How does a mortgage holder get a writedown when banks sell their loan?

Tonight on RTE’s Primetime they are going to cover the dilemma some IBRC mortgage holders (residential mortgage holders from both Irish Nationwide and Anglo) face when their loans are sold.

If the loans have a discount limit set on them as the commercial loans do then there will be little or no appetite for them because as it stands estimates are that 50% of the former INBS loan book are impaired in some way.

The  sale will probably proceed but it’s a question of who the buyer may be. The IBRC loan assets are being independently valued and then offered for sale through a competitive auction process.

Loan assets may only be sold for bids that exceed these independent valuations. All but a very small number of loans are being offered for sale as part of larger portfolios of loans.  

Successful bids must exceed the independent valuation, this is in effect a restriction on any discount. We have found no difference in the sale process as between IBRC mortgage loan assets and other IBRC loan assets.

The values that …

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AIB debt writedowns? What does it mean?

The Irish Times carried an article that stated that AIB would write down some mortgage debt. What does this mean though and who will be the beneficiary?

To begin with, the write-downs should be no surprise, that is what the provisions AIB have been putting aside for several years are for, in fact, to date it’s almost like they weren’t playing fairly because they were booking provisions but not actually using them for what they were for.

Secondly, there are 33,000 AIB mortgages with problems, of these about 10,000 are ‘unsustainable’ and for those mortgages there will be losses booked – that is the ‘writedowns’ they are talking about in the main, but on the end of whatever solution comes out of if the person may not be the owner of the home.

Several solutions are things like ‘split mortgages’ which require no writedown, others will be ‘mortgage to rent’ which will, because in that process the ownership will change and that means crystallizing the loss. How many of the 10,000 will come out …

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Mortgage writedowns occurring, but how much?

We often hear that banks are writing down mortgage debts, but then the lenders themselves say ‘this isn’t happening’. For such a large rumour there is a surprising lack of evidence on either side of the argument, although we do see scant documentation indicating this in some cases.

If you click on the picture it will give you the larger version of the kind of documents we see from time to time. In this instance the client has said they owe over €200,000 but that they lender will take less than half of this, settling on a figure of c. €90,000 to clear in full or they’ll owe the difference if it goes for less.

The property seems to be at a significant discount to others in the same area, and unless the person in question is not being honest (we have no reason to think they aren’t) then the letter indicates over …

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