Wednesday 20 November 2019

Debt deals on rise but tough questions remain

An increasing number of 'debt deals' are being revealed by the banks
An increasing number of 'debt deals' are being revealed by the banks

Debt forgiveness has become the new byword at the property-related dinner table conversation. As an increasing number of 'debt deals' are revealed by the banks, this process has become a matter for heated discussion and comparison.

The reason is possibly that debt 'forgiveness' was never really in the Irish lexicon, especially during the boom years when prices were increasing at manic rates and everyone on the so-called property ladder was a winner.

Then came the crash and, to use the hackneyed phrase, 'we are where we are'.

Where we are, according to our story today, is that AIB, which now includes the former building society arm EBS, has agreed at least 100 deals with mortgage holders, which have involved some form of debt write-off.

The latest deal to come into the public domain is a €195,000 debt forgiveness, which, in effect, means writing off half a Cork couple's mortgage. In many cases, one or both of the mortgage holders are working. Apparently the banks are finding it easier to do deals with people who they believe can pay, if not all, at least a substantial portion of their debt.

But according to the experts, 100 'deals' is just the tip of the iceberg – in a year's time there will be many, many more. Ireland, where there is an extremely high level of home ownership among the population, is drifting in the direction of the UK and the US, where debt forgiveness and 'handing back the keys' is the simple solution for those who find themselves unable to maintain their mortgage repayments.

Of course, there has to be a downside. Most ordinary people have little or no idea now much data is held by banks on their personal financial position.

A deal may result in a couple holding on to their house, but it may also mean that they will find it next to impossible to get any sort of credit in the future once their 'credit rating' is shared by the financial institutions. The other issue that hasn't really become part of the public debate is the "moral hazard" aspect of such deals. Is anyone doing anything for those who have sacrificed major aspects of their lifestyle to maintain their mortgage repayments? Or will they continue to be squeezed for mortgage repayments by their lenders and taxes and charges by the Government?

We should not forget that it is often those very same people whose taxes will end up funding AIB's pragmatic decision to embrace debt forgiveness.


Today is, apparently, Happiness Day. So what is happiness, apart from being one of the most mulled-over aspects of the human condition?

For some it is an old concept from the glory days of advertising – a man wreathed in a pall of cigar smoke; a woman gazing at her dream home. Yet in our highly commercialised world, happiness has taken on another meaning.

It is not really about worldly possessions any more, happiness is a state that can be gained by coming to terms with life. 'Money won't make you happy' goes the old saying, the riposte to which was: 'I'd rather be rich and unhappy than poor and unhappy'.

The poet Ogden Nash put it a different way: 'People who have what they want are very fond of telling people who haven't what they want that they really don't want it.'

Yet we, the majority of the population, never had it so good. So why are so many people feeling unhappy and unsatisfied?

Of course there are many problems in the modern world.

Yet there are also pleasures that cost us nothing, swimming on any of our fine beaches, breathing clear mountain air, walking the dog, and time with family and friends.

So maybe we should not try to understand or analyse, for today at least we should just heed the words of the late Bob Marley: Be Happy.

Irish Independent

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