BoI is latest lender to consider writing off mortgage debt
Published 14/04/2011 | 05:00
BANK of Ireland yesterday became the third major lender to admit that it will consider some limited form of debt forgiveness for over-burdened mortgage holders.
It came as Taoiseach Enda Kenny said that the Government was interested in measures to help relieve loan pressure on homeowners.
Speaking in the Dail, Mr Kenny said the options would have to be treated "carefully".
On Tuesday, AIB said it was looking at the option of struggling homeowners having part of their mortgage written off.
The bank's executive chairman, David Hodgkinson, said debt forgiveness was one option being considered by AIB. It recently emerged that a number of heavily indebted mortgage-holders with Bank of Scotland had managed to get some of their debt written off.
Bank of Scotland (Ireland), which shut down its operations here last year, admitted it was working with customers to "restructure their debt in exceptional circumstances".
Now, Bank of Ireland has indicated to the Irish Independent that it may write off some debt in limited circumstances.
The bank said a small number of its residential customers were unable to meet their repayments, with little prospect of servicing the debt in future.
"For that small group, we work with them to review their options with a view to helping them reach a pragmatic resolution," a spokeswoman for the bank said. It is understood that mortgage debt write-off is what the bank means when it refers to a "pragmatic resolution".
Banking sources indicated yesterday that lenders would be more inclined to look at writing off mortgage debt where someone was forced to sell their home.
Michael Dowling of the Independent Mortgage Advisers Federation said he had dealt with instances where both buy-to-let investors and residential mortgage holders who were in trouble had managed to cut a deal, with the bank writing off part of the capital owed.
Ulster Bank, KBC Bank and Irish Nationwide last night said they would not write off residential mortgage debts. Permanent TSB had no comment.