NAMA scored a stunning success with the launch of its negative equity mortgage a month ago, though possibly more for the publicity than for the mortgage product – dubbed the “deferred payment initiative” by NAMA – itself, as reporting suggests that most of the sales thus far have not been financed by the mortgage product.
There was always scepticism on here with respect to NAMA’s chances of securing approval from the European Commission for the scheme because of its potential negative impact on sellers who compete with NAMA, who are not able to offer a comparable mortgage product, which results in these sellers being placed at a disadvantage. It is true that Irish financial services group, IFG announced its own negative equity mortgage product last year but it has yet to reach the market, with not a single product being sold up to mid-May 2012. So as things stand today, if NAMA is selling one home at €200,000 with its negative equity mortgage product and you are selling an identical home next door, then you will need to reduce your price to compete on a level playing field. By how much? By up to 20%, or €40,000. And yet by having this product, NAMA may eventually get paid the full €200,000 if prices stay the same or increase over the next five years. The NAMA pilot of the scheme applied to 115 homes but there is an intention of extending the scheme to 750 homes.
NAMA wasn’t providing much information on its mortgage product, so a formal request was made to the European Commission for a copy of the decision to approve the negative equity mortgage, and documentation considered in arriving at the decision. The deadline for providing the information was set to 6th June 2012, but today the European Commission has written back – see letter reproduced above – to advise that “in view of the assessment of the objections raised with respect to the disclosure of documents ..applied for”, the prescribed period for providing a reply has been extended by three weeks. The application and response can be viewed here. It is not clear what objections have been made to prevent the release of what documents, but the matter will be pursued in the interests of transparency.
NAMA Wine Lake 
You’ve caught the incompetents off guard and they need an additional three weeks to decide what to do with you.
I’m guessing that Nama will try to have the Nama Act confidentiality clauses applied to the documentation they have already released to the EC; Despite the fact that since this documentation is available under FoI to the entire EU, Irish laws do not matter a fig. Nevertheless I suspect they will try to apply considerable legal torque to twist out of this, but this will ultimately fail in the face of EU legal/bureaucratic officials unwilling to put their necks on the line to satisfy the fancies of cloistered Paddy institutions.
When the legal advice eventually comes back negative(~ 2 weeks in), I would wager that they will simply stonewall. The documentation will either not be delivered, not fully delivered, or delivered but heavily censored with “NAMA ACT” ink all over it. This is very likely if the request was made from the Republic or even Northern Ireland. You might want to get a friend in the UK to send a letter instead.
Given the way they—and most Irish officials—have acted in the past, I fully expect Nama to pull some kind of passive aggressive stunt or the other(maybe a clarification letter or some administration fee). The rules don’t mean a lot when people make them up as they go along. Be sure to keep us all updated on any developments!
By the way, should you suddenly stop posting, I reserve the right to spread elaborate conspiracy theories all over the web, involving secretive board meetings, job offers, Russian femme fatales, confiscated helicopters, and disused railway works in the Ukraine. It’ll make a red hot screenplay.
“NAMA scored a stunning success…”
You know Nama is exactly like an Estate Agent when it talks about successful sales. Would it not be advisable to take their reports of success with at least some caution?
A recent price drop caught my eye…..
http://www.myhome.ie/residential/brochure/cedar-grove-firhouse-road-templeogue-dublin-16/215702
http://collapso.dyndns.org/JavaHost/servlet/MySQLsalehistoryMyHome?id=215702
These were one of the first lot of ‘firesale’ apartments in June 2010. They ‘SOLD OUT’ on the first weekend……………or, maybe not…….
@NWL. Ha! You scored a direct hit, NWL. Well done. I have been wondering on here for many months how NAMA could market this product as it is clearly in contravention of Competition policy. The reply – if you get one – will make interesting reading.
How about the 360 reduction in mortgage payments? That still leaves the family 680 in the hole after the 5,000 increase in government service payments, taxes, and so forth.
http://www.independent.ie/business/personal-finance/property-mortgages/new-mortgage-rate-cut-to-save-families-360-3125203.html
@Jake, what will the ECB Main rate be in 2015? It’s 1% today and the (light) betting is that it may come down to 0.75% or even 0.5% in the short term, though I have my doubts and can see much resistance to cutting below 1%. But by 2015 I would expect it to be more than today, 2-3% in fact, so any short term mortgage interest saving is likely to be overshadowed by rate increases as some solution to the EZ crisis allows a return to some kind of normality.
NWL,
Did the EU approve this scheme (and you’re just looking for additional info)?
@Ahura, I believe the Competition Commission at the European Commission did indeed approve the scheme. I say “believe” because I cannot find the decision yet on the EC website, and that was part of the information request. NAMA would not have launched the scheme without approval.
Thanks. That’s what I thought. It seems odd that a press release for the approval isn’t available.