Borrowers to be looked at on case-by-case basis by bad bank
The Government has admitted for the first time that NAMA could free some developers from their personal guarantees to repay loans.
A spokesman for NAMA said it did not mean "debt forgiveness" for developers, but did confirm that, on a case-by-case basis, borrowers may be released from their personal guarantees to the state agency.
The revelation first emerged in a written Dail reply by the Finance Minister to Fianna Fail's Michael McGrath, which was released to the public yesterday.
Michael Noonan said some developers might not be pursued for guarantees to pay back loans, in cases where they had co-operated fully with NAMA.
NAMA would make decisions on the pledges on a "case-by-case" basis, the minister said.
The "personal guarantees" mean most builders whose companies owe cash to NAMA are personally liable if the loans are not fully repaid.
It is the first time the Government has admitted that some debtors may not be pursued in relation to the pledges given to banks when loans were taken out.
NAMA said debtors who were co-operating fully with the bad bank, including fully disclosing all of their wealth, could be released from the personal guarantees but only in return for signing commercial deals that NAMA believes will generate a better return for taxpayers.
NAMA insisted that any deals to release builders from their loan pledges would be only implemented a minimum of two years after the debtor's assets had been sold off.
Mr McGrath said ordinary people would be "nauseated" if it meant developers who owed money were not pursued to the fullest extent possible.
He described the minister's reply to the original question as "evasive".
"I put a straight question, has NAMA done this, and in what number of cases; I am not satisfied with the reply," he told the Irish Independent last night.
Mr McGrath said there was evidence that some developers squirrelled away assets in the good times and afterwards. NAMA should pursue borrower to the fullest extent possible, he said.
The news that borrowers could be released from personal guarantees is the second blow to the claim that NAMA would pursue debtors "to the end of the earth", made when the bad bank was established.
In May, a major report by the State's financial watchdog, the Comptroller and Auditor General (C&AG), questioned the value of NAMA trawling for hidden developer assets, even where debtors were not co-operating with the agency.
In its audit of the agency, the C&AG looked at a pilot scheme to uncover hidden assets.
The pilot scheme included NAMA putting together a panel of private detectives and asset-recovery specialists to scour the globe for hidden wealth.
Some hidden wealth was discovered, but the assets "were insignificant in value and not all would result in a benefit to NAMA", according to the C&AG report.
Questions over the value of the pilot scheme have left a major question mark over NAMA's intention of carrying out detailed searches into the wealth of all of its borrowers.