Group urges State to buy unsustainable mortgages

Thousands of people drowning in “unsustainable” mortgage debt could have their properties bought by the State and turned into local authority units in a bid to help them stay in their homes, under a proposal put to Department of Finance officials today.  

The Irish Mortgage Holders Organisation set out the proposal today at a meeting aiming to address the growing repossessions crisis.

IMHO chief David Hall said while the plan would cost the State tens of millions of euro it was the only sensible way to tackle a problem that would only escalate further over the coming months, and that the cost could be reduced by resulting rent allowance savings.

He said local authorities should be given the right to buy up the mortgages of ordinary people facing severe arrears, in order to stop the properties from being repossessed.

The authorities would then continue to pay the bill on these individuals’ behalf while allowing them to stay in the property, which would be relabelled a local authority unit.

Mr Hall said the move would ensure that the banks involved did not lose out financially, guaranteed that individuals could stay in their homes, eased the home repossessions crisis, and created a wider mix of private and public accommodation.

He said it will also ensure thousands of people being effectively thrown out of their homes due to “unsustainable” mortgage debt will also not face homelessness or need to avail of rent allowance State support — a saving Mr Hall said could pay for the majority of the plan.

“We’ll be proposing that a number of not-for-profit voluntary bodies and local authorities take over tranches of unsustainable mortgages, about 2,000 at a go because this is now a monumental crisis.

“We’re not talking about Gorse Hill, we’re talking about ordinary homes.

“People are being dealt with like criminals, they are being put through the judicial system for mortgage arrears,” he said.

Mr Hall said the proposal could run along similar lines to the mortgage-to-rent scheme which allows people to stay in their homes as a private tenant, but will allow them an extra degree of certainty in the current market.

While he accepted the plans may not be accepted by the department, he said they are necessary as the State insolvency service is failing to force banks into cutting deals with struggling mortgage holders, resulting in 37,000 people now two years or more in arrears.

A Department of Finance spokesperson did not respond to the proposal last night. However, the office has in recent weeks organised a number of discussions with mortgage holder groups to address the growing crisis.

Read more of today’s news here