Noonan: Repossession must be an option
He said repossession had to be an option, otherwise in theory, the mortgage market would collapse.
“They [the banks] are now committed to proceed and the details of the arrangements they have made with the Central Bank, and of which they have informed the Government, that will be going out later this week.”
Speaking to reporters in Limerick, Mr Noonan said the mortgage arrears issue should have been dealt with earlier.
“This has to be dealt with in the interests of the people who are in debt, because they can’t manage their full mortgage repayments, but also in the interests of the country, because you can’t have 100,000 families in a small country not participating in the growth of the economy, and they can’t participate if they are burdened with debt.”
He said he had been told by an AIB director the average arrears for the 35,000 impaired mortgages was €13,000.
“What we want to do now is to speed up the pace of the settlements, that there is a quantum of work now that we can quantify and we want them to work through it in a set period.”
Mr Noonan said that where repossessions occur, the emphasis must be placed on the buy-to-let sector.
“People are in there; they make commercial investments, they are collecting rent, they should pay the interest on their mortgages, and if they can’t, the investment should be sold.”
He said the policy regarding personal mortgages was that repossession would be a last resort.
“But you have to have repossession as part of the set of solutions, because many of us have mortgages and you know the basis of it: You get a loan and the deeds of the house are taken by the bank and if the deeds are no use and they can never get possession of the property, sure why would you pay? There has to be this back stop at the end to protect the collateral which the banks have and to make the thing real.”
Otherwise he said, in theory, the whole mortgage situation would collapse.
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