Reasonable and practical solutions must be offered to those in mortgage arrears

Speaking on the mortgage arrears debate in the Dáil, Fine Gael Cork North West Deputy, Áine Collins, said that banks must be discouraged from going after the low hanging fruit where customers in mortgage arrears are concerned and instead must offer reasonable and practical solutions to those in serious difficulty.

  “There is no doubt that the level of indebtedness, especially among many who purchased their homes during the boom, needs to be tackled. And this Government has taken the steps to do that in the form of enacting the Personal Insolvency Bill, setting up the Insolvency Service of Ireland and providing free and independent advice to those in mortgage distress.

“There is no easy fix solution to this problem, however, and care must be taken to ensure that a balance is struck between mortgage write downs and maintaining the capital ratios of the banks to ensure they stay within European guidelines.

  “The specific, time-bound resolution targets set down by the Central Bank in proposing sustainable solutions has been augmented by new tougher targets which state that banks must conclude arrangements with 15% of customers in arrears by the end of this year and 25% by the end of next March.

  “The Central Bank is now auditing the offers banks have made to their customers in a bid to ensure that sustainable solutions will be found. There is a danger, especially in the buy to let and business sectors, that banks are going after the low hanging fruit by calling in loans where assets exceed the borrowings. This is an approach which needs to be carefully monitored as we must avoid a situation which does not allow solvent entities adequate time to work out their liquidity problems.

  “If this approach is adopted in the residential property market, banks will initially call in loans that have positive equity. This will result in the repossession of homes that could be made viable with a longer term solution.

  “There is a very delicate balance to be achieved between solving the mortgage and debt crisis while at the same time maintaining adequate capital ratio in the banks to save the taxpayer from having to recapitalise them further.

  “Banks must be encouraged to tackle the mortgage arrears and indebtedness of clients that are in the most serious trouble. The Government has put the measures in place to allow this to happen, we must now monitor the progress the banks are making and ensure it is in the interest of those who really need it.”