Minister wants mortgage debt help
A Government minister has called for a debt resolution scheme to allow struggling mortgage holders reach a deal with bankers and avoid going to court.
Social Protection Minister Joan Burton said banks needed to show that they were willing to settle in a realistic way with the thousands of homeowners in distress.
Economist Morgan Kelly has urged the Government to consider writing off mortgage debt, claiming it would cost up to six billion euro, but junior finance minister Brian Hayes said that would pose problems.
Ms Burton said a system where payments are limited to a percentage value of the property could incentivise people to make repayments.
"You then have a situation where when the house ultimately is sold, there's a further settlement," Ms Burton said.
"But if somebody who is in distress then meets the requirements of the debt deal, then over a period of time there are periodic reductions and savings for them. In other words, there is a structure and there is an incentive for them to pay what they can pay."
Ms Burton suggested Ireland could follow Iceland's lead on forgiving mortgage debt. The Nordic state has it written into its IMF bailout agreement that it will write-off home loans to 110% of the property.
The minister said a resolution system to deal with the mortgage problem was needed. She said: "Instead of going to the courts, you can actually have an agreement between the debtor and the banker."
Mr Kelly last week reignited the debate on debt forgiveness by claiming it would cost up to six billion euro. Although Housing Minister Willie Penrose suggested the scheme should be considered, junior finance minister Brian Hayes poured cold water on the idea.
Latest figures show the number of people behind with their mortgage repayments for more than 90 days stands at almost 50,000.