Talking with a strategic defaulter…

That strategic defaulters do or don’t is just a sideshow about quantifying their numbers, for several years we have been dealing with them on the advisory side of our company. Banks have large legal departments and teams chasing borrowers, and in turn the borrowers will from time to time hire their own professionals as a counterweight to the process, what you are about to read isn’t intended as justification, ethical reasoning or anything else, it’s just an insight into the thoughts of a strategic defaulter, why they did it and what has happened so far.

The person in question is a white collar professional and the director of a relatively well known company, she agreed to speak to us on the basis that we kept her identity private. She has a family home and six investment properties.

Karl: Did you make a concious decision to default on your loans? If so why?

Yes, because the bank were insisting I go on interest and capital repayments on the investment properties and the figures just wouldn’t add up so I chose to …

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Repossessions in numbers: Ireland vs the UK

When we hear that ‘we have a low level of repossessions’ it is comparatively true. It may be devastating for the people affected (as are things like cancer, the death of a loved one or any other tragic event), but it is still a relatively low number when you look at the empirical facts.

Here is a graph showing the number of repossessions in Ireland vs the UK per 100,000 mortgages. This base is better to use due to population differences. And while it may have inherent skews due to borrower/lender profiles and the like, it doesn’t explain away all of the variation.

Out of the the total population of 4.49m people there are about 750,000 mortgages (covering 1.6m households). This means that fewer than 50% of households even have a mortgage on them at all. At least every second home can’t have a ‘mortgage’ problem for this reason.

We do have a mortgage crisis, it has been building for a number of years, but to think that this is …

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