subject: No NAMA For The Little People [print this page] No NAMA For The Little People No NAMA For The Little People
There will be no Nama for the little people, according to an article in the Sunday Independent. The government does not want to encourage "moral hazard" so people who have mortgages on homes that are now worth less than the outstanding mortgage cannot walk away from their debts or even enjoy some degree of debt forgiveness. To do so would be unfair on their prudent neighbours, they say.
On the other hand, developers will not be expected to cough up more than half of what they owe and all tax payers will have to pick up the tab. When Nama was first discussed as an idea more than a year ago, it was going to apply discounts to the loans it bought from the banks and then seek the full outstanding loan amounts from the developers. This stance seems to have softened somewhat in more recent times as, to quote from Frank Daly, Nama's chairman "In essence, Nama's core objective will be to recover for the taxpayer whatever it has paid for the loans in addition to whatever it has invested to enhance property assets underlying those loans".
What this means is that Nama will buy approx 81bn in loans for 43bn and instead of looking for the 81bn that's outstanding, Nama will be happy to bring in the 43bn. So we have a situation where, on the one hand, the little people with the big mortgages will have to suffer on and try to make their own way out of their financial mess, and on the other hand, those whose loans are taken over by Nama could find that up to 50% of their debt is written off.
Many people may feel that this does not appear to be a fair and equitable system for tax paying private home owners.
