Belfast Telegraph

Banks 'must do more' for borrowers

Banks have been warned to work harder to solve debt issues for struggling mortgage holders living under the threat of losing their home, the head of the Central Bank has said.

Governor Patrick Honohan hit out at some finance houses claiming they were "behind the curve" in dealing with the worsening arrears problem.

While he confirmed some banks are writing down debt, he ruled out a blanket forgiveness scheme and insisted people thrown into repossession should be given the option of renting their home.

"On the other hand it may be possible to arrange that even very stressed owner-occupier borrowers who have to surrender ownership could stay in their house on a rental basis," said Mr Honohan.

The Governor also suggested a possible shared equity solution, and claimed the two ideas are being considered by the banks. He said they would not need legislation or regulatory action.

Mr Honohan said he would like to see a debt settlement agency emerge among the options being considered to tackle mortgage arrears, which he said would see a more efficient and reasonable approach to borrowers in difficulty.

But he warned: "Before borrowers think this is an agency that's going to let them off everything, it's not."

Echoing Finance Minister Michael Noonan, Mr Honohan said any solution to the mortgage crisis can be dealt with only on a case-by-case basis.

"Society at large would not be well served, to say the least, by strategic behaviour on the part of any persons that could service their debts but conceive, in the current environment, an opportunity to escape from their obligations, large or small," he said.

Mr Honohan, accompanied by Financial Regulator Matthew Elderfield, told the Oireachtas finance committee that banks were "behind the curve" in dealing with the problem, claiming they did not put enough resources in place to plan for those cases where the mortgages cannot be fully recovered.

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