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HouseBought for(1) Paid down(2)Now worth(3)Neg Equity (42%)Current mortgage payment monthly (4)Current Monthly Income of House Assume Sustainable Mortgage Payment = 55% of incomeEquates to 20yr mortgage @3.5% Equates to 30Yr Mortgage @3.5%Debt/Equity Stake of BankTotal OK? (Just a check)Debt/Equity Stake of Bank @30RULE: Take Debt/Equity if < 35% of total, else bankruptcy (5)RULE: Take Debt/Equity if < 45% of total, else bankruptcy (5)Ahura Rule: Take Debt/Equity if < 35% of sale price, else bankruptcy. 30yr Murphy RULE: Take Debt/Equity if < 35% of total, else bankruptcy (5)
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1. Couple on dole of 750pm-400 for living expenses400000520002320001160002000110060514520021780025480040000014200NoNoNoYes
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2. 1 person unemployed, other earns 1000pm, 500 for living expenses.2200002860012760063800110016008802112003168008800200000-189200YesYesYesYes
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3. Both unemployed, same as 1.500000650002900001450002500110060514520021780035480050000072200NoNoNoYes
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4. 2 people, unemployed, with kids, 600pm expenses190000247001102005510095060033079200118800110800190000-8600NoNoNoYes
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5. 1 person, unemployed, 150pm to live on.190000247001102005510095060033079200118800110800190000-8600NoNoNoYes
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6. 1 person, unemployed, 1 working, 150pm to live on.4000005200023200011600020001800990237600356400162400190001-124400NoYesNoYes
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AssumptionsAssetsLiabilities
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(1). 100% Mortgage bought in 2006. Case Study 1BankEquity: 254800254800
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(2). assumes 13% paid down since purchase in 2006254800 (stress test injected €)Put option Value
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(3). Assumes 42% drop in prices from CSO.
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(4).Assumes 3.5% @ 25 years, see loan analysis in next sheetHousehold217800217800
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(5). Bank underwrites 35% of mortgage anyway, will take equity stake iff payments to 'new' mortgage are within 35% of existing mortgage.
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