One of the key questions about NAMA is how much it will pay for the loans it takes over from the banks. The Bill sets out the principles underlying how NAMA will value these assets.
The Bill says the valuation methodology will recognise that the current market for property backed loans and the underlying assets is extremely weak - 'very illiquid', as the department puts it. The plans will not require the banks to accept 'fire-sale' values.
But the department says NAMA will not be guided in its pricing 'by the property prices and expectations regarding property prices that underpinned the original lending decision'.
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It says it will aim to set a reasonable price having regard to a longer-term perspective on the property market. The method for valuing the assets will require approval from the EU.
Finance Minister Brian Lenihan is drawing up detailed regulations on how the long-term value of any assets will be calculated. These are to be published in September. Institutions can seek a review of the price paid by NAMA, and this will be carried out by a valuation panel. The Minister will appoint the panel's members.
The department says NAMA will set the price it is prepared to pay for assets. In acquiring loans, NAMA will have 'all necessary powers to carry out full due diligence and acquire all necessary information'. Under the legislation, financial institutions are obliged to act in good faith and comply with appropriate directions from NAMA.
NAMA will have all the powers necessary to buy, hold, and sell off assets and, if necessary, complete developments with a view to achieving the best return for the State.
