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The struggle to pay mortgages

IT is not too difficult to understand how 40,000 homeowners could find themselves unable to meet their mortgage payments. With around 450,000 on the live register, a significant number of those will have taken on big loans to buy a house or apartment confident that they would continue to earn a good wage indefinitely, only to see their income decimated.

Another 30,000 people who are not in arrears have come to some arrangement with their banks to lighten the burden. So 70,000 homeowners are in some difficulty with their mortgages. It is a significant number, but not nearly as scary as some of the figures lately bandied about.

And it is reassuring to learn that, rather than giving in to despair, tens of thousands have sought some sort of restructuring and have been accommodated by their lenders.

Negotiation is always the wisest course. Walking away is not an option.

Those who hope to burn their bridges of debt by handing back the keys of their property may not realise that they can be pursued for many years and may find it impossible to gain credit for the rest of their lives.

Paradoxically, in the United States, where the sub-prime fuse was first lit, people who post their so-called 'jingle mail' cease to be liable for the mortgage. Here in Ireland, the legal position is quite different.

Anyone who bought a house or apartment in the past five years or so is likely to find himself, or herself, in negative equity.

He or she also faces the distinct possibility of a property tax after the next Budget, despite having paid stamp duty on a now devalued home.

Most of these are in for the long haul, with their 35- and 40-year loans, and some will not have problems, but at the extreme end of the scale, repossessions are a growing reality.

It is hard to see how a repossessed home can be a positive asset for a large financial institution, especially at a time when the property market is so depressed.

Repossession of a home should be an extreme and final resort and, fortunately, to judge from the figures, the banks and building societies appear to have reached that conclusion.

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