Twat is twat

This is the only waited to deliver long-term prosperity. And, the problems implicit in a society which is overly dependent upon house ownership must also be addressed, including a restriction upon the right of banks to ever seek to recover more than the value of the property from the mortgage holder so that the concept of negative equity is eliminated from consideration.

So the entire country is to be treated to jingle mail then? Property speculation should be a one way bet?

Householders cannot be held responsible for macroeconomic failure. Governments have this responsibility, and if they need to compensate banks for that fact, then so be it. But the torment of being held enslaved by a mortgage cannot be an outcome of this crisis.

Yes, that is what he’s saying. Losses on buying property must be paid by the government. Profits can be kept by the buyer.

The real issues are systemic, and the CPS proposal goes nowhere near addressing them.

Privatising profits and socialising losses in the housing market is the way to do this, is it?

One would almost suspect that Snippa got on the wrong end of negative equity somewhere along the line.

19 thoughts on “Twat is twat”

  1. It’s not just house mortgages. Value of a security pledged doesn’t meet the loan obligation? No problem the gubmint will pay.
    By extension, can’t repay an unsecured loan? No problem, the gubmint will pay.

  2. The *whole* *point* of a mortgage is the ‘mort’ part, if you’re in negative equity you’ve still got another 30-40-50 years to get back in the black. I was in negative equity for the first five years of my mortgage. SO WHAT???? I still had another 25 years of payments to reduce the debt and increase the asset value.

  3. One solution to the problem of negative equity is to rent. You get the advantage that you can up sticks and move with little or no problem if a better job appears elsewhere or family circumstances change. You don’t need to worry about maintenance. Yes, you don’t own it but unless you are lucky or spend a ton improving the property you aren’t likely to make much profit after the costs of moving have been taken care of. You can’t decorate to your taste, but you soon get used to it, and anyway it was good enough for you to rent in the first place.

  4. This is brilliant. I’ll get a massive mortgage and buy my brothers house for some overly inflated price. Then sell it back to him for 30% less and split the profits.

  5. First result of this is that banks will massively increase the deposit they require for mortgages, to give them a safety net – making it even more difficult for first time buyers.

    It’s an excellent proposal for a middle aged man worried that the value of his terrace in Ely might collapse; it’s another kick in the teeth for the young.

  6. Ok, no worries, owner is not responsible. New rule then – buy a property with a mortgage. If when you sell the price doesn’t cover the outstanding debt, no recourse, you don’t owe the bank. But if the price is higher, bank gets a cut of the profits for having taken the risk.

  7. So we are over dependent on house ownership, but we must also get rid of one of the few disincentives against property ownership. I can’t see how removing any chance of a loss will have an effect on property speculation. None whatsoever.

    Joined up ‘thinking’

  8. I find it curious that he’s advocating something is already a fait accompli.

    Let’s be honest here. If* there was a serious correction in house prices, all of what he’s advocating would happen. Losses would be socialised.
    The banks would be unable recover more than the value of the property from the mortgage holder so that the concept of negative equity would be. eliminated from consideration. Banks would be bailed out of the mess they’ve created for themselves. Call it “compensated” if you prefer.
    This is plan A. There is no plan B.

    *I’d say when.

  9. But the torment of being held enslaved by a mortgage cannot be an outcome of this crisis.

    The value of your investment can go up or down. Looks like I sold my gaff at just the right time.

  10. So he’s mortgaged to the point that he’s worried any fall in value of an end-terrace in Ely will push him into negative equity?

  11. +1,the Elysian Potato House is at risk, possibly from a scarcity of people willing to pay for Spud’s valuable braintime

  12. Dennis, He Who Made His High School Typing Team

    This is the only waited to deliver long-term prosperity.

    Evidently Spud is on the same typing team as Newmania.

  13. Yes, that is what he’s saying. Losses on buying property must be paid by the government. Profits can be kept by the buyer.

    No. Profits will be taken via a stringent capital gains tax. The sort the leftists proposed in NZ which does not allow for inflation (and were then surprised went down like a cup of cold sick with voters).

    Or taken in death duties, if you have the temerity to die before selling.

  14. Murphy’s proposal is what caused the 2007-8 financial crisis – housebuyers (*not* home-owners because the mortgage lender owned the home, the buyers effectively had an option) in states like California had a heads-I-win, tails-you-lose deal and when prices fell they walked away and left the banks with losses. Admittedly they were helped by some naive suckers in Wall Street and German Savings Banks who didn’t realise the mortgages were non-recourse and by Bill Clinton’s demands that banks did discriminate between those who could afford to repay the mortgages and those who couldn’t.
    Murphy wants another financial collapse in order that he can say “I told you so!”. It hasn’t happened yet so he’s trying to find a way to create one.

  15. Q. Who is this “government, Kemosabe?
    A. Other people.

    So small savers should bail out large borrowers. He should raise his sights. Instead of advising the SNP he should be advising Donald J Trump.

  16. Banks (or more importantly the people they sell non-performing mortgages to) don’t really go after the shortfall anyway. Not worth the hassle. Regulating away the option wouldn’t do anything except change consumer behaviour as noted by other commentators.

  17. Interestingly, in some US states house mortagages are non-recourse loans – if the borrower defaults, the lander cannot collect more than the current value of the property. Of course this means that borrowers must have a bigger deposit when buying so that there is little chance of the property being worth less than the loan amount outstanding. It might be difficult to switch England to such a system at a time when first-time buyers are already complaining at the size of the deposit required.

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