EBS consider plan to ‘shelve’ mortgage deals

RADICAL plans to ‘warehouse’ or shelve portions of mortgages owed by recession-hit homeowners are being considered by Ireland’s biggest customer-owned lender.

EBS Building Society is also proposing to help unemployed struggling mortgage holders get jobs, free of charge.

The proposals will form part of the lender’s solutions for mortgage debt management which it will publicly release before next week’s budget.

The building society’s Fergus Murphy outlined some of the 54 options identified to TDs at the Oireachtas Committee on Social and Family Affairs yesterday.

He said the best proposal in the medium term and simplest was to break up loans for mortgage holders in difficulty and ‘warehouse’ portions of them.

Committee members were told this could involve putting a moratorium on 20% of a loan, which would be put into a second mortgage. This would then be shelved for five years, potentially without any interest payments.

The mortgage holder would then concentrate on the remaining 80% of the loan.

After five years and a review, a possible rise in the value of the home could then help the mortgage holder pay off the second part or the 20% remainder of the mortgage.

EBS chief risk officer Fidelma Clarke said a potential rise in home values may help mortgage owners refinance their loans.

The building society has over 80,000 mortgage holders but a rough estimate suggest around 2,500 of those could apply for the split or ‘warehouse’ mortgage.

The radical option is modelled on proposals which were put forth in the US refinancing plan last year.

Other plans to address crisis mortgage situations include the building society funding a job finding scheme for borrowers.

This would involve special home visits where building society-paid professionals would advise borrowers about their CV’s, their upskilling options and how best to apply for a certain job. This would all be done free of charge, confirmed EBS chief executive Fergus Murphy.

The initiative had been tried in the US by a lender where over 1,000 were helped to get jobs.

Other initiatives being proposed by EBS include the dropping of penalties for mortgage arrears by all financial institutions; a rescue fund for future mortgage crises nationwide which would be funded not only by the State and lenders by borrowers also.

TDs welcomed some of the proposals yesterday. Mr Murphy said of previous banking habits:

“Money was too cheap, banks and building societies were lending this money too quickly and too cheaply.”


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