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Thursday, 25 August 2011

No Debt Forgiveness...

Government won't write off struggling homeowners' debt...

THE Government is not considering a 'debt-forgiveness' scheme to write off billions of mortgage debt for struggling homeowners, Tanaiste Eamon Gilmore confirmed yesterday.

The comments came as public demand grows for a mass mortgage write-off. One homeowners' group is claiming 60,000 people face losing their homes unless a solution to the mortgage crisis is found.

The clamour follows last week's claim by renowned economist Morgan Kelly that a debt-forgiveness scheme to rescue those in severe difficulty with their mortgages would cost just €5bn or €6bn.

But Mr Gilmore yesterday moved to calm growing expectations that a scheme was imminent, saying the Government was not considering "some kind of blanket write-off or mortgage debt forgiveness, as is being suggested by some".

It is understood that many senior cabinet figures, including Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin, have serious reservations about embracing any kind of mass mortgage write-offs.

Subsidising

They are believed to be conscious of how debt forgiveness would be viewed by low-paid workers who have never been in a position to buy a house, and would be effectively subsidising the home ownership of those who are better off.

The Government also has concerns about the cost of a debt-forgiveness scheme, which many estimate at more than twice Mr Kelly's figure.

Mr Gilmore yesterday stressed that the Government was exploring ways to help those having difficulty paying their mortgages and at risk of losing their homes.

The last government extended mortgage interest relief for those who bought when prices were at their highest and extensive work has been done on developing procedures to ensure banks deal fairly with those in arrears. The Central Bank is also engaged with banks on possible new measures to deal with the mortgage crisis.

Report by Laura Noonan - Irish Independent

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