Mortgage arrears: Should the state and banks accept liability?

Mortgage arrears: Should the state and banks accept liability?

Mortgage arrears: Should the state and banks accept liability?A new report on debt in Irish Society recommends that the Government should consider introducing a mortgage to shared equity scheme similar to Scotland. Where a person is struggling to repay their mortgage or are at risk of losing their home to repossession the scheme would enable the state or a bank to take a financial stake … in the home. This would allow the homeowner to reduce their own monthly repayments to a manageable level as the stakeholder would pay a proportion of the repayments to the lender.

The report entitled, “High Levels of Indebtedness in Irish Society” by the Joint Oireachtas Committee on Social and Family Affairs highlights the need for providing alternatives to repossession and also said, “Where lending has been reckless, all responsibility should not rest with the borrower but liability should be proportioned to the financial institutions and, if necessary, the broker that arranged the loan”.

According to The Financial Regulator there are roughly 791,000 residential mortgages outstanding in Ireland and 26,271 mortgages in arrears of 90 days or more.

Have our say – Mortgage arrears;

  • Should an equity-sharing scheme be introduced to help struggling homeowners?
  • Should the state and financial institutions accept a proportioned liability for Mortgage arrears?
There are 27 comments for this article
  1. damien at 6:41 pm

    What you are saying is stupid .There are people out there that paid over the odds for houses because banks and estate agents and developers got greedy and hiked up the price of houses and ordinary people paid the price .Go off and stick your head in the toilet where it belongs.There should be some bailout for genuine cases ,but as usual our government sat back watched it happened got their brown envelopes and big pensions and made idiots out of a lot of genuine hard working people.

  2. adams at 10:37 am

    I completely agree with E.Cronin above. People who got carried away and became reckless should not be bailed out for their mistakes.thanks for.


    Cheap Mortgages

  3. Christopher Brennan at 12:49 pm

    Bill, I wholeheartedly agree with you there concerning those who bought their big screen tv’s, dressed in their fancy robes etc. To the luxuries that they bought in the boom I still believe that they should continue to pay for these assets or have the kings men come and take all of their luxury goods. The gold chalices, Gold baths, even the golden medieval piss pots under their bed should go. Let the banks sell them to But under no circumstance should anyone confuse a big car, the fluffy golden robes or a piss pot with a house. All the before-mentioned were luxuries, the houses are an absolute necessity. These people should be happy to live in an empty house if they jumped on the bandwagon to keep up with the Jones’s. But they should be allowed to keep their house, even if they can pay a small amount but once they keep paying. It gets to me when I hear of those who have no money worries such as the bank directors, government officials and the watchdogs that presided over this fiasco tell us that we should tighten our belts and not go across the border when these same people reneg on their responcibilities by signing their assets over to their wives so the 80 million euro loans they took out won’t result in them losing their trophy homes (bankers), promise they will take a massive pay cut of over 10% and then say that because they have had their bonus’s taken from them that the pay cut will now be nearer 5% (High level civil servants) and of course I couldn’t make this point without mentioning our esteemed Taoiseach who is paid more than ANY leader in the western world.

    Bill, I still have a job and the thought of my taxes paying to bail out greed, like you, sickens me. I don’t want to pay for my next door neighbours Audi or 50″ flat screen TV, but if the government was to give some of my taxes to help them keep their house so that my money would not pay for a social welfare house for them or future unemployment benefits to them, I’d be glad to use my money for that.

  4. H at 2:52 am

    Let me remind a few commenters here, E Cronin, Stephen Kelly and a few other that the purpose of propaganda is not to control society but to get society to control itself, so that any dissenting option is immediately shouted down. Well congratulations folks, I’ve only one thing to say to you, does the phrase “Hook , line and sinker” mean anything to you? The politicians and bankers must be laughing all the way to the bank as they sit back on their massive inflation proof pensions when they think of people like you doing their dirty work for them.

    It has now emerged that the IMF told lack-luster Lenihan that NAMA wasn’t going to get the banks lending again, but he probably knew that anyway.

    Instead he pisses away 80 Billion Euro of taxpayers money on propping up the banks bond holders and big fat cat investors so that can hang on to their multi million pensions and plan-E VHI while the rest of us see our own meager pensions in free-fall and vital hospital services chopped even more and the prospect of 15 hour waits in A&E just to see a doctor.

