Brendan McDonagh: Nama chief

The government's powerful new National Asset Management Agency (Nama) will be able to order builders and developers to slash the prices of houses and apartments they are selling and reduce rents to tenants or else they will face liquidation in the courts.

The Sunday Tribune un­derstands Nama will have specific powers to order developers to cut prices well below their current levels so as to raise cash to offset arrears on existing loans.

Last week finance minister Brian Lenihan said there were three groups of developers to be dealt with by Nama.

The first group are not in arrears on their loans; the second are described as "hopelessly insolvent"; a middle third group are described as being in a "mixed" situation, with some performing loans and some non-performing loans.

Lenihan said it was not yet clear how this third group would be dealt with by Nama.

However the Sunday Tribune understands the fate of this group will rest on whether they are prepared to slash the price of their residential properties to release cash.

The early planning for Nama has thrown up several examples of developers not prepared to push prices below certain levels. However Nama will be given powers to order price cuts and rent reductions.

"Developers are still talking about not selling at fire sale prices, but Nama will be all about repricing the market. Reality has to be faced up to. Getting cash in the door is going to be the criterion," said a senior government figure familiar with the preparations for Nama.

The agency has now re­ceived 1,300 job applications, even though it will have a staff of only 30 to 40. As concerns grow about bank officials' role in Nama, the government has come up with a plan to exclude senior loan officers at the banks from the process.

An audit trail will be pursued which will identify loan officers who signed off on large exposures to developers in the past and these people will then be filtered out of the process, the Sunday Tribune has learned.

The agency is also expected to be aggressive about enforcing the security underlying major loans, even if that includes taking ownership of family homes belonging to developers.

"Whatever security has been put up will be taken," said a source.

Smaller loans are definitely not going to be part of the agency, the government has indicated. The Sunday Tribune understands the cut-off for loans will be €5m.