NEW MEASURES to protect thousands of homeowners in mortgage arrears will be in place by the end of the year, Financial Regulator Matthew Elderfield has promised.
They include a scheme to allow borrowers to defer the payment of interest, as well as a ban on penalty interest and arrears charges and a strengthened 12-month stay on repossessions.
However, Minister for Finance Brian Lenihan and Mr Elderfield ruled out any bailout for debt-ridden householders. Both backed the report of the Government’s expert group on mortgage arrears, which yesterday recommended against any formal debt-forgiveness scheme for mortgage-holders.
Mr Elderfield expressed disappointment at new figures which show that one mortgage in 20 is in arrears of more than 90 days. According to the Central Bank yesterday, more than 70,000 mortgage-holders were in arrears or had had their payments rescheduled. However Mr Elderfield said the figures indicated lenders were showing forbearance with those in debt and working to keep them in their homes.
The proposal for a deferred interest scheme is contained in the final report of the Mortgage Arrears and Personal Debt Expert Group. While rejecting debt forgiveness, it suggests a range of debt-forbearance measures.
Mr Elderfield said the deferred interest scheme would save indebted householders up to €1,000 in deferred interest payments over five years but would involve only a marginal cost for the banks. “Crucially, it doesn’t involve putting interest on interest so you’re not getting deeper into a hole.”
Bank of Ireland, AIB, EBS and Irish Life and Permanent have agreed to implement the scheme but Ulster Bank and KBS say they plan to stick to their existing forbearance measures.
Threshold chairwoman Aideen Hayden said the report’s recommendations did not provide real solutions.
“This report was an opportunity to put forth innovative recommendations that would provide long-lasting, real solutions . . . Instead, what we have is a range of proposals that tinker at the margins of the problems but go nowhere near addressing the challenges head on.”