Proposals Reject Blanket Mortgage Debt Forgiveness

As many as 10,000 people could see ownership of their homes transferred to local authorities under a scheme proposed by the Inter-Departmental Working Group on Mortgage Arrears, which published its report this morning, the Irish Times reported. Taoiseach Enda Kenny said the move was one of a number of options which would be considered as part of efforts to cure the debt crisis. The report says the State has a significant role to play in resolving the mortgage debt crisis and proposes the introduction of two “mortgage to rent” social housing schemes that will see approved housing bodies taking ownership of houses in certain circumstances and the leasing of houses by banks to local authorities if that was deemed to be more appropriate. Other proposals aimed at helping mortgage holders in difficulty were outlined in the report, but it stressed there will be no blanket debt or negative equity forgiveness programme. Defending the decision not to implement a blanket guarantee, the report states it would cost in the region of €14 billion to clear the negative equity in the Irish mortgage portfolios, while tackling the mortgages taken out between 2006 and 2008 would cost in the region of €10 billion. It also notes that 50 per cent of the arrears to date are outside the Covered Banks. Read more.