Irish Cabinet Discuss Debt Forgiveness

The continuing problem of mortgage debt is to be discussed by the cabinet today with a focus on a report which provides solutions to mortgage debt.

The report, called the Keane Report, is the second document containing proposals, which will attempt to alleviate debt, to be presented to the Government.

It has been brought before the cabinet and will be published by the Department of Finance tomorrow after being discussed by the Cabinet today.

The document outlines solutions to help those struggling to re-pay their mortgages.

It is understood the Keane report does not recommend any mass debt forgiveness scheme.

Instead, it makes recommendations such as freezing portions of mortgages, and allowing people to rent back homes after they have been repossessed.

It was originally thought that some kind of debt forgiveness, in terms of mortgage payments, would be agreed as well as a reform of bankruptcy laws.

This mindset comes after another report suggested proposals, that if adopted,would see banks practicing debt forgiveness and wiping out loans in some circumstances where homeowners could not afford to pay.

Refinancing debt, especially where there is negative equity, and proposals such as renting the home from the bank after the keys are handed over, were also among the options previously suggested.

These reports follow statistics from the Central Statistics Office that revealed 55,000 homes were in arrears. This is 7.2% of the total amount of mortgages and calls were made for banks to re-vamp their methods of dealing with the growing problem of mortgage arrears.

The Irish Central Bank Governor, Patrick Honohan said some would undoubtedly resume paying their mortgages, but some just will not recover.

Mr Honohan said the problem of mortgage arrears was severe, and banks had been slow to deal with the issue.

He said the time has come for the banks to try and help some of the Ireland’s struggling homeowners.

Like the Minister for Finance, Michael Noonan, Mr Honohan asserted that the problem could only be dealt with on a case-by-case basis.

He said: "There is no 'one size fits all' approach that would solve the problem."

The mortgage arrears debate has however been ongoing. Fine Gael had originally promised in the election to cut hundreds of repayments on houses bought before 2008.

(LB/CD)