    Worse than that, the idiots now think that they can tax their way out of the recession.

    Sorry for all the angst in this post, but I’m old enough to have seen it all before in the 80s, and now I’m see Fianna Fail drag this country to the verge of bankruptcy for a second time.

    Just think what it would mean for the economy if instead of lining the fat cats pockets that 80Bn Euro was used to reduce every mortgage in the country by 100,000. Think of how much money that would release into the economy, money for people to buy food in their local shops instead of going over the border to buy food, instead the ordinary tax payer is going to have to struggle to pay their mortgages before they retire, and then Thypoid Mary is going to take 15% of our homes under the hypocritically named “Fair Deal” scam.

    Economists have long recognised the multiplier effect that spending 1 Euro in the economy is actually worth a lot more in the economy, so you can imagine the effect of releasing the hundreds of millions of Euro into the Irish economy by the government taking a 1/3 share in a home owners mortgage and releasing that money that would have otherwise gone on mortgage repayments.

    In September 2008 the banks and the government had a staring match and the government blinked first. It’s time to redress the imbalance and the damage that has caused to the Irish economy.

  5. Bill at 10:42 pm

    Christopher, you are right that it is the government that has led us to this mess we find ourselves in, and I can assure you that I have made my anger very clear to my local TD. And yes I do own a house, and worked for it. And regarding evolution; yes indeed it was people sticking together that ensured our species survival during times of great stress and catastrophe. However my big gripe is with the mentality that all and sundry should be bailed out, presumably by me the taxpayer, there is no ‘sticking together’ in that. If we were to view it metaphorically it is the equivalent of a village where many have enjoyed the good harvest and outbid each other in bartering their wheat for the fancy robes( latest car, giant Tv, entertainment, fashion,holiday etc) made in the neighbouring village( taiwan/china etc). I and others like me didn’t want the fancy robes and were laughed at for our simplicity ( old car, plain cloths, able to make do)but knew that a bad harvest would be inevitable some day so learned to live with the plain robes and put aside some wheat for the bad harvest. Now the revellers are hungry and expect me to feed them while they still strut about in their fancy robes. I say don’t just sit there in the village moaning about your empty belly while in your fancy robes, get off your ass and do something worthwhile for me and the other villagers, make do with plain robes and then sure I’ll help out.

  6. Christopher Brennan at 2:12 pm

    Muhammad. It’s funny that what you write is completely and absolutely spot on, yet the Irishman Bill above you seems to think that the capitalist society we live in can be compared to Darwins theory of evolution. The simple fact that an economic system that rewards those who do nothing like our government, bankers and property developers, while pounding on those who do everything with a wide stream of tax incomes to bleed them dry is not evolution, it’s tantamount to devolution. In evolutionary societies they stuck together like families, worked together for the betterment of their communities, shared each others resources for the betterment of their communities. This present capitalist society we have bails out those speculators and bankers that caused us this hardship and punishes those who were forced to live in mortgaged or rented accomodation. Bill, you sound like a person who owns a house or lives with mammy and daddy. When a 4 bed house that is 300K and you can get a mortgage for 800 odd euro to pay for it, it makes more “capitalist” sence to go for that to live comfortably with your family than to pay 1,200 euro rent on a 2 bed apartment per month. That’s capitalism. No matter which situation of the two you are in, if you lose your job, you lose your ability to pay mortgage or rent. Guess where that leaves you? Like the single mother you were moaning about, it leaves you at the mercy of social housing. And guess who pays for that? EVERYONE as taxpayers.

    If you want to moan, complain about how single mothers have it. I doubt anyone else would care at this stage now that they’re about to lose their house after the humiliation of losing a job. But you really should cop on and direct your anger at those who helped construct the mess we are in. If this government lets banks take peoples houses away then we are going to see more ghetto towns full of social welfare reciepients that get “something for nothing”, and given time these same hard workers who have paid their taxes all this time will start to suffer this “single mother syndrome” since they’ll learn to adjust to getting something for nothing. Instead of making people homeless the banks should keep people in their homes, keep them working and ensuring another generation doesn’t suffer for the greed brought on by bankers and property developers, not the simple family that needed the home to live in.

