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Ferris calls for system of debt resolution for mortgage arrears

13 April, 2011 - by Martin Ferris TD

Sinn Féin TD for Kerry North/Limerick West Martin Ferris has called on the Government to introduce some form of debt resolution to address the growing problem of mortgage arrears.

Deputy Ferris succeeded in having a special debate on the issue in the Dáil this evening.

Deputy Ferris said:

“According to the most recent statistics there were 44,508 mortgage accounts in arrears for more than 90 days at the end of 2010. That amounts to 5.7 per cent of residential mortgages and amounted to an increase of 25,000 from 2009.

“Given the recent European Central Bank increase in interest rates, along with the current levels of unemployment, wage cuts and so on, that figure is certain to increase again and perhaps even more dramatically.

“My own party and others have proposed that measures be taken to address this problem. A group of respected economists last year urged that the banks introduce some form of debt resolution and that they accept part of the loss as their own.

“We believe that it is now time to look at possibly writing off some portions of negative equity on properties which are principal family homes, where people are in arrears and their mortgages are clearly unsustainable - and look at mortgages in terms of current house values rather than what they were at the time of purchase when unscrupulous lenders gave massive mortgages to people that they could not repay.

“When such suggestions were first made they were not taken seriously. Today, however, it has emerged that AIB is considering some form of debt resolution. That is both realistic and a recognition by them that they are to a large extent responsible for the mortgage crisis not only because of their housing loans policy but the overall part played by the banks in fuelling the speculative boom for which we are now paying the cost.

“Given that the state is now effectively running the banking sector I would urge that the Government take proactive measures to force all of the banks and other financial institutions including the sub prime lenders who appear to be the most aggressive pursuers of repossessions to provide real relief for mortgage holders.

“While the AIB indications are positive I would be a bit worried about their reference to ‘inter generational’ mortgages. While that does sound somewhat plausible in that it would lengthen the period over which a family would have to pay back what they owe, it also raises the spectre of indenturing future generations with a debt that was created before they were maybe even born.

“That is a situation akin to that which was foreseen by critics of the financial and credit system up to a century ago when they spoke about people becoming virtual serfs on the basis of unpayable debts.

“We need to address all of these issues immediately before the mortgage crisis becomes the next time bomb to threaten this society and force more people into unsustainable situations.”

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