Sunday 17 December 2017

No relief for struggling homeowners

Bitter blow as mortgage group admits it won't create debt-forgiveness plan

Laura Noonan

THE Government's special mortgage group last night privately admitted it will not come up with any new measures to help struggling homeowners.

The news will come as a bitter blow to borrowers who have been holding out for new measures under which banks would offer more widespread "debt forgiveness", take equity stakes in houses or rent homes back to their owners.

The new group will instead only recommend new "guidelines" for how banks should deal with borrowers.

Sources last night also confirmed the group was likely to concentrate on creating a new agency to deal with homeowners who felt they were being treated unfairly by their banks.

It is understood that officials from the review group have privately admitted there had been "mistakes in communication" that had raised the hopes of struggling borrowers.

Finance Minister Michael Noonan recently promised his administration would act swiftly once it got the group's report at the end of September, rejecting suggestions people would have to wait for December's Budget for new measures.

"People are waiting for a big announcement," one source said. "There will be none -- the group will simply issue guidelines."

It's understood the banks will be "strongly encouraged" to follow the guidelines, which will be of a general nature and won't compel lenders to do things such as take equity stakes in houses or rent homes to borrowers.

Instead, the guidelines will lay out principles for how banks should engage with borrowers who can't meet their repayments and want to restructure their loans.


The Government has already laid the ground work to establish a new agency that will adjudicate in situations where borrowers feel they are being treated unfairly by their banks.

The new agency will fall under the remit of the Citizens Information Board and will be spearheaded by former AIB whistleblower Eugene McErlean

"The department has no comment to make on the issues raised," a spokesman said last night.

"The deliberations of the Interdepartmental Group (on mortgages) are continuing and, as indicated previously, the group will report to the Economic and Management Council by the end of September."

The Central Bank, which has a representative on the group, also declined to comment, as did the group's head, Declan Keane.

Last week, Central Bank governor Patrick Honohan hinted at the creation of MABS II, as an agency that would help borrowers who had debts across numerous banks.

Professor Honohan also argued the case against any formal debt forgiveness scheme, but said banks were "behind the curve" in engaging proactively with borrowers.

The decision not to introduce a new scheme is understood to stem from the fact that such a scheme could encourage borrowers who can pay their mortgages not to do so.

Irish Independent

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