'No bailout' for hard-up homeowners
Published 17/11/2010 | 16:32
Tens of thousands of homeowners struggling to pay their mortgages will not be given a bailout, Finance Minister Brian Lenihan has declared.
Ruling out a debt forgiveness scheme similar to those in the US, Mr Lenihan has instead backed a 'deferred interest scheme' to combat an arrears crisis.
Under the plans, lenders will be asked to allow hard-pressed homeowners repay two thirds, or 66%, of their mortgage interest and defer the rest for up to five years.
So far, more than half of financial institutions have agreed to the proposals drawn up by the Government's mortgage and personal debt group.
Mr Lenihan suggested pressure would be put on others to row in behind them.
Mortgages would be declared "unsustainable" when deferred repayments amounted to a year and half's interest or when borrowers were still on the scheme for five years.
Those with "unsustainable" mortgages would then be eligible for social housing and their home would not be repossessed before they were allocated a new home.
The group has also called on lenders to help allow homeowners in negative equity to "trade down" to a more affordable home to cut their monthly repayments.
Mr Lenihan said: "We are committed to solutions that are fair and appropriate to the current circumstances of Irish homeowners. The Government accepts the group's recommendations and wants to see them implemented without delay."
Almost 40,500 homeowners have now fallen behind on their repayments by three months or more, according to latest Central Bank figures.