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Ireland’s AIB Plans Crackdown as Borrowers Choose Default 8-1-2013
Allied Irish Banks Plc is preparing to take legal action against thousands of homeowners, estimating that more than 20 percent of borrowers behind in repayments are opting not to pay in the hope of winning debt relief...“It’s not discretionary to stay in your home and not pay your mortgage” when it can be afforded, Chief Executive Officer David Duffy, 51, said in an interview, after the Dublin-based lender said its net loss narrowed 28 percent in the first half amid falling bad loan losses. “You can’t live rent free.” Read More at Bloomberg


Irish Mortgage Woes Worsen as 25% of Home Loans in Trouble 12-13-2012
Ireland’s mortgage woes worsened in the third quarter as the economy struggled to recover from the worst recession in its modern history. By value, about 25 percent of all residential loans including buy-to-let were at least three months in arrears or had been restructured. Irish banks are under pressure from regulators to find solutions for loans that might never be repaid after receiving 64 billion euros ($83. 6 billion) of bailout funds since the collapse of the country’s real estate bubble four years ago. Read More at Businessweek.com


Broke Spaniards Wait for Eviction Relief, but Foreclosure Can Turn Them into Lifelong Debtors 12-12-2012
Irene Gonzalez is desperately waiting to hear if she'll benefit from an emergency government decree that protects Spaniards such as her from being evicted for failing to make their mortgage payments. Gonzalez, 45, has had her full-time job reduced to part time at the small air-conditioning company she works for. She's a single mother caring for two children in a cramped apartment in a working class neighborhood that she and her ex-husband bought in 2001, when the nation was basking in a strong economy and a seemingly endless housing boom. She says she can't afford the mortgage payments and her ex-husband, who always handled them after they divorced, stopped paying several years ago when construction business soured with the bursting of Spain's building bubble. Even if Gonzales is granted a two-year reprieve from eviction, Spanish law still mandates that she and her ex-husband will still owe almost €140,000 ($183,000) on the mortgage, court fees and interest for the rest of their lives. If they don't pay off the debt, their children — now 13 and 8 — inherit it. Read More at Foxnews.com

Australia New-Home Sales Fell to Record Low in August, HIA Says 10-2-2012
Australian sales of newly built homes slumped to the lowest level on record in August, a private report showed, underscoring the central bank’s decision to resume lowering interest rates…”[n]ew home sales for August are the latest in a string of soft new housing updates for this financial year,” Harley Dale, HIA chief economist, said in a statement. “A fresh round of interest rate cuts will help rebalance this situation, although financial institutions obviously need to play their role in cementing this outcome.” Read More at Bloomberg

U.K. Home Prices Plunge Most In Three Years, Nationwide Says 8-2-2012
U.K. house prices recorded their biggest annual drop in three years in July as the economic slump worsened, Nationwide Building Society said. Prices fell 2.6 percent from a year earlier, the most since August 2009, the Swindon, England-based lender said in an e- mailed report today. From the previous month, prices dropped 0.7 percent to an average 164,389 pounds $257,800). Britain’s recession deepened in the second quarter and mortgage approvals fell to an 18-month low in June. Read More at Bloomberg

Borrower's urged to avoid 'strategic default' 5-30-2012
Borrowers are being urged against deliberate non-mortgage repayment — in a hope of attracting debt forgiveness — ahead of new legislation being passed. The Association of Chartered Certified Accountants (ACCA Ireland) said, yesterday, that to view the pending personal insolvency legislation as some kind of magic wand could be a grave mistake by consumers. ACCA said it fully understands that many borrowers are unable to meet their mortgage repayments, but warned against borrowers opting for a so-called "lifestyle strategic default" option, whereby they use their mortgage payments for lifestyle spending choices instead — all in the hope that the new legislation could usher in debt forgiveness alternatives. Read More at Irishexaminer.com

Spain to spend billions on bank rescue 5-8-2012
Spain is planning a state bail-out of Bankia, the country's third biggest bank by assets, in a move likely to involve the injection of billions of euros of public money into the troubled lender. In an abrupt reversal of policy, the Spanish government, which had previously insisted that no additional state money would be needed to clean up the country's banking sector, confirmed that an intervention was being prepared…[t]he bursting of Spain's property bubble has seen the level of bad loans as a proportion of total lending rise to the highest level in 18 years, leaving banks managing vast portfolios of repossessed and unsold real estate, and choking off credit to an economy that is suffering its second recession in three years…”[j]ust injecting capital would be the equivalent of rearranging the deck chairs on the Titanic," the person said. "I think Spain has not admitted to itself just how weak some of its banks actually are and how serious the situation is." Read More at CNN reporting on Financial Times Story

