Sir, – I welcome the comments of Minister for Social Protection Joan Burton (Deaglán de Bréadún, Home News, August 29th) that banks and other lending institutions “need to engage with individuals who are in difficulty or who are in danger of becoming in difficulty” and her call for banks to become more active in dealing with citizens who are “embroiled in debt”.
It is at last an official indication that lenders are not being as helpful to their customers as they should be. The apparent response from the Irish Banking Federation that their members share the objective of early and constructive engagement with borrowers is not evident from my own experience.
For the many people who are struggling with large levels of private debt, including mortgage debt, the ongoing distress and fear of the situation is heightened by the apparent unwillingness of lenders to deal realistically with their customers. My experience is that lenders adopt a defensive attitude to people honestly trying to deal with unsustainable levels of repayments. It is possible to renegotiate with bankers but it takes resilience and perseverance to do so, with lenders routinely adopting tactics such as ignoring written correspondence, and proposing payments which would clearly require unsustainable cutbacks in a family’s basic standard of living.
Perhaps the banks could also consider having appropriate staff in place to deal with customers in difficulty. Mounting private debt levels cause psychological and emotional strain to those trying to deal with the problem and the trauma of having to reveal one’s financial difficulties and work out a solution is not helped by having to deal with staff who are often too young and inexperienced to have any real appreciation of the financial realities of having to work and raise a family in these difficult times. – Yours, etc,
Sir, – As I was too feckless to apply for a mortgage during the boom years, I am now in the unfortunate position of not having any debts to be forgiven. This is surely unfair to me and the thousands of others who never got their act together to buy a house.
I therefore call for the proposed mortgage relief measures to be accompanied by rent reductions for the legions of disorganised apartment dwellers. Should we be denied justice because we were a bit lazy? – Yours, etc,
Sir, – There is an obvious moral hazard associated with the introduction a system whereby individuals and families who face destitution due to their mortgage difficulties can get help. I’m sure that with an enlightened approach the potential hazards can be overcome. It seems to take forever to take action when it comes to dealing with ordinary people, whereas decisions were taken overnight in relation to the banks. The moral hazard of throwing money at the banks after their irresponsible behaviour did not appear to be a problem, yet it is when it comes to ordinary people!
That there appears to be no moral hazard in allowing ordinary people to damage their health and wellbeing because of poor diet and wellbeing resulting from destitution, indicates that the economy is much more important than people. We should be ashamed of ourselves for allowing our once caring society to deteriorate to such an extent. – Yours,etc,
BRENDAN O’DONOGHUE,
Kilerrig,
Carlow.
Sir, – When I was growing up we were told that we could never afford to host the Olympic Games. Then our government gave three times the £9 billion London has spent to a bank. All citizens,including, and maybe in particular, mortgage-holders have given billions in the hope of keeping credit flowing. This has not happened. Citizens are paying for this in decreased children’s allowances, social welfare and pensions, increased tax, stealth taxes and receiving less State services in return for shared austerity.
The time has come for mortgage-holders to take an initiative. May I propose that November be a mortgage-free month? All mortgage-holders should simply withhold this payment and put it towards paying for Christmas or taxes. – Yours, etc,
Sir, – Jason Fitzharris (August 30th) asks what barmy ideas are next for debt forgiveness? How about paying a salary to the bankrupt mortage-holders to help dispose of their own properties, as was done for developers? – Yours, etc,
Sir, – Jason Fitzharris (August 30th) fails to understand that wishing to have a roof over one’s head and having to pay the going price for it does not constitute financial recklessness. The threat at the time was that prices would rise and if one didn’t get on the ladder one would never have a home of one’s own.
I suggest mortgage-holders be asked to pay the mortgage on the current value of their home. In that way the burden will be drastically reduced while the banks can still be paid the full amount over time. The same banks have €6 billion to offset the shortfall in current income (which will be redressed over the long term). This will work provided the banks are debarred from charging more than the full amount of the originally calculated repayment amount. This simple restructuring would solve the problem to the satisfaction of everyone – even the bankers, who certainly don’t deserve it. – Yours, etc,
Sir, – In the matter of debt forgiveness, we should remind ourselves that such a practice has been a feature of the ethics and morality of one of the most successful elements of humanity in business, namely, the Jewish people. With them, the practice is millenniums-old. It would be good for all of us in the emerging multicultural Ireland if a representative of that community were to be invited to share with the rest of us how the practice works, seemingly without moral hazard, and seemingly with much community enrichment.
At the same time, an invitation might similarly be extended to a representative of the Christian churches to set forth how in its history, the Christian church made provision for those suffering poverty, again without moral hazard. If the Rite and Reason column could be used for this purpose we would all benefit from being reminded that deep in the recesses of our culture is the knowledge that in times of crisis, which this is, there is a need for extraordinary action, not just for corporations but equally for suffering individuals. We have no difficulty with a properly regulated debt forgiveness scheme at this time, nor, personally, have we need of it. Faith and hope for the future requires such and charity compels it. – Yours, etc,
Sir, – The typical home loan in Ireland is approximately €250,000, the proposal that those in difficulties would be able to negotiate to pay only two-thirds of the interest for periods of up to five years is very sensible.
For €250,000 at 4 per cent, this would be €833 per month.The alternative is eviction of the owner and an immediate write-down for the bank as it would try to sell thousands of repossessed homes in a nonexistent market.
The customer then would have to be housed. The current rent subsidy paid by the State is about €950, but the State would end up paying a private landlord this €950 to provide a home for the original evicted family. It would be a lose/lose situation.
In Switzerland, hardly the bastion of socialism, they have 50- year loans at very low interest rates. Paying interest-only for five years or so now, would give everyone breathing space, it would allow spare cash for all consumers which would help the domestic economy and create jobs. This in turn would increase the domestic economy and create more jobs – a virtuous circle.
The option to go interest-only should be available to all homeowners. It’s not a cost on the banks per se (certainly nothing like the cost we as taxpayers have had to bear for them). It’s a good way to use the cheap ECB money the banks are getting and it would potentially release billions into the Irish economy. – Yours, etc,
Sir, – Things are not quite as hopeless as they appear when not only is the unthinkable being thought, but actually mentioned: I refer specifically to the idea of debt forgiveness. Of course, the great and the greedy have the insolence to compare this to moral hazard, something which they are fully prepared to extend to themselves, but nobody else.
We should at least contemplate the probability that very possibly this may well be the only thing that separates us from worldwide financial Armageddon, so to speak.
Jubilee debt is a very ancient idea, which has previously worked and for once could we learn from history rather than repeating the same mistakes and reliving Groundhog day continuously? – Yours, etc,