IMF urges debt forgiveness for indebted mortgagees

michaels

Borrower with zero equity and unable to make repayments:
Option 1: Bank Repossess. Losses from forced sale born by creditors, borrower bankrupt and thus less economically active for 6/12 years, state has to provide accommodation to borrower
Option 2: State and bank share costs of supporting borrower in home. No dead weight loss from repossession/adverse credit, state saved from cost of housing following repossession.

Option 2 may cost less (to the state directly and indirectly through bank support) overall but option 1 is the 'moral high ground'

The_White_Horse

michaels wrote: »

Borrower with zero equity and unable to make repayments:
Option 1: Repossess. Losses from forced sale born by creditors, borrower bankrupt and thus less economically active for 6/12 years, state has to provide accomodation to borrower
Option 2: State and bank share costs of supportng borrower in home. No deadweight loss from erepossession/adverse credit, state saved from cost of housing following repossession.

Option 2 may cost less (to the state directly and indirectly through bank support) overall but option 1 is the 'moral high ground'

there has to be fairness. why should one person work hard, do without and struggle to pay a mortgage whilst their next door neighbour lives there for free because he can't afford it???

isn't it better that they all get help - regardless of their positions (so the prudent and sensible don't get completely shafted). the guy may be able to afford his mortgage is 25% is knocked off. If he still can't, then repossession is the ONLY way.

You cannot punish the hard working and prudent to assist the rest.

wotsthat

Graham_Devon wrote: »

You can't ignore the moral hazard of something such as this. It's probably the biggest part of such a stimulus. And trying to compare it to Africa is poor.

I'm not comparing it to Africa. I'm pointing out the futility of making the starting point my morals vs your morals - I already know I'm morally inferior.

It's a really interesting idea but I think its virtually impossible to implement correctly and Iceland is an example of nothing anyway.

However, we're a wealthy country and some of that wealth being hoarded by the rich (that they don't need) might be better used to improve the lives of the general population. I wouldn't be surprised if we didn't hear more about this to put the frightners on the rich and encourage them to voluntarily part with some dosh.

It would be nice to think that the government could reduce it's spend on registered charities and the gap filled by the rich for example.

ILW

So in effect send out the message that anyone who buys insurance or uses savings to tied them over a dodgy period is an idiot. That will be great for the future.

purch

I am at a loss to see why the "silent majority", those with a perfectly sustainable mortgage debt, with no problems over repayment and whilst maybe having a slightly reduced standard of living due to the ongoing recession have very little to complain about, would need part of their mortgage written off.

The economic problems faced by this country would not be solved by doing this.

ILW

wotsthat wrote: »

I'm not comparing it to Africa. I'm pointing out the futility of making the starting point my morals vs your morals - I already know I'm morally inferior.

It's a really interesting idea but I think its virtually impossible to implement correctly and Iceland is an example of nothing anyway.

However, we're a wealthy country and some of that wealth being hoarded by the rich (that they don't need) might be better used to improve the lives of the general population. I wouldn't be surprised if we didn't hear more about this to put the frightners on the rich and encourage them to voluntarily part with some dosh.

It would be nice to think that the government could reduce it's spend on registered charities and the gap filled by the rich for example.

Define "the rich" please.

wotsthat

ILW wrote: »

Define "the rich" please.

Anyone with money they are likely not to need.

ILW

wotsthat wrote: »

Anyone with money they are likely not to need.

So anybody living above subsistence level then?

shortchanged_2

Fair play, another cracking idea by the IMF.

What sort of message does this send out???

Go out and spend, spend, spend but don't worry you'll never have to pay your debts back...........come to think of it it bit like the banks really.

Very dangerous road to go down.

I'm actually gobsmacked that a group of so called economic experts could come up with such a ridiculous idea.

wotsthat

ILW wrote: »

So anybody living above subsistence level then?

I was thinking more along the lines of a person with a paid off mortgage, pension provision, grown up kids and maybe a bit of a rainy day fund.

I'll fit the criteria in a few years - I'll be trickling cash down through the generations below me. It'll be nice to see the money doing some good rather than hoping it's well spent when I'm dead. I don't want to end up like the frenzied coffin dodgers on the ISA board stressing about the difference between 3.1% and 3.3%