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NAMA sued in Dublin’s High Court

A fortnight ago, it was reported on here that NAMA was one of the parties being sued in Dublin’s High Court in a case involving what appears to be a Portugese property development. Yesterday, the plaintiffs in that case, Tony Ward and James Hiney, lodged two applications naming the same defendants,

(1) GERRY FAGAN T/A OCEANIO DEVELOPMENTS GERRY
(2) MORGADO DA LAMEIRA – EMPREENDIMENTO TURISTICO E GOLFE S.A
(3) OCEANICO LUSOIRLANDES – INVESTIMENTOS IMOBILIARIOS E TURISTICOS SA
(4) IRISH BANK RESOLTION CORPORATION
(5) NATIONAL ASSET MANAGEMENT AGENCY

James Hiney is joined in his application – 2012/12954 P – by Sabina Hiney and both plaintiffs are represented by McCartan and Burke solicitors. Tony Ward has a separate application – 2012/12952 P – and he too, is represented by McCartan and Burke solicitors.

Given that this is Ireland, we can’t access the application itself to see what is at issue or what remedies are sought.

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This morning, Ireland’s Central Statistics Office (CSO) has released its inflation figures for November 2012. The monthly headline Consumer Price Index (CPI) fell by 0.4% compared to October 2012, and is up just 0.8% year-on-year. November’s results mirror those ofOctober and  September and continue a subdued trend seen in recent months compared with the 2%+ that pertained before January 2011. If this low rate of annual inflation continues and is representative of the components of GDP and if our real GDP does in fact grow by 0.4% as forecast by the European Commission in October 2012, and if the €13bn year-to-date deficit recorded in the November 2012 Exchequer Statement worsens, then Ireland may miss the 8.6% deficit:GDP target as set out in the Memorandum of Understanding with the so-called bailout Troika, which may herald intensified austerity with bigger budget adjustments. The Budget 2013 forecasts indicated Ireland would conclude the year with an 8.2% deficit, but evidence  countering this low figure mounts.

Housing has stopped being the biggest driver of annual inflation, mostly because mortgage costs have been declining – by 17.1% in the past year, as ECB rate cuts and greater scrutiny of variable mortgage interest rates take effect. Just a few months ago, mortgage interest was rising by 20% per annum, and as mortgage interest costs account for nearly 6% of the basket which measures inflation, the impact on inflation was substantial.

 

Energy costs in homes on the other hand, which account for 5% of the total basket examined by the CSO, have risen by 8% in the past 12 months, mostly driven by the 9% price hikes at the ESB, and in October 2012 at Bord Gais.

Elsewhere, private rents rose by 0.6% in the month of November 2012 – this after a 0.7% monthly increase in October 2012 and a 0.9% increase in September 2012, a flat month in August and three months of declines in April-June followed by a small increase in July – and over the past year, such rents are up by 1.8% according to the CSO – there is some small rounding in the figures above which show 2.1%.

 

It seems that in our financial crisis, the big correction in rent took place in 2009 with a 19% maximum decline, compared to a decline of just 1.4% for all of 2010. Since the start of 2011 there has been a 6.1% increase (mostly recorded in February and October 2011 and February and September/October/November  2012).

Rent assistance levels have not been affected by the recent Budget 2013, neither the rates nor contribution have changed.

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[CORRECTION: This morning’s release of arrears and repossession data from the Central Bank contained a footnote which referred to changes to previous quarters’ data due to “reclassification”. The footnote was overlooked on here and the figures below have now been updated to reflect the previous quarters’ data published by the CBI. The adjustments extended to overall mortgage numbers, and it would be interesting to see how that “reclassification” came about. The original release for Q2,2012 is here.

The blog has also received the latest figures from the UK’s Council of Mortgage Lenders – arrears are in this Excel spreadsheet and repossessions are in this Excel spreadsheet. The latest annual numbers are little changed to previous numbers.

The reclassified figures from the Central Bank show that the pace of increase in mortgage arrears over 90 days have decreased slightly. In Q2, 2012 the increase from Q1, 2012 was 7.1% whereas the increase from Q2, 2012 to Q3,2012 is slightly less at 6.3%. In Q2,2012 an extra 5,356 mortgage accounts fell into arrears of over 90 days and that reduced very slightly to an extra 5,111 mortgage accounts in arrears in Q3,2012.

The revised figures show that the number of mortgage accounts did fall in Q3,2012 by 3,000. This followed a revised increase in mortgage accounts in Q2,2012 of 1,000 which was the first increase since records began in Q3,2009.

