Tuesday 16 January 2018

Lenders told to do more for families in arrears

Charlie Weston

BANKS have sufficient funds to allow them to help out mortgage holders in difficulties, Central Bank governor Patrick Honohan said yesterday.

And he told lenders they need to "ramp up" their efforts to deal with those who are so deeply in arrears that they risk having to hand over their homes to the bank.

"Insufficient capital cannot be a reason for inaction," Professor Honohan said at a conference yesterday.

The likes of AIB, EBS, Permanent TSB and Bank of Ireland have been provided with almost €10m to allow them to cope with rising losses on residential mortgages.

Prof Honohan said lenders have restructured "relatively few" mortgages.

He added that the country is developing more "comprehensive solutions" to the arrears problem.

"Enough capital has been injected into banks to absorb unavoidable losses from unsustainable mortgages. Inefficiency of capital cannot be a reason to delay action," he said.

Around 40,000 households are in arrears for more than six months on their mortgages.

The Government published recommendations for dealing with arrears on Wednesday that could see thousands of indebted borrowers lose ownership of their homes and rent the properties instead.

Prof Honohan said it was crucial that banks and the State were able to distinguish between borrowers who cannot pay and those who will not.

"Making that triage between the truly unsustainable situation and the can but won't pay is one of the key operational challenges for banks and other public authorities," he said.

Irish Independent

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