We don’t have recourse to the FSO, wholesale repossessions & other IBRC myths

The hype-machine is in full throttle on the sale of the former INBS loans. The fear being that some large evil hedge-fund is out there waiting to repossess homes in the thousands.

There may be such a fund headed by some unknown Dr. Evil, but chances are a hedge-fund is the best outcome for the IBRC mortgage holders.

While some of the points about who does and doesn’t fall under various regulations has been made here already, it is worth pointing out that several other factors must apply.

Firstly is that IBRC loans have no recourse to the FSO already, and loans in the IBRC cannot be changed outside of the original loan terms so people simply can’t get a solution while they are IBRC owned.

This is a problem common in other lenders such as Bank of Scotland who don’t exist here any more, only original loan terms can apply so apart from interest only there is no creativity for a mortgage resolution allowed.

Due to that …

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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, …

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Flouting planning laws…

In today’s Independent there is an article about Ray Grehan and his ‘flouting of planning laws’. Having been through the planning process a few times I can say that it is often a frustrating exercise in which you hold an asset (the site) but are directed regarding it’s use by a third party who has little to lose based upon their recommendations which often hinge upon opinion.

In Grehan’s case he flew in the face of the planners – something which is very common in one off housing (in fact, you’ll find that every profession involved in housing knows what you can and can’t get away with), with the usual follow up of ‘retention’ being the solution.

He did the same thing many others do, fight with the local council to get planning, then build something different and try to keep it. The ratio of retention granted to that of properties that are forced to get torn down to remain compliant? I don’t know the answer, what I do know of is a long …

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The Second Wave: How Development loans were banked and RIP’s

The fact that NAMA is now set to leave loans under €20 million with the banks is debunking the justification for its original creation.

Yes, there were bigger loans with bigger problems, and they have been covered on every facet, and that will form the bulk of NAMA’s asset book, but what doesn’t go across will be handled by the banks (who incidentally already manage NAMA loans on behalf of the agency, only the legal ownership goes to the agency).

In Bank of Ireland’s case this will account for €2.1 billion of loans of which €1.6bn is already impaired! That’s a massive 76% impairment rate, of which €800m has been provisioned for – so about half of the expected loss is covered.

That tells us nothing about every other institution though, because BOI is likely to be one of the healthier ones, they neither …

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Anglo, new ‘Bad bank / Bad bad bank’ plan

We are anaesthetized from outrage at this point when it comes to Anglo Irish Bank (or if you are a eurosceptic who doesn’t understand acronyms such as Ambrose Evans-Pricktard we are talking about ‘AIB’).

The latests announcement is that Anglo will be split into a deposit only bank and an asset recovery bank, both of which will be fully legal regulated entities. Let us be the first to congratulate the Minister of Finance for being the only singular individual who owns a bank in Ireland (two lines under the heading ‘resolution proposal’ it says “It will be a stand-alone, regulated bank, completely separated from Anglo’s loan assets and it will be owned directly by the Minister for Finance.”

Fascinating given that for anybody else you can’t have a single owner (see Central Bank: Licensing and Supervision Requirements and Standards …

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Battersea & REO, what’s the story?

Battersea power station was bought for £400m in 2006, REO took a loan for £226m other £134 was cash/other equity, the purchase was split 50/50 between BOI and BoS in London. only exposure for Bank of Ireland was that loan and now it is in NAMA, people are making a big deal about this and it is important to look at the facts rather than what it represents.

The BOI loan has gone to NAMA and BOS was taken by LLoyds, that is the current state of play. Lloyds and NAMA agreed to extend the loan facility to august 2011 – so they (REO) can get through the planning process, which happens to be the single largest planning application in the history of the UK, literally a truck load of paperwork went into the council in connection with the station.

Exposure on the loan is now at £100m, it has been a performing capital and interest loan. While the value of Battersea fell as all properties have, it also rose in the …

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Trading conditions in the year to date remain challenging, particularly in Ireland. Conditions have improved in Great Britain and our Capital Markets and Polish businesses are performing well. In the US, M&T reported strong results in the first quarter of 2010.

OPERATING PROFIT Please note that all trends in this update are in constant currency terms.

A combination of factors is placing downward pressure on our net interest margin and / or operating profit before provisions this year. These factors include: •    Highly competitive and uneconomic market repricing of customer deposits •    The elevated cost of wholesale funding and the higher cost of the Government Guarantee •    Reduced income on capital and increased interest payments on higher yielding bonds following the two capital exchanges successfully completed in the past year •    NAMA administration costs and reduced income from NAMA loans •    Targeted loan volume reductions outside Ireland to reduce our loan to deposit ratio

Positive factors, including loan repricing across all portfolios and a reduced impact or non recurrence of   some of the above factors, are expected to have a …

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RTE ‘Frontline’ with Pat Kenny: NAMA for the little people?

RTE Frontline 12th April 2010 – NAMA for the little person? from Irish Mortgage Brokers on Vimeo.

Irish Mortgage Brokers was featured on RTE’s ‘Frontline’ with Pat Kenny on Monday the 12th of April 2010. The topic of the day was about bailouts for home owners who are in trouble with their mortgages.

Noleen Blackwell of Free Legal Advice Centre was there on behalf of favouring methods to save home owners, and Karl Deeter of Irish Mortgage Brokers was there promoting the use of market mechanisms as a solution, along with arguing the case that for many people, bank ownership of their home is not necessarily a bad thing.

This is a hot topic in Ireland, in particular because many people feel, that taxpayers stepped up to save our banks, so now they should do the same in return.

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Talking NAMA, how much is a billion?

While we are all hearing about ‘a billion this’ and a ‘billion that’ for various financial institutions I would hope that we don’t lose sight of what a ‘billion’ actually is.

A billion seconds ago it was 1959 A billion minutes ago you could have spoken to Jesus… In person A billion hours ago our ancestors in the stone age were eating raw meat and dying regularly of things like the common cold. A billion days ago we were not bipedal.

So a billion is a big number, its a one with twelve zeros after it


If you earned the minimum wage of €8.65 it would take you over 13 million years of non stop work, day and night, seven days a week to earn a billion euro (pre tax).

We are getting shafted, it doesn’t feel good.

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