Hi °C | Lo °C THE Government is to step up the pressure on banks to do deals with homeowners in mortgage arrears now that the promissory note issue has been sorted out.
Finance Minister Michael Noonan told banks to start doing deals now with indebted householders ahead of new personal insolvency schemes coming into play.
The legislation to put a new State Insolvency Service in place has been passed but it could be months before it is running.
Mr Noonan said the new service would provide a platform for banks to do deals with heavily indebted householders.
But lenders should not wait until the new service is operational before restructuring mortgages where people have more debt than they can repay.
"The personal insolvency legislation has gone through the Dail and the Seanad. It is a platform for sorting out the debts many people have. Banks can go now and, on a case-by-case basis, deal with people," he said.
And the minister again accused the banks of dealing with problem mortgages at a slower pace than he would like.
He insisted the banks have enough capital to write off portions of debts, if householders keeps to strict agreements.
Restructure
Mr Noonan, who said he had no immediate plans to step down from his position, said AIB had geared up to be able to restructure up to 2,000 distressed mortgages a month.
He said Bank of Ireland had told him it would be able to handle a similar number.
The Department of Finance and the Central Bank are at odds over whose responsibility it is to force banks to deal faster with indebted homeowners.
The new personal insolvency process opens up the prospect of banks coming to deals with mortgage holders. Agreements would last up to five years and be rubber stamped by judges.
If householders stick to a new reduced payments plan, the banks could write off large chunks of what they owe on mortgages and buy-to-let loans.
But lenders have the power to veto deals they do not like.
The State insolvency service is racing to establish itself.
Head of the new body, insolvency expert Lorcan O'Connor, still has no office, no IT system to process applications for personal insolvency debt deals, and has yet to put rules together on how the service will operate.
However, Mr O'Connor told a conference he hopes to have the service in operation by June.
He is set to launch an information campaign about the service in the coming weeks.
Irish Independent
