| 23.9°C Dublin

Government to force banks to help mortgage borrowers

BANKS will be forced to up the number of deals they do with distressed homeowners who cannot pay their mortgages, under new rules.

The Government is set to force banks to work with mortgage borrowers who find themselves in genuine distress.

Taoiseach Enda Kenny will outline at a press conference today an overhaul of how banks deal with the mortgage crisis.

As part of Government directives, banks will have to offer deals that last years rather than putting those behind with their payments on the likes of interest-only deals for a few months.

The deals will also include split mortgages and long-term, interest-only deals for those in serious arrears. Informed sources indicated there will be no debt write-offs and mortgages must be repaid in full.

The six main banks – AIB, EBS, Bank of Ireland/ICS, Permanent TSB, Ulster Bank and KBC Bank – will be given common targets for dealing with mortgage arrears.

Banks yesterday met the Central Bank and the Cabinet was briefed about the new strategy.

The main lenders will target homeowners they feel are deliberately withholding mortgage payments under the new Government strategy.

The banks could also regain powers to threaten repossessions of residential and buy-to-let investors whom they suspect aren't paying their mortgages despite being able to.

A High Court decision in 2011 and various Central Bank rules on mortgage arrears have convinced some people that they cannot lose their homes.

If the banks have not shown that they have met the new target of restructuring at least 20,000 mortgages a month, they will be forced to put aside extra capital, as new rules on provisions will be introduced in 2014.

See Dan White, Page 15