Contrary to what the Irish Bank Federation claims in its press release today, the number of sub-90 days arrears accounts has actually increased from 47,162 in Q2,2012 to 49,482 in Q3,2012. The IBF says there has been an “underlying decline” which is wrong.

Overall, the figures today show that all accounts in arrears are up 7,431 in Q3,2012 compared with an increase of 5,256 in Q2,2012 and on both an absolute and relative basis, the pace of deterioration has increased.

Here are the revised figures – click to ENLARGE

ArrearsQ32012Corrected

Here are the revised Ireland and UK figures

UKIrelandComparisonQ32012ArrearsRepos

]

[NOTICE: The Central Bank has this morning published Q3,2012 data but it has also adjusted previous quarters' data and this is now being checked with the Bank. For example, the Q2,2012 press release from the Bank is here, but this morning's data shows significantly different data for Q2,2012]

This morning, the Central Bank of Ireland has published its quarterly series of arrears and repossession statistics for both owner-occupied homes and for the first time, Buy to Let mortgages. The figures are available not available from the Central Bank’s website yet, but the Irish Times seems to have had an advance copy to prepare this report. Below is the historical position on owner-occupier mortgage accounts – click to ENLARGE.

ArrearsQ32012

The above shows that the slowing down in the rate of new arrears has reversed and mortgage arrears are now growing at their fastest rate since the end of 2011. The only positive detail is the number of mortgage accounts has increased for the first time since records began in Q3,2009.

In addition to arrears over 90 days, some 43,742 accounts have been “restructured” – these may be paying interest only or smaller-than-contracted sums or in some cases, may not be repaying anything whatsoever.

Today’s figures show that 17% of owner-occupier mortgage accounts are in arrears over 90 days or have been restructured. Some 17,000 homes in Ireland also receive welfare payments in the form of mortgage interest supplement. It is not clear if any of these payments are to mortgage accounts that are in arrears or restructured. A further 49,482 mortgage accounts were in arrears of less than 90 days at the end of September 2012, but such arrears can oftentimes be cleared. But on the face of it, up to 26% of Irish owner-occupier mortgage accounts are in arrears, have been restructured or are in receipt of Government aid.

The figures today show that 154 properties were repossessed in Q3,2012 which is in line with previous months and means that our repossession level remains at a very low level compared to international standards, for example in the US and the UK.

Figures for Buy to Let mortgages today reveal that one in six mortgages is in arrears of more than 90 days. There are 149,592 BTL mortgages, of which 26,779 or 17.9% are in arrears of more than 90 days. There has been a similar rate of deterioration in these accounts since Q2, 2012 as owner occupier accounts.

IrlUKQ32012

The contrast between the treatment of mortgages in Ireland and our closest neighbour, the UK, is stark. Not only are arrears per 100,000 accounts more than five times the level of our neighbour  but repossessions per 100,000 accounts is one quarter of our neighbour’s rate. You are 24 times more likely to have your home repossessed in the UK if your mortgage falls into arrears than in Ireland.

There has been little progress with dealing with the mortgage crisis, and it remains to be seen if the Personal Insolvency Bill which should be passed into law before Christmas (2012) will benefit home-owners. It has been over a year since An Taoiseach responded to President Clinton’s speech at the Global Irish Forum in Dublin Castle where Bill Clinton identified the mortgage crisis as the greatest economic challenge facing this State.

UPDATE: 13th December, 2012. The Central Bank has finally published the arrears information which was due at 11am and which was circulated or leaked to media before 11am judging by the lengthy report by Pamela Newenham in the Irish Times at 11.01am.

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If you’re having an annual review and agreeing your objectives with any half-decent manager, you will know what SMART stands for – Specific Measurable Attainable Realistic Timebound. Instead of having some nebulous objective which you don’t understand and which can’t be objectively measured, you agree meaningful objectives and at the end of the year, you and your manager or staff can agree if objectives have been met. It’s standard stuff.

But NAMA HQ is a SMART-free zone, and today the Agency has published its objectives for 2013 and lo and behold, there’s not a specific target or measurable objective for the 12 months of 2013 at all. It’s a good job that the senior folks at NAMA waive their bonuses because otherwise there could be a real bunfight over whether or not objectives had been met.

In fairness, there is one metric in the objectives – NAMA does estimate its operating costs in 2013 will be €140m, down from what NAMA says was €167m in 2012. In fact, NAMA’s budget for 2012 was €194m, but it seems that NAMA is conveniently ignoring receivership costs and is deducting these from proceeds of sales at companies to which receivers have been appointed.

NAMA is continuing to recruit and now employs 206 staff directly from the NTMA who are involved in the disciplines shown below (in brackets) plus 550 staff who manage smaller loans at AIB, Bank of Ireland and IBRC plus an army of service providers.


