the banks by the government on our behalf, afterall they screw us. No mercy for the banks, who by the way own vast tracts of real estate (much of it prime in Dublin city centre) allready. Banks are a neccessary evil in capitalism and should be treated as such in this negotiation. They are not a benevolent society.

  32. Peter Mooney at 1:31 pm

    This reminds me of the similarly inane idea Fine Gael had to compensate Eircom shareholders whos values had dropped. This country is on it’s knees financially and the state is supposed to do this, plus have a “social dividend” as well. Let’s give the civil servants their 3% rise due as well, and stretch the national debt repayments out to 15 years, why not? There is such a thing as responsible opposition as well as responsible government, otherwise we will elect a different bunch of tools to stick their snouts in the same old trough.

    When we all come back to the same planet, the moratorium on banks taking back properties of people in distress needs to be extended – UNLESS NO EFFORT IS BEING MADE TO PAY BACK THE DEBT, we have enough freeloaders here in the Dail.

  33. Daniel Duggan at 1:26 pm

    No. NAMA should not compensate people rich or poor for their foolish investments. No one in Ireland was forced to buy a house. People could have done their maths, seen that they were about to pay a crazy price of say 50-years rent for a house, and rented instead. At the time of purchase many of those who now want the long suffering tax payer to now bail them out were boasting in the pub, at dinner parties and anywhere else they could of their “property investment portfolio” and how clever they were.
    As for people losing their job and not being able to afford the re-payments, sure that is bad luck, but go and find work wherever in the world it is available till the economy improves at home. Life is not always easy; if you are a real man you stop whinging get out there and solve your problems yourself.

  34. Andrew McDowell at 1:20 pm

    This is a Fine Gael proposal by Richard Bruton, not a Labour Party proposal.

    Andrew

  35. karl75 at 1:16 pm

    yes they should im in negative equity by quite alot even if i sold my house id still have alot to pay off so yeah we should be covered for the negative eqity to balance us out and not be in death for the rest of our lives

  36. Greg at 1:16 pm

    Anybody who has bought a house since 2004 is financially better off at this point simply handing the key back to the bank and walking away, and of course, as prices go down, this will broaden out to people who purchased in 2003, 2002, etc. As long as your debts are more than the value of your property, the banks have no economic incentive to take back the property. So they probably won’t, they will try to force you into an interest only mortgage arrangement, so that the homeowner rather than the bank carries the losses.

  37. Victor Hart at 1:04 pm

    No! NAMA is being created with the clear objective of clearing up the mess in the banks so as to allow credit for business and for future home ownership. The State cannot and should not act as a “Nanny” for those who foolish overspent and allow them a way out – perhaps to default at the taxpayers expense.

    NAMA, when established, should stick to the objectives set out already. Perhaps “Myhome.ie” should also stick to its core business, ie providing a service to buyers and sellers and stay away from politics.

    VH

  38. Steph at 12:56 pm

    Think of the amount of 300-500k mortgages taken out over the past 6-8 years, many of which [i]will[/i] be paid back to the banks for the next 30 years or so. They will be profiting from the property boom for a long time into the future. For the individuals who are in difficulty “at the moment” who’s to say they won’t be back on their feet in a year or two. I think any bank who goes ahead with mass repossessions is very shortsighted. Everything that can be done to help out people who in difficulty through no fault of their own, should be done. If this involves NAMA then so be it. Question though what if people decide not to buy back the equity off NAMA, I mean would it be beneficial at all to do this?

  39. Anne Cunningham at 12:54 pm

    Should we all start considering defaulting given that the euro we borrowed to spend on overinflated property prices is now worth an awful lot less? Remember it was the banks and valuers who caused the increase in prices by flooding the economy with easy credit? The true value of property is 50 % less now. Yet we are paying alot more. Are we mad?

  40. Paul O’Neill at 12:48 pm

    No way. The Banks are a business. They were found wanting in Moral issues as well as profiterring before the crash but we allowed them to do it. Likewise we can’t blame the politicans as we voted them in. We should just suck it up and allow those we gave a mandate to, to just get on with it, however they see fit. We Joe Public have to accept that we are to blame for the wanton grred that was allowed to run rife throught this little country of ours. Those that overpaid for the bricks and mortar should be thought a valuable lesson while those that didn’t get caught up in it should be allowed to pick over the bones of the crash. This is capitalism. But instead what we’re getting is anti-darwinism..The survival of the unfit! Get used to it. The polling station is your only chance to teach the a lesson. I will vote S.F. next time. Get a watch dog who’s not afraid to bite into Gov (as a partner)

  41. Padraig Yeates at 12:38 pm

    Eamon Gilmore’s proposal makes economic as well as social common sense. If banks practiced good accounting they would write down debts to their true value now rather than keep illusory figures on the books. Failure to face up to reality now will only lead to bigger losses later in repossessions and fire sales.

  42. Sean at 12:35 pm

    Not sure exactly how but yes. The banks are getting our money to bail them out from the results of their wreckless lending and, despite it being our money, they are still likely throw us out on our ear should we run into difficulties with them. I assume there’ll be some “verbal agreements” in relation to repossessions but, like Lisbon, these will soon be shown up as not worth the paper they are printed on.

  43. Declan de Monge at 12:35 pm

    Bought my house 2 years just before the crash, since then I had a 20 percent cut in my wages plus the 4 percent by Government.All I can do is pay my bills and eat anymore cuts and I will be in serious trouble so
    I think we should have protection as the banks are making more profits now than they were before the crash

  44. Greg at 12:33 pm

    I guess the question, “Should NAMA provide mortgage support for homeowners?” really amounts to, should NAMA, i.e. the state, be restricted to supporting the wealthy elite of this country, or should it be supporting ordinary people…

  45. Graham at 12:28 pm

    What if your home currently has no equity? as in most cases now, your home may be worth less than you mortgaged it for.

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