Why not make a bank’s veto backfire on them?

There are two views that have been mentioned recently, one is that bankruptcy should have a reduced term to 1 year and the second is that banks have a veto on insolvency deals.

Perhaps the best way to resolve the issue isn’t to make bankruptcy one year for everybody, but rather to make it one year when and where a bank has rejected an insolvency solution put forward by a personal insolvency practitioner.

This would mean their decision to veto has a negative impact upon them, there are consequences to rejecting genuine offers. Obviously this would require some tweaking because individual cases and circumstances can become quite complex, but it would certainly help a creditor to sharpen their mind if they knew that a refusal could then have worse outcomes without affecting their contractual rights.

The good thing about this is that it would also channel more people into the proper route for dealing with debt (the official regulated insolvency one) and keep them out of what will probably become a scandal some day in the future (the informal channel …

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TV3: Tonight with Ivan Yates on the Mortgage Report of the Finance Committee

We were happy to take part in the Tonight show on TV3, we looked at some of the issues that politicians and regulators can generally get vocal about.

The issues of social housing failure and keeping people with wealth in houses were two main points, as well as that of the unfairness of people who borrow getting access to social housing ahead of the people who were poor all along.

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How bad did we manage the mortgage crisis? Pretty bad, here’s Cormac Lucey on it

Cormac Lucey looked at the deplorable state of how we managed the mortgage crisis in the Sunday Times, the clippings are below.

The piece talks about the countless regulatory failures we have endured, and that we did this despite knowing there were better options available.

When you make it nigh impossible to do the right things, it’s no surprise that you get the wrong outcomes.

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Lickety split-mortgages: are they really a solution? #splitfail

The calls for ‘more split mortgages’ are commonplace, what is often lacking is a deeper understanding of the flaws inherent. For instance, why was there any outcry at banks charging interest on the warehoused portion? Failure to do so is an effective write-down and cash flow loss.

That isn’t to say banks shouldn’t get both, but don’t dress it up in the flowery language of ‘split mortgages’, instead just say ‘we believe in write downs and cash flow losses’. Take an example where a bank doesn’t charge interest for 25 years on a €100,000 warehoused portion of a mortgage where a total of €300,000 is owed.

Assume a discount rate (we’ll side with ECB being able to do their job [mistake]) of 2%. The present value is = 1/(1+r)^n this is where ‘r’ is the rate and ‘n’ is the compounding periods. The reason for doing this is to give an idea of what the €100,000 would be worth in the future if there was no interest and inflation never went over 2%, the …

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Davenport after Dark on Newstalk: Karl Deeter on mortgage repossessions 1st August 2013

We were asked to speak to Fionn Davenport & Kieran Cuddihy on Davenport After Dark about the changes in the Land Conveyance Law Reform Act 2013 which may result in more repossessions in the future, we agree with this view, the question is what [glossary id=’6898′ slug=’mortgage’ /] holders will be targeted first?

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The mortgage crisis

We were asked to speak at the Fianna Fail ard fheis in a panel on the mortgage crisis, our contribution was as an independent opinion on the topic, we were there with other independent experts to give context to the crisis which was a focus in the event. We would stress that in the arena of financial advice that politics doesn’t come into it and that while members of our firm exercise their right to vote, we don’t align ourselves with any particular party.

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2008: When banks independently all decided to make a similar decision

This week five years ago is when independent mortgage advisors were in the middle of getting some harsh news, some lenders were pulling out of the market completely, others were informing us of 50% cuts to procurement fees.

Fair or unfair? In light of things like Croke Park it would be seen as totally unfair, you’d never get any other industry that takes a 50% hit like this as fast (and then there is the separate issue of lending dropping 95% on top of the 50% reduction).

Brokerage has already been down the path the public sector are on. I recall sitting across the table from PTsb chief David Guinane who in late 2007 called in the broker bodies and informed them that they were getting a reduction that they might not be happy about, but that this was not something we could negotiate.

There was talk in brokerage of boycotting both them and Irish Life in return, and while we were still debating about what to do all of the other …

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A strange contradiction, making a problem then complaining about it…

At the Central Bank conference on distressed property markets yesterday there was an excellent line up of speakers, the event was launched by the Governor who said that ‘Household financial distress is at unprecedented levels in Ireland as can be seen, for example, from the extraordinary rates of arrears on the servicing even of mortgages secured on owner-occupied homes‘.

That line is the one that made headlines, it was designed (intentionally or not) to make a point which various regulators keep making – that banks are not dealing with this problem.

So all we get from this is that mortgage arrears have miraculously gone to ‘extraordinary levels’ somehow and somebody needs to fix that… The justified rage being that we pre-capitalized the banks (recapitalizing would have necessitated the capital being used first not held to the bitter end) to the tune of €64bn.

Matthew Elderfield said it in March of last year, ‘time to face up to reality’. This was echoed in a talk given to the …

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The end of Wall Street

This is an insightful look into the financial crisis, looking at it from the view of how mass borrowing for residential real estate lead to a bubble, the political input into the causes as well as the packaging of these loans and how it ultimately lead to the closure of Bear Stearns and Lehman Brothers.

This is a great video set, surprisingly the Wall Street Journal are the makers of it, you don’t see that kind of departure from vested interests very often.

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