No 'Debt Forgiveness' On Mortgage Arrears

A leading mortgage group has said they will not be recommending a formal 'debt forgiveness' scheme for mortgage holders in serious arrears.

The announcement comes after yesterday's figures from the Central Bank, which revealed one in 20 Irish mortgages have been in arrears for over 90 days.

The worrying data showed 40,472 mortgages were in arrears for over the 90-day period at the end of September, equating to over double that of last year's figure.

Today's report from the Mortgage and Personal Debt Group, who issue recommendations on measures to help Ireland's mortgage holders, said repossession levels in Ireland remain substantially lower than those seen in the UK and that restraint among those in difficulty was having a beneficial effect.

The group also said that an Exchequer funded mortgage to rent scheme should not be introduced given the "current budgetary and fiscal environment" and existing waiting list for social housing. Although, should the constraints ease, "it may be appropriate to reconsider a mortgage to rent scheme".

Despite refusing major projects to help troubled mortgage holders, the group has recommended a scheme to allow borrowers to defer the payment of interest, as well as a ban on penalty interest and arrears charges by lenders and a strengthened 12-month stay on repossessions.

Labour Spokesperson on Social and Family Affairs, Roisin Shortal, welcomed the proposals recommending the Department of Social Protection should introduce an alternative and more equitable Mortgage Interest Supplement (MIS) scheme.

"These proposals are long overdue and indeed Labour has been calling for measures such as this for two years or more... what we need now is action and given the fact that there has been virtually no progress to report in the wake of the group's interim report that was published in July, we need it urgently."

Meanwhile, however, the party's spokesperson on Housing Ciarán Lynch said the report was almost "entirely devoid of any concrete solutions".

"Mortgage arrears and home repossessions are a growing problem and while the publication of the report is a positive step, I'm afraid with the exception of one or two specific proposals, it is analysis-heavy and solution-light. The report is ultimately a further deferment of the mortgage arrears problem, and surely comes as a huge disappointment to the thousands of families across to the country."

The report said that during the last three months, mortgage lenders filed 210 cases against mortgage holders, an increase of 24% since the second quarter ending June. The 210 cases possess arrears totaling €7.8 million against the full mortgages of €76.9 million.

The level of mortgage default is of serious concern to the Irish Government and to the economy. Just as the Anglo Irish Bank collapsed as construction companies defaulted on their loans, it is believed that banks with large mortgage holdings could be equally at risk from homeowner defaults. Current estimates suggest that an outbreak of mortgage defaults could plunge the Irish economy into a financial crisis that would be effectively beyond recovery.

(DW/BMcC)