Monday 20 January 2020

Mortgage write-offs 'can't be left up to banks'

Charlie Weston Personal Finance Editor

BANKS should not have the final say on who has some of their mortgage debt written off, under recommendations outlined yesterday by a committee of TDs and senators.

Under new legislation proposed by the Government, banks are to have a veto on which homeowners will have the amount owing on their mortgages reduced.

But a cross-party Oireachtas committee has called for an official appeals mechanism to be put in place with the power to rule against banks.

The appeal could come into play where a lender rejects a "reasonable proposal" prepared by a financial adviser on behalf of the householder, said Fine Gael TD David Stanton, who chairs the Committee on Justice, Defence and Equality.

A state insolvency office is due to be set up to oversee the new debt deals.

This office would need to be given legal powers to handle banks that reject deals with homeowners, said the committee.

Alternatively, the courts could have a role in deciding whether or not a bank has been unreasonable in rejecting a deal.

The Insolvency Bill proposes that householders who are unable to repay mortgage debt will be able to get some of it written off without having to go into a court to declare themselves bankrupt, provided that they meet certain conditions. But the banks will have to agree to any deal.

Families should be facilitated as far as possible to remain in the home in any insolvency arrangement, the committee said in its report on the proposed new personal-insolvency legislation.

Insolvency

All debts of struggling households should be lumped in together if a family is getting a deal from the lender, it urged.

Under the Bill, homeowners would be represented by personal insolvency trustees, but the committee said there was little detail on how these would be regulated and paid and the kind of expertise or qualifications which would be required of them.

It said that the state-funded Money Advice and Budgeting Service (MABS) could take on the role of insolvency trustees if it was better resourced.

Irish Independent

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