We need to help distressed mortgage holders

Now that we have become reluctant owners of a number of errant financial institutions, we are effectively the holders of a vast amount of deeds to peoples’ homes — in essence we have become landlords.

This is an opportunity for us to display greater consideration, understanding and leniency than many of the landlords at a previous time in our history.

Between 1997 and 2007 we tolerated or allowed to prevail, a gross distortion in the housing market, an area of crucial public concern.

This laissez faire approach led to a famine in affordable housing. Given that there was genuine demand for housing, the market was distorted by a number of intrinsic predisposing factors — cheap credit, imprudent lending, flawed tax incentives, and the absence of local rates/ property taxes, among others.

Residential property became undervalued and overpriced. It is incumbent on us to help those who are suffering the most because of this failure on our part; that is, first-time house/apartment buyers who naturally wished to put a roof over their head, and those who moved house, who are now saddled with heavy mortgages and undervalued property.

Financial institutions should accept that the distorted or untenable market conditions under which they then issued the mortgages now renders those contracts suspect.

Is it not better to persevere with an under-performing asset/loan rather than consider it a bad debt and cancel it?

The contracts of these mortgages should be converted to longer term loans, intergenerational if necessary, but at a minimum/tolerable rate of interest, with the proviso that when suitable conditions prevail, the terms could be reviewed.

The option of us, the State, assuming all those mortgages in distress and administering them in a humane manner, should be considered, with the proviso that the State holds an option on future profits of the financial institutions.

Eddie McGurrin

Hazelwood

Sligo