Banks To Offer Help With Mortgage Debt

Following intense pressure from both The Central Bank and the Government, the banking sector in Ireland is finally putting strategies in place to deal with the thousands of customers who are in severe difficulties with their mortgage repayments.

Five years after the value of houses collapsed many people find themselves in chronic mortgage arrears and holding an asset in negative equity. The banks have been persuaded to get to grips with this problem.

It may well be that the intense criticisms aimed at the Banks by leading politicians including the Taoiseach Enda Kenny and the Finance Minister Michael Noonan, have begun to have an effect.

There would appear to be a change in the attitude of the Banks to this problem.

Where before it may have been a case of repossess and to the devil with it, they seem to have submitted to political and financial pressures and decided to offer help to people struggling with unaffordable payments.

Most of the big players in this sector have now completed pilot schemes to see what can be done to alleviate this debt problem.

Homeowners suffering mortgage repayment difficulties could be offered ‘long term forbearance options’ which are intended to bridge the gap between excessive repayment levels and a future upturn in the property market, however distant that upturn may be.

In the coming months we can expect to see these long term solutions being offered to distressed mortgage holders.

The key here is the fact that the Banks have at last acknowledged that this is a growing problem and it needs dealing with – now.

Special collection teams are being trained to deal solely with the escalating crisis.

For instance one major bank is employing 150 extra staff just to deal with customers who can’t meet their repayments.

Solutions on offer

There are a diverse range of solutions being proposed.

Each Bank will offer its own independent strategy, and people’s individual circumstances will have to be considered.

However – the options available to clients who want to negotiate with their lenders may include Mortgage to Rent – Split Mortgages – Shared Equity – Interest Only – Trade Down Mortgages – Voluntary Sale for loss, to name but a few.

Elsewhere, Department of Finance Secretary General John Moran called for a “much more dramatic write-off of debt for households”.

Whilst the Banks would baulk at the mere suggestion of this it would appear that in some cases they may be left with no other option.

Article by Loans Ireland. We have a free mortgage calculator tool here and a range of guides to different types of loans.