Mortgage scheme ‘doesn’t go far enough’

THE scheme to help people struggling with mortgage arrears will place a “strong emphasis on forbearance to give borrowers the opportunity and time to resolve their difficulties”, Taoiseach Brian Cowen said.

But there was a more mixed response from other quarters, with disappointment expressed the scheme did not go far enough.

In all, the Government-appointed mortgage arrears advisory group made 41 recommendations in its interim report.

For the most part, the recommendations focus on homeowners who, while currently struggling because of the recession, will ultimately be able to repay their mortgages.

The group said its recommendations, once accepted and implemented by the banks, would result in “improved communication, standardised documentation, consistent policy and experience (and) a range of forbearance measures”.

This principally means the banks will seek to engage constructively with people holding mortgages that are deemed viable – and not charge penalty interest or arrears charges.

But the interim recommendations did not cover those with “unsustainable” mortgages – where the size of the debt and other factors mean that the borrower is unlikely to be able to repay.

There had been hopes that the advisory group would recommend debt-forgiveness, loan modification or similar measures.

But the group said it would address options for “unsustainable” mortgage holders in its final report, due in the autumn.

The Free Legal Advice Centres (FLAC) welcomed the recommendations but noted “major issues remain to be addressed by the group which are of utmost concern to many thousands of households around the country”.

Fine Gael social protection spokesman Michael Ring said the interim report was “half-baked and hollow”.

He accused the Government of abandoning struggling homeowners.

“This report confirms there will be no NAMA for struggling homeowners,” Mr Ring said.

“The timidity of the Government’s proposals is shocking given that the IMF said last week that banks have enough capital to provide debt write-downs for the most vulnerable families in order to help keep them in their homes.

“Yet the Government has bent over backwards to pour billions into the banks.”

Labour housing spokesman Ciaran Lynch said the report was “long on aspiration but short on detail”.

“It is almost two years since the financial markets went into meltdown, and while the Government has rescued builders, bankers and developers, it is clear that ordinary homeowners are still at the back of the queue as far as Fianna Fáil and the Greens are concerned.”

According to the latest data, there were 791,000 outstanding mortgages at the end of the first quarter of 2010, with 32,300 of them in arrears.


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