Mortgage plan ‘vague and lacking in urgency’
Under the central plank of the Keane report, which again ruled out blanket debt forgiveness, up to 10,000 people could lose ownership of their homes and instead pay rent to keep the same roof over their heads.
Despite claims the measures could ease pressures for mortgage holders, consumer and housing campaigners felt the plans did not go far enough.
Taoiseach Enda Kenny was also accused of backtracking on election promises, as a key pledge to increase mortgage relief for young buyers looks set to be dropped.
The Keane report, which was published yesterday, proposes allowing borrowers to give up their homes but rent them back, warehouse part of their loan or carry on the negative equity while moving into a smaller property.
Other measures include plans to bolster budgeting and support services for borrowers as well as an overhaul of the personal insolvency laws.
Finance Minister Michael Noonan said all the measures could cost €35 million annually, but that €7m of this would be paid by banks.
The report ruled out a blanket debt forgiveness scheme and said it would cost €14 billion to clear the negative equity off Irish properties.
Mr Noonan defended the recommendations and said the measures could help boost house prices.
“The primary principle is that people continue to live in their own homes. And the second issue is there must be a clear distinction made between those who can’t pay and those who won’t pay.”
Mr Noonan conceded the measures — while removing the burden of debt from borrowers — would see thousands of people having to give up ownership of their homes.
Up to 45,000 mortgage holders are in arrears of over 90 days and the Keane group expects this to rise.
CAROLINE LENNON-NALLY has been in mortgage arrears for the past 10 months, and is one of the thousands of distressed mortgage holders Declan Keane refers to in his report into the mortgage debt crisis, which was published yesterday.
But the idea of becoming a social housing tenant in “her own home”, as the report recommends, sends her into a tailspin.
She said she has already paid about €50,000 in mortgage repayments to her bank, a size-able deposit when she bought her home, as well as stamp duty.
“I’d rather burn it than rent it back off the banks,” she said. “I have put huge amounts of my own money into this house. I worked my whole life for it. Anyway, it’s only worth about €200,000 to them now.”
She paid €385,000 for the property, but her bill came to €412,000 by the time she had paid stamp duty and legal fees.
Stuck in a 5.5% fixed-rate mortgage, negotiated in 2007 when she bought her home, she found it increasingly difficult to meet her €1,470 mortgage repayments, which were fixed at interest only until 2012.
Last winter, Caroline realised she could only afford to pay €1,000 per month and told her bank, which said she would have to pay €8,000 to break the agreement. For the past 10 months she has paid €1,000 into an account every month to prove she is willing to pay — but not on their terms.
Caroline has founded Irish Home Owners United, which will meet legal group New Beginning and the Defend Our Homes alliance later this week.
- Irish Homeowners Unite can be contacted through Facebook at http://exa.mn/homes.
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