The ghost houses of Ireland: Foreclosure and eviction 5-7-2012
DUBLIN—In Mairead Harold’s Irish childhood, there were no rugged mountains, stone-built cottages or seaside cliffs. Harold grew up poor in Dublin’s derelict Finglas neighbourhood, where rows of gritty semi-detached houses and parks have long been regarded as a haven for drug dealers and their clients. A 1987 marriage to Stan Harold hardly improved her fortunes… It wasn’t long before Stan left. Almost 20 years later, he came back, announcing in 2005 that he wanted roughly $130,000 to surrender his claim to the house…[d]uring her second meeting with a loan officer at Allied Irish Bank...Harold’s loan application for $162,500 was approved and she walked out with a cheque…At 46, she is struggling to find even part-time work and can’t afford the monthly mortgage payments of about $1,300 on a home she estimates is worth $79,000. The bank wants to evict Harold, her son and the 4-year-old daughter she had with a recent boyfriend. Harold’s story shows how easy it was to get credit during Ireland’s roaring heyday of the last decade…[i[n 2010, Dublin lawyer Vincent Martin and his colleagues were contacted by a man who was at loggerheads with the Irish Nationwide building society, a local bank. After obtaining the bank’s files on his account, the man had discovered the bank, which has since merged with Anglo Irish Bank, had created a new version of him for their credit committee…[t]o help that man, and others such as Harold, Martin and his colleagues started a legal aid group called New Beginning, which specializes in helping people who are at risk of losing their homes. Read More at TheStar.com

Madness in Spain Lingers as Ireland Chase Recovery 5-2-2012
From atop the stone walls of Avila, Spain, a medieval city an hour’s drive northwest of Madrid, beyond the parking lots and empty playgrounds and thousands of vacant new apartments, a construction crane can be seen moving on the horizon as building continues. “Avila isn’t an exception,” said Jesus Encinar, co- founder of Madrid-based Idealista, Spain’s largest property website, and an Avila native. “It’s a small-scale example of the madness that gripped the whole real estate industry.”…[i]n Ireland, where overbuilding and subsequent collapse were comparable to Spain’s, the government and real estate industry are confronting the mistakes that created the crisis…Ireland is making more progress as it deals with the legacy of a bust that crippled its economy, once the most dynamic in western Europe…[i]n the stages of death of a real estate boom, Spain is still in denial. In Ireland, they’re moving toward acceptance. Read More at Bloomberg.com

Irish Bank Evicts Pensioner After $155 Billion Losses: Mortgages 4-25-2012
Brendan Kelly’s televised eviction from his Dublin house hit close to home for many of those watching in Ireland, where one in seven mortgages is in trouble…[i]t was a rare moment in a country where lenders dealing with about 20 billion euros of distressed loans have seized less than one percent of the properties backing them. Home prices may drop as much as 70 percent from their 2007 peak…[s]o far, banks have been reluctant to resolve defaulted mortgages through foreclosures and repossessions and the government has pushed for solutions that keep people in their homes…[s]till, bankers are concerned that the new laws may encourage strategic defaults. Read More at Bloomberg.com

Icelandic Anger Brings Debt Forgiveness 2-20-2012
Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger. Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association…The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 110 percent agreement was here,” said Thorolfur Matthiasson, an economics professor at the University of Iceland in Reykjavik, in an interview. “It’s the broadest agreement that’s been undertaken.”… Read More at Bloomberg.com

Norway Faces Severe Credit Shock 2-13-2012
Norway faces “severe” imbalances in its credit and property markets as households continue to amass debt at unsustainable levels, according to the head of the country’s financial regulator…Norway’s credit and property markets continue to show signs of overheating five months after the regulator asked banks to tighten lending standards…Norway is in the grip of a house price bubble, while the International Monetary Fund on Feb. 2 warned of real estate and credit market risks in Norway. Read More at Bloomberg.com

Canada's Subprime Crisis Seen With U.S.-Styled Loans: Mortgages 1-30-2012
Canadian lenders are loosening standards, offering mortgages similar to U.S. subprime loans that pose an "emerging risk" to financial institutions, according to the country's banking regulator. Banks and other lenders are becoming "increasingly liberal" with mortgages and home-equity credit lines that don't require individuals to prove their income…"It just speaks to the general easing in lending standards, which has contributed to a booming housing market," said David Madani, an economist in Toronto with Capital Economics, which estimates that Canadian housing prices may fall 25 percent over the next few years…Canada's banking system has been rated the soundest in the world for four straight years by the World Economic Forum, and none of the country's lenders needed a bailout, unlike U.S. banks, which suffered losses on securities backed by sub-prime mortgages…Mortgage terms are also typically shorter in Canada than the U.S., and lenders can pursue defaulting borrowers for full reimbursement even after foreclosure. As well, mortgage interest isn't tax deductible in Canada, unlike the U.S. Read More at Financialpost.com via Bloomberg.com

U.K. House Prices Face Further Downward Pressure as Consumers are Squeezed 1-29-2012

U.K. house prices were unchanged in January, according to property researcher Hometrack Ltd., which said “downward pressure” on prices will continue amid a squeeze on consumers. From a year earlier, values fell 1.6 percent in January..[t]he U.K. economy shrank 0.2 percent in the fourth quarter as inflation, rising unemployment and the euro-area debt crisis damped consumer spending. Bank of England Governor Mervyn King said last week that consumers faced a “ferocious squeeze” in 2011 and the recovery is likely to be “long and uneven." Read More at Bloomberg.com

Austrian Banks Facing Payback as Hungary’s $22 Billion Debt Slaves Revolt 12-14-2011
“Almost 18 months after [Prime Minister] Orban was elected in April 2010, he passed a law allowing Hungarians to repay mortgages denominated in foreign currencies at discount of about 25 percent to today’s exchange rate. “I paid it back last week,” Bod said. “I’m free of debt slavery,” said the former industry minister. The plan “is easy to explain from a political viewpoint. It’s cheap for the government, expensive for the banks, good for voters.” Read More at Bloomberg.com