Minister calls for new solution to mortgage debt

Social Welfare Minister Joan Burton said today that Ireland needs a debt resolution mechanism that would aim to reach agreement between debtors and bank, and avoid the issue coming before the courts.

Minister Burton was responding to calls for a bailout programme for troubled mortgage holders.

Economist Morgan Kelly sparked renewed debate on the issue when he estimated €5-6bn would help end the crisis for homeowners in difficulty.

Minister Burton this morning pointed to a scheme in place in Iceland, where the amount of a repayment is linked to the current value of a property, and said it should be looked at here.

"You then have a situation where when the house ultimately is sold there's a further settlement," she said.

"But if somebody who is in distress then meets the requirements of the debt deal, the over a period of time, there are periodic reductions and savings for them.

"In other words, there is a structure and there is an incentive to pay what they can pay."

Iceland has it written into its IMF bailout agreement that it will write-off home loans to 110% of the property.

The minister said a resolution system to deal with the mortgage problem was needed.

“Instead of going to the courts, you can actually have an agreement between the debtor and the banker,” Ms Burton said.

Housing Minister Willie Penrose suggested that Mr Kelly's suggestion should be considered, junior finance minister Brian Hayes poured cold water on the idea.

Latest figures show the number of people behind with their mortgage repayments for more than 90 days stands at almost 50,000.