The Criteria Crunch

We have just been informed that one the lenders we deal with are only getting through applications received by the 4th of March, that is a near 20 day delay on new applications they are considering. Why the backlog? Has the market suddenly recovered? Are they being flooded?

No, rather it is a case that in banks nearly everybody has been enlisted to work in ‘collections’ and the staff were taken from every other department, in particular the ‘new business’ section. The bank we are talking about today merged their direct channel with brokerage so even going via a branch makes no difference, the whole company has only four working underwriters.

So inasmuch as the credit explosion saw too many resources being thrown at lending and the expansion of same, the crunch is doing the exact opposite by overshooting the mark in the reduction of resources. For a publicly quoted bank to be 20 days behind means that the market is facing yet another hurdle in reaching its rational level. Lending hasn’t frozen, people are …

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The 'Rich Man' died a 'Pauper'… LTV's and Life Cover

There is a risk creeping into the lives of many that they are not aware of, one that every generation has continually faced and also one that is the greatest wealth destroyer of all, namely death and debt. Nothing kills wealth quicker than death and in particular in circumstances where the estate is not settled correctly in advance or where there are large debts that were not covered.

Every person I know is bulletproof in theory but corporeal in practice and that means that many of us have risks that we are not covering, you can’t cover 100% of the bases 100% of the time but some do need to be covered and it doesn’t have to be rocket science.

How did the rich man die a pauper? We’ll take an example of a person with a home and two RIP’s (residential investment properties), We’ll say that the lady of the house is a solicitor earning €120,000 a year her name is Jane Doe, and the man of …

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The ‘Rich Man’ died a ‘Pauper’… LTV’s and Life Cover

There is a risk creeping into the lives of many that they are not aware of, one that every generation has continually faced and also one that is the greatest wealth destroyer of all, namely death and debt. Nothing kills wealth quicker than death and in particular in circumstances where the estate is not settled correctly in advance or where there are large debts that were not covered.

Every person I know is bulletproof in theory but corporeal in practice and that means that many of us have risks that we are not covering, you can’t cover 100% of the bases 100% of the time but some do need to be covered and it doesn’t have to be rocket science.

How did the rich man die a pauper? We’ll take an example of a person with a home and two RIP’s (residential investment properties), We’ll say that the lady of the house is a solicitor earning €120,000 a year her name is Jane Doe, and the man of …

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Banks: give you an umberella when its sunny and take it back when it rains

Samuel Clemens (aka Tom Sawyer) brought us the quote which is the title of this post, ‘banks give you an umbrella when its sunny out and take it back when it rains’, his simply worded expression held as true in Missouri of the late 1800’s as it does today.

Recently we had a client who is on an interest only mortgage, their circumstances have changed right when their interest only period was about to run out, naturally we suggested that they ask for a continuance of an interest only period, while this won’t work down the capital amount owed it will keep their cash flow alive and if you have to chose between owing more and being unable to pay then the former is preferable. Sitting in a pot might not sound great but it beats the raw fire.

The bank were happy to comply and they sent out a letter, it was at this …

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Valuations in property are currently meaningless

Free markets, or indeed markets in general, have a tendency to set prices, not through control, not by one person holding up a placard and shouting from the rooftops, but rather through the process of prices reaching a point at where they occur, where demand and supply are reacting with each other.

So if you look for €3 million for a three bed semi in Donnycarney your property will not sell, no matter how much you want it to. At the same time, if you were to list a property there for €50,000 it would sell overnight, and both of these extremes demonstrate a pricing being totally out of balance with the market. The interesting point now though is this: The market itself doesn’t know what is happening, so valuations are currently meaningless. By that I mean the people who go out and value property are not able to make accurate assumptions about property prices in this market, we are seeing this daily, and then dealing with the end result which is …

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Why wasting the talent of 400,000 people is a mistake

With unemployment expected to reach 400,000 it tells you one thing instantly: among the group you will have a cross sector encompassing every facet of society. Scientists, builders, finance workers, bus drivers, fast food employees et al will stand shoulder to shoulder in the dole queue, likely with little or no interaction because, quite frankly, unless you’ve signed on before then you know not the frustrating depression that comes with it.

So what could we do? Does it even make sense to allow such a waste of talent? If we have a state that pumping money into the system so that we can be saved from ourselves then should this extend into how we think about welfare? I would say the answer is yes.

There are many people who have lost jobs who probably didn’t love what they did to begin with, obviously they love it more than the dole but if this is the case then why not use this juncture to help them pursue something that …

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Forensic Underwriting, when is it ‘too much’?

Lenders will underwrite loans. That is part of the process, it is a natural and normal occurrence in finance, to underwrite, to ensure that you are researching the proposed deal to the extent that you can be sure that you are not taking a pointless risk, but when is it ‘too much’?

Traditionally an employee would be asked to give several forms of documentation as evidence of their position so that they could be considered for a loan. Normally this would have been a straight forward process, and one that generally works.

However, as of late we are seeing ‘forensic underwriting’ becoming more prevalent. The degree to which a lender wants to delve into a persons situation is rising beyond the traditional norms and in some cases we believe it is going well beyond the call of duty.

Let’s be frank, we need banks, who else will lend money to a stranger to buy an asset? Without banks it would only occur between people who have a lot of money personally …

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Forensic Underwriting, when is it 'too much'?

Lenders will underwrite loans. That is part of the process, it is a natural and normal occurrence in finance, to underwrite, to ensure that you are researching the proposed deal to the extent that you can be sure that you are not taking a pointless risk, but when is it ‘too much’?

Traditionally an employee would be asked to give several forms of documentation as evidence of their position so that they could be considered for a loan. Normally this would have been a straight forward process, and one that generally works.

However, as of late we are seeing ‘forensic underwriting’ becoming more prevalent. The degree to which a lender wants to delve into a persons situation is rising beyond the traditional norms and in some cases we believe it is going well beyond the call of duty.

Let’s be frank, we need banks, who else will lend money to a stranger to buy an asset? Without banks it would only occur between people who have a lot of money personally …

Read More