Banks told to act on mortgage debt relief

Taoiseach Enda Kenny has called on the banks to act now and negotiate deals with struggling mortgage holders ahead of new debt relief measures coming into force next March.

Mr Kenny said he was not satisfied with the pace of the resolution between banks and troubled homeowners.

Mr Kenny came under pressure during Leaders’ Questions in the Dáil yesterday after stinging comments from finance chiefs this week on the failure by lenders to tackle the mortgage crisis.

Central bank senior regulator Fiona Muldoon accused banks of acting like spoiled teenagers and of being in denial about the mortgage crisis.

Elsewhere, Department of Finance secretary general John Moran called for a “much more dramatic write-off of debt for households”.

Reacting to the comments, Mr Kenny said the financial regulator had said he did not need more powers to persuade banks to negotiate mortgage deals.

But he added: “It is time to move and demonstrate that their powers, the range of the facilities under the code of conduct and recapitalisation, mean they have the capacity to sit down with every individual and work out an individual solution. If they do not do this, the insolvency system will kick in on Mar 1.”

But Fianna Fáil leader Micheál Martin said the Government was operating a “non-interventionist” policy and needed to push the banks to act.

He said lenders would still be able to veto department relief options under the personal insolvency legislation being introduced. There was need for an independent arbitrator to oversee decisions on mortgage debt deals with banks, he said.

Sinn Féin leader Gerry Adams called on the Government to exempt homeowners with negative equity from the proposed property tax. He said there were 129,000 families in mortgage distress.

Mr Kenny responded: “I am most certainly not satisfied with the pace of resolution [of the banks].”

Independent TD Shane Ross said it was time to “put a boot around” the banks’ necks. He claimed lenders were just procrastinating resolving the mortgage crisis.

Mr Ross said: “They are waiting for the economy and housing market to improve; they are waiting for anything to come to their rescue; including the insolvency Bill. However, this will not sort out the problem, which has the potential to make the night of the bank guarantee look like a picnic.”