As for the objectives, they can be summarised as “NAMA will do its best”

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Despite the fact that the Property Price Register seems to show muted results for the NAMA deferred mortgage product launched on 8th May, 2012, NAMA insists that the pilot scheme has been a success, and the Agency has today announced it is extending the scheme to an additional 180 homes in 12 counties – remember the pilot scheme announced in May 2012 only applied to 115 properties in three counties.

The NAMA scheme which NAMA calls a “deferred payment initiative” involves buyers getting a normal mortgage from one of NAMA’s designated banks – AIB/EBS, Bank of Ireland and PTSB. After five years, the value of the property will be assessed and NAMA will knock any decline in value, up to 20%, off the original purchase price. The scheme was designed to give reassurance to buyers that if prices continued to fall, then NAMA would bear the risk up to 20% over five years.

NAMA has said that it eventually hopes to extend the scheme to a total of 750 homes. The extension of the scheme announced today applies to the following properties:

Phase II[1]_Page_1

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Jones Lang Lasalle (JLL) has today published its commercial property series for Ireland for Q2, 2012 – the report should be available shortly on the JLL website but for the time being, there is Jack Fagan’s report in today’s Irish Times. The JLL series is one of the two Irish commercial indices referenced by NAMA’s Long Term Economic Value Regulations (Schedule 2) and is used to help calculate the performance of NAMA’s “key markets data” shown at the top of this page. The other quarterly Irish price series is published by SCSI/IPD and will be available on Tuesday 24th July at 3pm; because it is generally published after JLL’s, it is not used here to help compile the NWL index, but the SCSI/IPD index does historically show a very close correlation with JLL’s.

The JLL Index shows that capital values fell in quarter two, 2012 by 2.3% – this means that with the exception of Q4,2011 Irish commercial property has declined in value for 19 of the last 20 quarters and the aberration in Q4,2011 when a 1.2% increase was recorded was due to the exceptional measures set out in Budget 2012 – the reduction in stamp duty on commercial transactions from 6% to 2%, the abandonment of proposals to abolish Upward Only Rent Review terms in pre-February 2010 leases and the enhancement of capital gains arrangements for commercial property held for several years.

Overall since NAMA’s Valuation Date of 30th November, 2009 prices have declined by 23.8%. Commercial prices in Ireland are now 65.7% off their peak in Q3, 2007. On an annual basis prices are down by 7%. The NWL index is now at 806 which means that NAMA needs to see a blended increase of 24.1% in property prices across its portfolio to break-even at a gross profit level (taking into account the fact that subordinated bonds will not need be honoured if NAMA makes a loss). NAMA acquired loans underpinned by €9.25bn of Irish commercial property. The Q2, 2012 decline of 2.3% means that the underlying NAMA property has declined by €166.5m in Q2, 2012 (€9.25bn minus 22% to Q1, 2012 adjusted for 2.3% in Q2, 2012) – so much for NAMA claiming the market was stabilizing!

Rents decreased by 1.4% in the quarter, reversing the 0.7% increase in Q1, 2012 which was itself the first increase since Q2,2008. This is unsurprising as secondary market rents have continued to slide even though there are indications of prime rents stabilizing.

UPDATE: 24th July, 2012. The “other” commercial index for Ireland has been published today by the SCSI/IPD and is available here. It shows commercial property prices fell by  2.3% in Q2, 2012 with retail falling down 2.2%, office by 1.5% and industrial by 1.5%. Prices are now down 65.8% from peak, which compares with 65.7% shown by the JLL index.

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(The new properties added in April 2012, click to enlarge)

NAMA has today published its now regular monthly list of properties subjected to foreclosure action – the list shows NAMA foreclosed properties at the end of March 2012. The full list is here, the list of new properties added is here, and you will find previous editions of the monthly list which was first launched in July 2011, here. It is hoped to have the list in a spreadsheet format shortly, available here.

 

You should read the full list of NAMA’s terms for accessing the lists here. But in summary, this is what you’re looking at:

(1) Real estate property subject to loans in NAMA to which receivers have been appointed. The receiver’s website is shown against each property.

(2) This is all the real estate foreclosed sorted by country, and then region.

(3) Not all of the property may be for sale.

(4) Contact the receiver with enquiries or expressions of interest in the first instance. Only pester NAMA if you’re not getting any response from the receiver and make allowances for receivers being busy with queries, particularly after a new release of foreclosed property.

(5) If you think there are mistakes on the list, contact NAMA.

Comment and analysis here shortly.

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