Barmiest Loon wrote:
another "performing" mortgage along with the hundreds of thousands of other "performing" mortgages.
The Irish banking system is rock solid.
indeed. surely the next big problem is these mortgages expiring - i.e I/O ten year tracker mortgages handed out in 06/07. They were relatively common in the jumbo mortgage market.
i know of a few characters who borrowed €2m+ I/O expiring this year. No chance of making capital repayments, houses still in deep negative equity.
any ideas how the banks are likely to handle these?
Under IFRS 9, they Banks will have to take the full loss in their P&L from 2018 onwards.
Option 1 - Banks sell loans to third-parties who pursue debtors aggressively to get a return on their assets
Howls of protests from the media on vulture funds benefitting from buying assets cheaply and then treating the poor Irish people like some bewhiskered Victorian villain landlord
Defaulters squatting outside their repossessed houses in Lidl tents
Gerry Beades and the rest of the New Land League occupying these bog-standard houses
Option 2 - Banks extend debt forgiveness to debtors
Howls of protest that the Banks are supporting the rich
Option 3 - Banks try to repossess the properties using the Irish legal process
Idiotic public comments from Ed Honahan
Numerous court hearings and delays and associated costs
Protests about Banks repossessing properties and sympathetic media profiles of the poor property owners
One of the many reasons for the current state of the residential property market is the failure to repossess and force the hand of the strategic defaulters. This lack of liquidity and associated moral hazard is affecting all of us.