1. Eamonn Moran

    “Thus we have the NAMA input; but where does this money come from?

    Quite simply it comes from nowhere.”

    So the state/citizens are giving Nama banking powers? i.e. the power to loan money into existence.

    Also they are taking on some of the risk of the mortgage from the bank and are happy to take a disproportional slice of the risk.

    So the way I see it the state is allowing nama to create credit and may then have to reimburse some of this if the mortgages fall into difficulty.

    One huge downside I see is that people will be asked to purchase at “normal” market rates but if the mortgage holder cannot repay then the property will have to be sold at receivership (allsop) rates. These are already at least 20% below “normal” rates.

    Private banks will have a smaller risk than normal as the state subsidises their exposure.

    So it becomes a national gamble on whether any of the people given loans will default. This will depend on them being able to get the levels of rental income they hope from the properties which is not at all certain.
    If they don’t default everything will be great.
    But if they do the state will be facing even larger banking losses.

    Someone needs to grant the NTMA a gambling licence.

  2. idij

    In your example what NAMA are saying is, even though the house is only worth your deposit plus what the bank is willing to lend (140k), if that, we, being the generous souls that we are, we’ll charge you 42% more (100* 60/140 = 42%) + interest.

    It’s a complete ripoff if you ask me.

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