Thursday 14 December 2017

Report offers 'limited' help to desperate homeowners

Charlie Weston

HOPES of a comprehensive plan to help thousands struggling to meet mortgage repayments will be dashed by a report to be discussed by the Cabinet today.

It will merely recommend a small level of debt forgiveness in extremely limited circumstances.

The report, which is headed by Department of Finance official Declan Keane and made up of representatives from a number of government departments, will not recommend any mass debt forgiveness scheme.

It will call for mortgage lenders to fund the recruitment of around 100 financial advisers to offer a debt support service to those at risk of losing their homes.

Another recommendation is that local authorities and charities should buy the homes of those in hopeless mortgage arrears. The properties would then be rented back to those forced to give up ownership of their houses.

The new group of financial advisers would work alongside the existing Money Advice and Budgeting Service.

But the report will suggest that there should be a new system, outside the courts, to allow those who are over-burdened with debts to have some of their bills written off.

This is expected to lead to a limited form of debt forgiveness where those who have their houses repossessed, or hand over the keys, are able to have the balance that they still owe formally written off.

This is already happening on an informal basis. The report, chaired by Mr Keane, who is a KPMG accountant on secondment to the Department of Finance, will also recommend that:

•Some repossessed homes be taken over by local authorities which will then lease them back to those forced to give up their properties.

•Housing associations will be encouraged to take ownership of repossessed houses that would be rented out as social housing.

•Lenders should consider setting aside, or warehousing, a portion of the capital amount owned on a mortgage for a limited period. This would be for those with a reasonable chance of getting back to work and would radically lower the monthly repayments for a period.

•Proposals for negative equity mortgages for those who want to trade down, which would allow those seeking a smaller home to take the balance they owe on their original home on to the mortgage of the new smaller home.

•The State's expenditure on mortgage interest supplement, which will cost €70m this year, should lessen if the new measures are adopted.

There are some 22,231 people at risk of losing their homes because they have not paid their mortgage for a year or more.

Almost 70,000 homeowners are three months or more behind on their home-loan repayments.

The recommendations of the Keane group report are expected to come in the form of guidelines, with the banks "strongly encouraged" to follow them.

Irish Independent

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