Banks should help on home loans

IF the Government and banks do nothing to help the 30,000 house owners who are having serious difficulties paying their mortgage it could cost more in the long run.

This is according to brokers and support groups who yesterday urged the Government to listen to the advice of the International Monetary Fund (IMF) and put a scheme in place to assist homeowners in arrears.

In a review of Ireland, the IMF, which oversees the global financial system, said now that the banks have more capital they could absorb the initial costs of some form of assistance for those who are finding it difficult to pay their mortgage.

Director general of the Free Legal Advice Centre (FLAC), Noeline Blackwell, said a lot of people can’t manage their mortgage payments and they are not getting the support they need.

She said very little has been done to help the 30,000 people in “serious arrears” with their mortgages.

“It is people who are unfortunate enough to be in real trouble because they bought homes at the height of the property boom when they were told it wasn’t the height.

“The fact that personal debt is at a very serious level in Ireland has not yet been addressed by the state and it’s not enough to have good intentions about that, real efforts have to be put in place to do that now,” she said.

Karl Deeter, of Irish Mortgage Brokers, said that every scheme has a cost and doing nothing for homeowners in trouble could end up costing more in the longer term.

“There is a problem and we need to deal with it,” he said.

“What the IMF are doing is pointing out something that we have known for quite a while now,” he added.

Some of the proposals that Mr Deeter said the Government or banks could consider would be a sale and rent buy-back scheme or negative equity loans.

This week the IMF said the transfer of loans to NAMA and the revised capital ratios imposed by the Financial Regulator had moved the banks towards normalcy, adding that a scheme to assist homeowners in difficulty is overdue.

It said “narrowly targeted support measures for vulnerable homeowners would limit the economic and social fallout of the crisis”.

The IMF said that “with their bolstered capital, banks could absorb the initial costs, perhaps basing themselves on the welfare system to identify eligible beneficiaries”.

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