Fianna Fáil Finance Spokesman Michael McGrath has described as unsatisfactory the lack of any guidelines from the Central Bank on the write off of mortgage debt by banks. Deputy McGrath was speaking following confirmation by the Governor of the Central Bank, Professor Patrick Honohan, at today’s Oireachtas Finance Committee meeting that banks are writing off mortgage debt in individual cases.
At today’s meeting, Deputy McGrath questioned Professor Honohan and the Deputy Governor for Regulation Matthew Elderfield on the issue of debt forgiveness and other issues facing mortgage holders in difficulty.
Deputy McGrath said: “Following much speculation in recent weeks about debt forgiveness, there is now official confirmation from the Governor of the Central Bank that debt forgiveness or mortgage write-down is taking place on a case by case basis with borrowers in difficulty. However, the Governor acknowledged today that there are no guidelines or supervision from the Central Bank in this area and it is completely being left up to the banks to work out with the mortgage holder.”
“Now that we have confirmation from the Governor the debt is being written-down in certain cases, the Government must ensure there are appropriate guidelines in this area, supervision of their implementation, and that mortgage write down is applied in a fair way across the banking system. It is not satisfactory that debt forgiveness is being left to individual banks to decide without any policy guidance whatsoever.
“The current situation leaves distressed mortgage holders in the dark and without any assurance that their individual case is being dealt with in the same fashion as someone else in similar circumstances. The very least people can expect is consistency in this area. This is particularly important given the Minister Noonan’s statement that a formal debt forgiveness scheme has been ruled out and that it is being left to banks to make individual arrangements with customers.
Deputy McGrath said: “Governor Honohan also acknowledged today that ‘negative equity mortgages’ are being provided in certain cases. However, it seems the Central Bank is not in favour of these products being advertised by banks. Mr. Elderfield also confirmed that while banks engaged in providing negative equity mortgages have been spoken to on this matter, there are no guidelines in place.
“We must know what criteria banks are using to decide if debt forgiveness or mortgage write-down is appropriate or if a borrower can be provided with a negative equity mortgage to move to a new home.
“As long as the public remains in the dark about what measures are available for them if they get into difficulty and how these measures will be applied, people will remain confused, only adding to their anxiety are an extremely difficult time.”