  7. Dr.Muhammad Mushtaque at 11:58 pm

    When your house in positive equity and you sell,state is there to claim its share in form of tax though its stake in the house is nothing,when you die, state get 20% capital gain tax on it though you have worked your arse for whole life to built the house with your after tax money ,then why state and financial institutuions can not share in negative equity.state has munched billions of euros in sales tax and stamp duty on inflated prices of these houses.if state can rescue builders and banks through NAMA,it should do the same for ordinary voiceless peopleof this country as well.

  8. Bill at 10:40 pm

    There weems to be a mentality which says that society somehow owes people a certain quality of life regrardless of wether or not they actually pay for it themselves. An obvioius example is the young single mother who feels that this is a good choice for them as society will give them a house and pay for all of their living expenses. Now we see those who were caught up in the frenzy of spoeculation ( nobody had to buy, renting was always an option but people thought they would be left out of the property boom party) on houses thinking that somehow they are owed an escape from their predicament. Well money doesn’t fall from the heavens, it comes from someones toil and sweat. I say get off your ase and do the toil and sweat yourself, you are not my child and as such shouldn’t expect me to feed your stupid greedy mouths. It really is amazing that people who signed up to the capitalis system are now trying to play the socialist game when it suits them. I say put the houses on the market and let the sensible ones who didn’t get greedy buy them for what gthey aree really worth and rent them to whoever can afford to rent. It really needs to be survival of the fittest or in this case the most intelligent or are we going to try and turn millions of years of evolution on it’s head and go backwards by rewrading stupidity?

  9. Christopher Brennan at 8:51 pm

    I agree with the state or financial institutions taking some of the burden. Simple economics state that for a bank to cover the cost of the home they are repossessing then they must sell it for at least what it the value of the remaining loan is worth. If someone took a mortgage out for 300K and has 50K paid off and are evicted, with devaluation of the property they would either have to pass it onto NAMA and take a cut or sell it for below value as there is little to no demand out there for homes. The best bet for the bank is for it to allow these people to stay in their homes while paying off the debt. ANY effort, even if it is a bit difficult for the banks, should be made to keep people in their homes and paying what they can afford.

    Brian Cowen & Co. said that the only way our country will get back on its feet is to regain our competitiveness. I agree. I’ve taken a wage cut and although I am in a union I have not recieved a single extra cent under the “towards 2016” pay agreement since 2005. So with my pay cut I am back on 2004 wages! I am being asked to pay more since 2004 for my petrol, cigarettes (even though I know I should quit), Gas, Electricity, mortgage interest rates etc. If I am being asked to take these cuts so we as a country can regain our competitiveness, why can’t the banks be asked to do the same to keep our people warm, with food on their tables and with a roof over their heads?

  10. Tony at 2:55 pm

    My grandiose 1100 sq.ft. 3 bed-semi in Dublin 24 was valued at a ridiculous €495,000 in 2006. So the people who bought in my area at that time were hardly reckless. In fact many were clamouring to get onto the property ladder before it became impossible to ever own a home. A couple on €120K a year had no problem getting a loan and paying the mortgage. You seem to forget that there are 400,000+ wage earners not earning any more. Many of those earned well above the national average, and were living within their means.

    The best way to help people is to change the antiquated bankruptcy laws here and allow people to eventually have a second chance.

  11. Lenny at 2:54 pm

    If people are bailed out then we are merely sowing the seeds for the next property boom/bust. People need to take responsibility for their own actions, saying that the bank approved me for x mortgage or y mortgage is not an excuse for taking the money and investing it badly which is in effect what everyone did. Ireland is one of the least densely populated countries in Europe which has no natural resources and yet it had the most expensive property?!?! bubble written all over it.
    Also interest rates were and still are very very low so the fact that people are struggling is unfortunate but also due to their own pretty poor budgeting (yes we have had salary cuts but there should have been some flex in your calculations).
    Someone posted that people felt “forced” to buy their own homes, we all feel “forced” to do things but being an adult means you can make the decision not to follow the crowd.
    I dont see a solution other than bankruptcy for those behind on payments, it will deflate the property market and make it easier to buy homes in 2/5 years. Also I fully agree that renting even if you have a family shouldnt have any stigma attached to it, it is widespread in Germany which didnt have a peoperty boom and is managing quite well in this crisis.

  12. Ruairi O’Brien at 2:50 pm

    +1. Very well said.

