Every little helps (except when it means mortgages)

Tesco won’t be offering mortgages in Ireland despite rolling out a full host of financial services, this is also a departure from the UK proposition in which they are included, something we covered nearly four years ago.

Bothered? Maybe not, but you should be because any market with a functional duopoly is unhealthy, we saw for instance how AIB increased their rates and for 2 or 3 hours their prices were the same as BOI, but then BOI co-incidentally increased their rates by 25 basis points on the same day so the pricing difference occurred once again.

Why would Tesco decide not to enter the Irish market? They claim it’s regulation, one doesn’t need a Professional Diploma in Compliance to realise that much of our regulation is identical to the UK and in foundation is primarily based upon it, …

Read More

Talking through my hat

In Saturday’s Independent Laura Noonan covered mortgage arrears (it wasn’t Charlie Weston – one commenter mentioned him and we had to delete it for obvious reasons). I’ll refer back to the table below a few times in the blog

OFFICIAL figures on the “mortgage crisis” overstate the number of households in real trouble – and lack key insights into how deep the problem really is.

An investigation by the Irish Independent has revealed the Central Bank’s figures include several types of borrowers who are no longer in trouble.

A large number of senior bankers right across the industry who spoke to the Irish Independent now insist the situation is improving.

The latest statistics, however, indicate that 77,630 households are at least three months behind on payments.

But these figures include: – Those who missed payments long ago and have since resumed paying normally.

Why don’t the banks make this information public then? And when the say ‘repaying normally’ …

Read More

A handbag of recent thoughts…

In the Irish Times, Isabel Morton echoes some thoughts that I also have, that the property market represents a good opportunity at present, there are considerations though – namely to look for non-apartment second hand properties within the M50.

Last night I got to help launch the ‘Irish Property Buyer’s Handbook 2012‘, the second edition which was written by Carol Tallon [disclosure: the lowlight is my chapter on mortgages]. Minister of State for Housing and Planning Jan O’Sullivan was the guest of honour. It went well, and I think the book will be a success amongst prospective buyers because it really is a great piece of work on the practical aspects of buying property.

Phil Hogan is looking for some new thoughts on how to avoid a repeat of Priory Hall, the idea being ‘compulsory certificates‘ by architects. This seems like a great idea in soundbite format, …

Read More

Is getting a debt writedown a gift? Would you have to pay tax on it?

The US model of ‘short sales’ has a hidden sting in it that often gets lost in the noise, namely that the reduction of your debt is often considered a gain and it needs to be reported on your IRS Form 1099 (as opposed to a W2 or 1040) which covers income outside of wages/salaries/gratuities.

Which means that if you sold your property (we’re assuming it is in negative equity) for a €50,000 loss and the bank write that off, that in effect you have a non deductible loss which you didn’t pay and therefore you pay the tax on it (their equivalent of capital gains).

Like the US, Irish investors can offset capital losses against capital gains, in the case of your own home this doesn’t apply. In the American example a write-down creates a tax liability, although not in every state (my home-state of California being an example). This was becoming such a problem that the IRS brought out two special tax codes called ‘The mortgage forgiveness debt relief act …

Read More

Zombie Banks acting like Zombies

I wrote a piece in today’s Irish Sun about our banks and that the state owned operations are showing a decided lack of inventiveness when it comes to helping existing borrowers.

This may be down to disincentives, issues with management or the Department of Finance, but suffice to say, it doesn’t make sense that non-state owned banks and foreign banks are innovating in potentially beneficial ways for their customers and the banks we paid to save are not.

Read More

Investor defaults and ‘receivers of rent’

Today Bank of Ireland chief Richie Boucher spoke about strategic defaulters, the wording used was different, he spoke about tendencies to engage in “a diversion of rental income that should be coming to the bank”.

Who will the receivers be? I suspect it will be some of the well known estate agents who I know are in talks with other banks on the same basis. The ‘receiver of rent’ clause in many mortgage contracts is often unenforced. The ability to obtain it is not generally contested but it still requires a court order and then the operational difficulty of getting to the property to explain this to the tenant and then taking over the collection of the rent.

Why has the level of arrears spiked in the investment pool of business? Theories abound, my own (which makes me vastly unpopular) is that it is down to making a business decision in favour of oneself. However, getting a rent receiver is not a ‘fix’ and I think Bank of Ireland will …

Read More

Allsops Auctions are back – This March

We spoke to Brian O’Donovan from TV3 News about the upcoming Allsop/Space auction in March. One property is listed at €7,500. Even if you priced the land at zero or used construction costs this property is undervalued because the actual materials that go into building it would cost more to purchase.

Obviously the idea of ‘value’ isn’t just about materials, it’s also about utility and for that reason the materials assembled (construction) in a certain location may make them somewhat worthless, but it is an interesting development to note.

Read More