Major mortgage bailout for homeowners is on the way
Published 10/10/2010 | 05:00
A MAJOR mortgage-bailout measure means banks face forgoing millions of euro in repayment income.
The radical recommendation would let struggling homeowners put off paying up to 33 per cent of their mortgages for several years.
It comes from the Department of Finance's Expert Group on Mortgage Arrears and Personal Debt, whose report is due out later this month.
The recommendation is highly likely to be enforced on the state-controlled mortgage lenders, the Sunday Independent has learned.
"Part of the mortgage-interest payments would be suspended for a period of time," an informed source said.
"Say you have a €300,000 mortgage and can't fully make payments on it, but you can make payments on €200,000. You could park €100,000 and then continue to service the €200,000 portion."
This 'breather' would continue for three to five years.
"That portion could be recovered through the eventual sale of the house or when the homeowner's circumstances improve," the source added.
It's not a blanket opportunity for homeowners to go rogue on their mortgages, however, and would only be an option of last resort.
The source explained: "A mortgagee would have to be able to service some of the debt. It would apply only after other forbearance measures, like a period of interest-only payments or a mortgage holiday had been exhausted."