Keane report - Help those drowning in sea of debt

The Government has published the report of the interdepartmental group headed by accountant Declan Keane. It warned that borrowers and lenders must recognise that some of the current mortgage arrangements are unsustainable.

The Government’s Economic Management Council commissioned the group to consider actions that would alleviate the problem. It promptly ruled out the simplistic idea of blanket debt forgiveness, because, for one thing, the state does not have the necessary resources.

Those who can discharge their mortgage obligations must do so. “Given the challenging environment, the unfortunate reality is that some people will lose their home,” the report warns. “The challenge is to minimise the incidence and consequences of this event.”

The report also warns that there will inevitably be a further deterioration in mortgage arrears. Thus any scheme which provides an incentive for people to cease paying their debts will only exacerbate the arrears problem and add to the costs of taxpayers.

Finance Minister Michael Noonan announced that local councils would enter into leasing arrangements with struggling homeowners on a case-by-case basis in line with recommendations in the report. These would be arrangements whereby the local council would, in certain instances, take over homes that are repossessed and rent those to defaulting buyers, who would be able to remain in their home. The social advantages of such arrangements should be apparent.

There will inevitably be questions about what other measures should be taken to help people who face other difficulties as a result of being unable to meet their mortgage repayments.

The report acknowledges that the issue of mortgage arrears is so complex it requires a broad range of remedies. It proposes the establishment of an independent mortgage advice service to assist mortgage holders in difficulties. There are also calls for reform of personal insolvency legislation.

In the midst of the recommendations it is important that society should not lose sight of the purpose for which the Keane report was commissioned — to help people and their families in severe mortgage difficulties to keep a roof over their heads.

The recommendations of the report are the start of a process, not an end in itself. The Dáil is due to hold a two-day debate on the report next week.

It is important that consideration should be given not only to the views of the banks and the lending institutions but also to people at the coal face who will have the pick up the pieces of those whose lives have been crushed under the mountain of debt.

This will be the result of being caught up in the financial crisis, caused mainly by external factors over which they had little or no control.

It is important that the views of St Vincent de Paul, and the National Housing Organisation, Threshold and free legal advice centres should not only be sought but also heeded.