    The so-called champions of capitalism have an a la carte approach to ideology and are not congruent in their actions, when matched off against their proclamations.
    This is a righwing government. Anyone who doubts that should ask why single mothers have been granted 3-bedroom homes in some of the housing stock that was empty. Not out of goodness or ideological duty / congruency. That is a smokescreen. No, ask yourself who owns the house that the person has been given use of? Her deserving it is not the issue today. Who pays for it (the taxpayer) and who benefits from it (the FF/PD (and FG) speculator cabal ) is the key focus. Follow the money at all times. Other ‘reasons’ are mere icing on the cake politically. How would a government look after single mothers so well yet try to abolish the rural transport scheme or force means-tested sick OAPs to pay for their monthly prescription. Take back the curtain and see the rightwing self-serving shorttermist nature of Brian Cowen, Brian Lenihan and their predecessors Brian Cowen and Charlie McCreevy. To have our fate still in the hands of these republican / (citizen-minded?) impostors is our sorry punishment for believing that there’s economic upswings without downswings….. See for more on economic cycles and how you can, even now, build up a small bulwark of wealth (even while in debt (you must service debts AND save !!) also get a copy of The Richest Man In Babylon in your local library and DIGEST IT !!) and resist the soothing lies of local (Dublin) and central (Brussels) government.

    Peace and prosperity to you and your families.

  13. Paul Browne at 2:42 pm

    You may very well be right! Although compared to my humble tiny abode, many couples living in 4/5 bedroomed deatched homes will still tell you that they are ‘cramped’ and the big house in the country will come soon. Some are never happy!

  14. Stephen Byrne at 2:35 pm

    Yes, I think it’s a good idea provided it is managed well.It is only fair that these householders who cannot pay all of their repayments should be subsidised to some extent.After all they are tax payers just like the rest of us who are not in the same desperate financial position.The social consequences of not helping them is enormous.It appears that the Nation is willing to bail-out the Banks and the property speculators.

    However, many mortgage holders need “a reality check” and perhaps the nation also. Your house is the most important asset in your life so forget about the second home in sunny Spain; you second car; your meals out at the weekend;little Mary’s ballet lessons or little Jonny’s karate lessons to name but a few of our modern day over indulgences.

    I do hope that the majority of people can hold on hold their homes, but it will take committment by all of the Nation.

  15. Ruairi O’Brien at 2:11 pm

    You say “This is a ludicrous and unworkable idea………….Would the state or bank then have a ‘negative equity stake’ in the property?”

    You mean like its negative equity position through NAMA? Or possibly its negative net worth through 25% (and soon to increase) ownerships of AIB and BOI??

    Seriously, your attack is baseless.

  16. Katie at 2:02 pm

    I have to agree with Colm. I am not living in a ” grandiose”house and our income has dropped considerably.between income cuts levys and my wife is a carer for an elderly relative and she even had her allowance cut.. 1 son in college and we are still trying to get his grant and another who has just lost his job.My mortgage is permanenttsb and they seem to have carte blanche to increase their rates when ever they want why cant the government stop them from doing this.They know most ordinary people cant afford these increases. I feel extremely sorry for people in mortgage distress but I really dont know how to fix it and I know I cant pay anymore.A new government has to be the way forward sooner rather than later.

  17. Neil at 1:35 pm

    I completely agree with E.Cronin above. People who got carried away and became reckless should not be bailed out for their mistakes. The out-of-control “keeping up with the jones” mentality we have experienced over the past 8 years destroyed this country. People who took part in this destruction should not be bailed out while people who were sensible are left to battle on.

  18. Brenda Duffy at 12:58 pm

    Yes I agree this would be a fantastic idea. Myself and my partner were approved our mortgage based on the salaries we were taking home 3 years ago. Things have dramatically changed since then, we are down over €20K per year. When we got the mortgage the repayments were no issue at all, now its a struggle.
    Why would the banks take your home from you? In the current climate they are not going to be able to sell it, so they are now left with a house on their hands and a family without a home.
    To be able to agree a payment plan like this would be fantastic. People dont want to avoid paying what they owe, they simply can’t afford it. So to help people not lose their home but keep money coming to the banks, this is ideal.

  19. bren at 12:56 pm

    I think you will find that those with so called “Trophy homes” are not the ones in financial difficulties

  20. Colm at 12:47 pm

    If you can’t pay your mortgage then you lose your house. That was the deal we all signed up to at the beginning and I say that knowing that if the economy doesn’t pick up I’ll probably lose my job and be in the same situation. Perhaps we need to reform the system to allow people become bankrupt for personal debt and start again. However what we should not do is put further burdens on the remaining taxpayers.

