Borrowers defaulted on home loans in hope of debt write-downs
International ratings agency Moody's has controversially suggested large numbers of mortgage holders have stopped making repayments in a bid to get debts written off.
Banks have in the past suggested that a large number of those in arrears are so-called strategic defaulters - those who make a decision to stop making payments on a debt, despite having the financial ability to make the payments.
Now Moody's says in a new investor note that mortgage arrears rose sharply here when rumours of debt forgiveness circulated at the end of 2011, even though general economic developments did not justify such a spike.
Irish mortgage arrears are the highest in Europe, the ratings agency said.
Moody's said this country was a good example of what it called "recourse regulation". Recourse is the legal right of banks to demand repayments.
The ratings agency looked at mortgages that were packaged up and sold to investors, so-called residential mortgage-backed securities (RMBS).
The Moody's investor note states: "Irish RMBS arrears surged when rumours of debt forgiveness circulated at the end of 2011, even though general economic developments did not justify such a spike.
"Regulation introduced in 2013 weakened the recourse nature and introduced the possibility of debt forgiveness, even though underwriting standards have been strict and debt forgiveness has only been used in very limited cases to date."
Moody's was making reference to the Insolvency Service of Ireland, which oversees formal debt write-down deals.
It was established under the Personal Insolvency Act 2012, which came into force in 2013.
The ratings agency said the Irish mortgage market ranks as the weakest in a sample of European markets it looked at in terms of ability of banks to force homeowners to pay mortgages and to repossess a property.
It said mortgages in this country display the highest level of what it called delinquencies.
Recent figures from the Central Bank show a total of 92,291 residential mortgage accounts were in some form of arrears. This works out at around one- in-eight mortgages.
The number of accounts in arrears over 90 days at end September was 65,584.
Banks have claimed that up to one in five of those in arrears are strategic defaulters.
A charity that helps those unable to repay their debts said banks were exaggerating the extent of strategic arrears. The Phoenix Project's Tom O'Reilly said: "Strategic default is overplayed by the banks to turn public opinion against the people who are not able to pay their mortgage in full."