No Cabinet confusion on mortgage crisis, says Bruton

A senior Minister has today defended the Government's handling of the mortgage crisis, insisting there was no confusion in Cabinet on how to tackle the problem.

Amid differing signals over how to deal with €10.8bn of lending-hit arrears, Richard Bruton said the Government would not make any decision until an expert group reported next month.

The Central Bank has revealed more than 55,000 people are behind with their mortgages by more than three months, with 800 repossessed homes now held by the banks.

"There's no confusion in Cabinet," the Enterprise Minister said.

"The position is crystal clear. There's a report which will be received by Government.

"At this stage, there is not a menu for Government decision, and until we have that, we won't be making decisions."

Finance Minister Michael Noonan has thrown down the gauntlet to banks claiming they have enough money after being bailed out by the taxpayer to write-off some mortgage debt.

The Government agreed to pump another €24bn into the country's banks last March in a bid to win back confidence from international money markets, taking the total bail-out bill to €70bn.

But Mr Noonan has been accused of fuelling uncertainty among mortgage holders over precisely what action the Government plans to take amid claims the problem is worsening.

Official figures show the courts granted repossession orders in March to June for 124 homes; more than 170 properties were seized by lenders during that time - 54 of them repossessed and 119 voluntarily surrendered or abandoned.

The Central Bank this week revealed 55,000 households were three months behind in mortgage repayments - the total book value is €10.8bn, with €947m of arrears.

It has also been estimated that 20,000 mortgages are classed as unsustainable and this figure has been factored into bank stress tests.

Permanent TSB said the number of mortgage holders in arrears for more than 90 days jumped from 6.8% to 8.8% in the last six months.

Economist Morgan Kelly has urged the Government to consider writing off the debt, claiming it would cost up to €6bn.

Labour Housing Minister Willie Penrose said such a scheme should be considered, while Social Protection Minister Joan Burton has called for a debt resolution mechanism to allow struggling mortgage holders reach a deal with bankers and avoid going to court.

A blanket debt forgiveness scheme has been ruled out by Mr Noonan and Transport Minister Leo Varadkar while Junior Finance minister Brian Hayes said such a proposal would pose problems.

Taoiseach Enda Kenny said the Government was acutely aware of the problem, and would make any decisions when the inter-Departmental report on the problem was published next month.

Mr Noonan said a proposal was needed that would distinguish between those who could not pay, and those who would not pay.

"We're looking at a number of principles, we want as many people as possible to retain their own homes," he said.

"We also want a principle that we'll distinguish between those who can't pay and those who won't pay."

Mr Bruton backed Mr Noonan's stance on the banks having enough capital to write down debt.

"Michael Noonan has made very clear that the Government, through the taxpayer, has provided very significant recapitalisation of the banks in anticipation of the potential losses," Mr Bruton said.

"Government have made no decisions in this area but regard it as an important issue."

But Fianna Fáil said there was total confusion at Government level over how to tackle the crisis.

Senator Thomas Byrne, the party's Seanad spokesman on public sector reform, said the Government needed to be clear on what it intended to do.

"There is total confusion at the heart of Government on this issue," he said.

"The Government must be clear in its approach and the failure to do that is fuelling confusion and uncertainty for families with large mortgage debt."

Mr Noonan is due to be quizzed by the Oireachtas finance committee over Government plans on the issue tomorrow.

Central Bank governor Patrick Honohan and financial regulator Matthew Elderfield will appear before the committee on Friday.