    I work bloody hard to get the money each month to pay my mortgage. If my neighbour defaults (either because they can’t or won’t pay) why should my tax go to pay their mortgage? Why should I be the idiot going to work every day while my neighbours wave me off knowing my labour is keeping them in the lifestyle they have become accustomed to

    I suppose my question is where is the money going to come from for yet another bailout? I can’t pay any more tax and I can’t pay for any more services (health, water, bin, tolls etc) that my tax used to pay for. As a taxpayer I have already bailed out the bankers (recapitalisation), developers (NAMA), church (abuse redress board) and lawyers (various tribunals). Don’t get me wrong I would like to help my neighbour ahead of any of those b@stards but unfortunately the government put them first in the queue and my pockets are now empty.

  21. bren at 12:47 pm

    The fact is that the state has a duty to provide accomodation for all it’s citizens. Now over the last decade or so it was actively encouraged by a right wing, free marketeering governemnt for people not to rely on local Authorities and to buy their own home. People felt pressurised into buying homes they couldn’t afford in a market that grew and grew but was noticably unsustainable to most but those who were involved. Now that this has collapsed that same goverment must take resposibility for it’s actions and assist ordinary people in the same way as they are assisting the developers and bankers.
    If they were so entrenched in the free market why didn’t they just let the banks collapse and nationalise them all. The same way that small and medium business have been allowed to go bust

  22. Peter O’Connor at 12:31 pm

    Some help should be available on a case by case initiative but again it must be very tightly run to ensure people can’t walk away and leave the state holding negative equity. Certainly those who have lost jobs through no fault of their own must be helped. The question is how much and who decides.

  23. matt at 12:25 pm

    Yes … great idea. lets use tax payers money or money that could be better of invested by the banks supporting new eneterprise just so someone can stay in a house they can not afford to live in, and futher propp up a property market that is unsustainable!!

    If anything needs looking at to help families out it is bankruptcy laws!

    Why can families not rent a house they can afford? Mine does!

  24. E Cronin at 12:24 pm

    No! No one forced these people to buy grandiose houses they couldn’t afford. Why should people who were more sensible about their money and ability to repay loans inevitably have to bail out those who were reckless? While the banks have to accept their share of responsibility for this mess, so should the customers who took out the loans. That said, while I think mortgage holders should pay the full about they owe to the banks, I do think banks should be more flexible for people struggling with current repayment levels.

  25. Helen at 12:14 pm

    Yes, I think the people who are in mortgage difficulties should receive help.

    Why should the banks be bailed out and not our own people. The banks are not giving these people a chance and it’s unacceptable. Some people are stuck in a fixed rate position and if the banks would release them from this rate the people would be able to make the payments. The banks are greedy and they want to squeeze as much out of these people as they possibly can which is unfair. People are losing their jobs, salaries being reduced to salaries received more than 5 years ago and the banks need to take this into consideration. The banks have gotten off far too easily and the Exec’s and Chairpersons who fraudulently took millions of euros were sent off with a big fat pension and bonuses and are now sitting in their big homes laughing at the rest of us. They’re not suffering and nor have they been prosecuted, they deserve jail time for fraud. There seems to be one rule for the corrupt and another for the ordinary joe soap who plays by the rules. Allow help and give these people some dignity, for some of them their dignity is all they have left !

  26. Paul Browne at 12:12 pm

    I think it is a great idea if homeowners fall into genuine harship and unforeseen arrears. However, there must be some guarantee that if the stakeholder is the State that the homeowner doesn’t get to walk away from the deal and leave the state with even more unwanted and devaluing properties. Furthermore, there are many who lost the run of themselves and bought trophy homes they could never really afford. Nobody forced them to take the money from the banks and an easy bailout seems generous for their greed, folly and vanity.


  27. Stephen Kelly at 12:12 pm

    This is a ludicrous and unworkable idea.
    In a significant number of cases these homes will be in negative equity. Would the state or bank then have a ‘negative equity stake’ in the property? Or would they somehow own (part of) the ‘non-negative equity’?
    The best solution is to update the bankruptcy laws and allow those people who are, in actual fact, bankrupt right now to deal with the way most other civilised countries do.

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