Helping greedy out of a hole
REVELATIONS yesterday from the Central Bank that it is the larger residential and buy-to-let mortgage accounts that are most likely to be in trouble may foster resentment.
That is because it is these distressed mortgage holders who are most likely to benefit from a deal under the new personal insolvency regime.
New arrangements will replace the current inflexible bankruptcy system with court-backed deals between strapped borrowers and banks, with some debt written off if a payment agreement is observed over a five-year period.
These big borrowers – who took out loans of more than €300,000 – risk dominating the new personal insolvency process. This will be at the expense of equally distressed mortgage holders who borrowed much smaller amounts.
The Punt can't help thinking that those who borrowed big during the boom are mostly the same people who used their homes as virtual ATMs to provide themselves with cash.
The money was used to fund lifestyle purchases like Range Rovers, buy investment properties and holiday homes and pay down other debts.
Now they are in trouble.
Of course, the Punt is aware that many of those with large mortgages who are now in a financial mess are genuine cases whose businesses and careers have collapsed.
Equally, we can't help feeling some of those who borrowed big were plain greedy. Now the little guys could end up being the losers in the personal insolvency deal making.