Banks Have Funds For 'Debt Forgiveness'

Irish banks have enough money for so-called debt forgiveness.

The Finance Minister, Michael Noonan, has insisted that the capital is in the banks to allow the write off of some residential mortgage loans, following the recapitalisation of the nationalised banks in July of this year.

Figures from the Central Bank yesterday revealed that more than 55,000 mortgages are in arrears. This is 7.2% of the total amount of mortgages. It is also an increase on the figures for March, which had only 6.3% in arrears.In addition the report revealed that 886 homes have been repossessed since 2009.

The Taoiseach Enda Kenny said the Government is "acutely aware" of the difficulties some homeowners have in paying their mortgage.

The Finance Minister has however assured that proposals and a report on how to tackle the issue would be ready by the end of September. Mr Noonan said the last round of stress testing of the banks also tested mortgage debt - and this was one of the reasons so much capital was given to them.

"So it's a manageable problem, but it’s very onerous on certain individuals and the Government will deal with it" added the Minister.

Meanwhile a spokesman for the Department of Finance has rejected calls for a debt forgiveness scheme for householders in mortgage distress.

As Central Bank figures confirmed a big rise in the number of people in mortgage arrears, the department spokesman said there was no "magic bullet" or "one-size–fits-all" solution to the problem.

He said: "suggestions that are circulating such as blanket debt forgiveness are not realistic options."

Fianna Fáil's Finance Spokesperson Michael McGrath has also criticised what he called a "total lack of coherence within the Government" regarding debt forgiveness.

Minister of State for Finance Brian Hayes, however, said the Government had not ruled out anything and would await the findings of an expert group on the issue before deciding how to act.

Speaking on his way into the first Cabinet meeting following the summer break,Mr Noonan said the Cabinet is expected to discuss the issue of mortgage arrears today, but Ministers will await delivery of the report before taking any major decisions.


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