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Banks Write Off Debt For Landlords

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From FT.com:

"Several of the UK and Irish banks that received government bail-outs are offering to write off up to 25 per cent of a mortgage debt for professional landlords and developers – just to encourage them to move to new lenders."

Full article here: Banks write off debt for landlords

Hey, Everybody wins. Everybody meaning Banks, Landlords & Developers but not your average homeowner that is.

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As deserving as the banker boonuses I suppose, hell it is only tapayer's money :ph34r:

http://www.ft.com/cms/s/2/e54b8042-200a-11e0-a6fb-00144feab49a.html#axzz1B8NWADKH

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/2/e54b8042-200a-11e0-a6fb-00144feab49a.html#ixzz1B8NtdGAS

Banks write off debt for landlords

By Tanya Powley

Published: January 14 2011 18:26 | Last updated: January 14 2011 18:26

Several of the UK and Irish banks that received government bail-outs are offering to write off up to 25 per cent of a mortgage debt for professional landlords and developers – just to encourage them to move to new lenders.

Anglo Irish Bank – the institution at the centre of Ireland’s property meltdown and the recipient of €30bn of government money – is one of a number of lenders willing to let certain property owners off a proportion of their debt if they refinance elsewhere.

Brokers report that Bank of Scotland, part of Lloyds Banking Group, and Royal Bank of Scotland have arranged similar deals – often known as “golden goodbyes” – although Bank of Scotland says it is not “policy” to incentivise a remortgage with another bank.

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which clever bankers are going to even want loans these banks cant make a profit on?

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Sounds like they have already priced in 25% falls with the expectatiion of more to follow and are hoping for a greater fool to take the bad debt off of their books.

I don't care if landlord's "get away with it". After this, banks are going to be even less likely to write new loans...

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I don't care if landlord's "get away with it". After this, banks are going to be even less likely to write new loans...

If only that were true.. weren't the conditions of the bonus payments that banks would risk extending more credit?

I hope there is more to this story than I understand, but the apparent blatant redistribution of wealth away from considered risk takers to foolish chancers seems not only unjust, but a huge moral hazard.

Instead of bailing these guys out they should be repo'd and their BTL empires sold to the mountain of FTBers who can actually afford the payments.

I really couldn't be more pissed off on behalf of the sensible members of the young generation.

Edit to add: I've written to my MP. This is disgusting.

Edited by libspero

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Sounds like they have already priced in 25% falls with the expectatiion of more to follow and are hoping for a greater fool to take the bad debt off of their books.

This is Ireland, they have already fallen 25%

tim

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It is a bit more devious than it first apepars to be.

If AIB or one of the others have already written down their distressed loans by 40%, getting them off the books for a loss of "only" 25% allows them to book a "gain" on the recovery of 15%.

Of course, this gain forms part of their profits and potentially the bonus pool. The assymetry in bonus treatment of gains and losses means that bankers have the incentive to write down loans very agressively in bad years so that they can make more bonuses in subsequent less bad years.

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Free bailouts to the parastic BTLers shows you how afraid they are. A HPC of 20% will lay the banks to watse and THIS time I hope the government lets them collapse followed by nationalisation and then a break up. Something has got to kill the beast before the economy can ever be rebuilt on a surer foundation than HPI.

Edited by Realistbear

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It is a bit more devious than it first apepars to be.

If AIB or one of the others have already written down their distressed loans by 40%, getting them off the books for a loss of "only" 25% allows them to book a "gain" on the recovery of 15%.

Of course, this gain forms part of their profits and potentially the bonus pool. The assymetry in bonus treatment of gains and losses means that bankers have the incentive to write down loans very agressively in bad years so that they can make more bonuses in subsequent less bad years.

why would they be writing down performing loans?

and If they are distressed, why would another lender even want them?

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why would they be writing down performing loans?

and If they are distressed, why would another lender even want them?

I guess the 25% subsidy from the taxpayer/bank makes the loan performing again. It cuts the borrowing cost because 25% of the capital has been written off by the government owned bank, and the LTV ratio has been favourably adjusted to allow a switch to a lower interest rate. The landlord's costs are reduced...so more profit created. It prevents repossession so maintains property scarcity and therefore supports prices.

The fact that it represents abuse of public resources on a Tunisian scale is beside the point. At least so it appears, for now.

Edited by ingermany

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How is this so different from just letting the average person off with 25% of their mortgage? This is absolutely OUTRAGEOUS, no!?

They can obviously see the incomes of these people and just want to get rid (knowing a certain percentage are going to go bust with the forced rises in interest rates)

as the economy and jobs tank over the next x number of yrs (along with house prices)

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..... before the economy can ever be rebuilt on a surer foundation than HPI.

I hear there's good money to be made breeding tulips RB. Maybe we should try that next?

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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