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Trophy houses may have to go says NAMA boss

PROPERTY developers were criticised by NAMA chairman Frank Daly for continuing on their "extravagant mind-set".

Mr Daly said that while all developers have sent representatives to meetings with the toxic loans agency, some did not attend these meetings in person.

"Certainly not all of them have yet abandoned the extravagant mind-set of the 2003-2007 era," Mr Daly said.

He also said some borrowers may be required to sell non-income-producing assets, including so-called 'trophy' homes to generate cash to support their own operations.

Speaking at the Leinster Society of Chartered Accountants, the chairman said that the borrowers are now "fully aware" of what is expected in terms of the "thoroughness and stringency of their business plans".

His comments come after NAMA chief executive Brendan McDonagh told a Dail committee it was his strong view that indebted developers "displaying obvious wealth [are] almost in defiance of us". Mr Daly said developers know that the agency would be "rigorous" in recovering loans on behalf of the taxpayer and outlined that no borrower is "too big" to fail.

It was revealed this week that NAMA is paying just 45pc of the loan amount for the first group of Anglo Irish Bank loans transferred from the country's 10 biggest developers. The agency previously said it would pay 50pc.

That means the agency will be paying just 49pc of the cost of all the loans from the five NAMA banks to the country's 10 developers.

"Our approach has been fully vindicated by what has emerged to date in terms of sub-standard loan documentation and of assets not properly secured," Mr Daly said.

The so-called 'bad bank' has now spent €16bn buying the first group of loans and expects to spend another €21bn as it begins buying loans from smaller developers.

Mr Daly also said one of the more baffling features of the boom was that banks seemed oblivious to other lenders who were financing similar developments in the same area. He also raised big questions about Ireland's planning process in the past and asked how many shopping centres or apartment developments a medium-sized town could accommodate.

The hundreds of unfinished housing estates across the country will never be completed, the NAMA chairman said.