Wednesday, February 13 09:44:24
Patrick Honohan has said the Central Bank is "ramping up" its engagement with banks in recognition of the fact that, until recently, they seemed to be "behind the curve" in addressing the problem of mortgage arrears on a sustainable basis. Speaking at the bank's conference on distressed property, Mr Honohan said household financial distress is at unprecedented levels according to RTE News.
This can be seen, he said, from the "extraordinary" rates of arrears on the servicing even of mortgages secured on owner-occupied homes. He said that while most borrowers continue to service their loans, long-term debt modification is relevant for cases of over-indebtedness involving or bordering on insolvency.
However he said permanent debt relief is "not something that will be offered to all of those who have suffered a loss of wealth" and that negative equity is not in itself a rationale for debt relief. He said repossessions may be inevitable for many investment properties but should be avoidable for the majority of owner-occupier cases where borrowers are doing their best to maintain repayments.