Monday 19 March 2018

Nama 2 may not be the cure for our ills

A special 'bad bank' could be set up for homeowners in arrears, but would it work? The 'Sunday Independent' decided to ask a panel of experts

AS the nation edges ever closer to the point of accessing the EU's stabilisation fund, the Sunday Independent sought a range of views on whether a "Nama beag," or a mini-Nama (National Asset Management Agency) for mortgage holders might work.

It is estimated that 200,000 households are in negative equity, while figures from June show 36,000 mortgages were in arrears of three months or more, with collective arrears of more than €500m.

Mike Soden

Former chief executive of BoI and member of the Central Bank Commission

"There needs to be a discussion and negotiation about a Nama 2. Everybody has a responsibility for their debts but people living a normal life were caught by the system and by changes in interest rates and in the wider financial system.

"They bought homes because of the pressures of society and they might now want to move house for whatever reason but they have a debt burden over them.

"There is need for a social conscience to help only those who are genuinely in need. The system should try to avoid destroying people's lives to the point where they're stressed and cannot lead an ordinary life.

"It should try to find a way of accommodating them, ranging from the debt being forgiven to the debt being deferred. If a mortgage is reduced, but they one day sell the house, then shared appreciation would apply to any increase above the written down value."

Ronan Lyons

Economist with

"The obvious question about this is why should those who were prudent with their finances pay for those who weren't.

"But this is more about the country as a whole. This might be a reasonable way of ensuring that we as a people have a decent economic future.

"You need some cost for entering into the scheme so that only people who can't pay back their mortgage access it.

"In terms of writing down the bank debt, this is the least bad solution. I'm not sure how exactly the financing structure of it would work so the idea needs further analysis and solutions."

Marian Finnegan

Economist at Sherry FitzGerald

"I don't think it's a workable solution. I fear that it would create more uncertainty in the country's finances and perhaps in the wider financial sector as well.

"I can't see how we can just make the debt disappear or how we can do this in practice without impacting the banks even further.

"It's important that we look at all possible solutions for those with mortgage difficulties though, such as the possibility of freezing their debts for a number of years."

Derek Brawn


"There's an idea in the US of contingent writedowns, where you cut a third of what someone owes. You might reduce this amount gradually over five years in case their financial situation improves during that time.

"If at some stage they sell the house for more than the written-down house value, then there is shared appreciation, meaning the bank gets half of any increase in the value of the property.

"For this to happen, however, it would require ECB (European Central Bank) approval and it would involve further recapitalisation of the banks."

Joe Higgins

Socialist Party MEP for Dublin

"Young families and couples who are struggling with mortgages on their homes should definitely have their repayments adjusted. There should be a mechanism to do so, because they were victims of property speculation.

"Rents increased ridiculously to the point of Rachmanism during the boom. People wanted to buy a house because it was cheaper to do so."

"Although it would be complex enough in the detail, I think most people would support a fair solution."

Ciaran Callaghan

Analyst, NCB Stockbrokers

"If the banks were in a stronger position with a better capital base then maybe we could afford it. But I don't think this is a runner because if you're giving any kind of debt forgiveness, the money has to come from somewhere.

"If you did something similar for mortgages, banks end up having to make writedowns due to the losses, so they need further capital. If the losses were bad, then that impacts all of us even further, potentially putting a greater strain on the sovereign."

Sunday Independent

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