Paschal’s dig at chronic debtors Long-term arrears ‘imposing cost on others’

LONG-TERM mortgage arrears built up by some borrowers in recent years are imposing a cost on other bank customers, Finance Minister Paschal Donohoe said yesterday.

He argued that others were paying more as a result of the unpaid debts built up by customers who had refused to engage over several years.

‘Because there is an amount of debt for which there is no engagement, it does create a cost on the banking system, and that cost, in turn, creates risk for our economy and additional cost and risk for other citizens,’ Mr Donohoe said.

The Central Bank has said that more than 28,000 loans are in arrears, with 14,000 homes in danger of repossession because their owners have not answered letters or made payments, some for up to five years.

‘What we are also seeing now is a growing number of debts for which payment has not ‘Risk’: Paschal Donohoe been made and the banks are not experiencing enough engagement on, and my strong message to individuals who find themselves in that level of difficulty is to engage with the banks,’ Mr Donohoe said yesterday in Dublin.

‘The code of conduct on mortgage arrears is in place, to ensure that a strong level of protection is available, but in order to avail of that level of protection, you must engage with the banks.’

The minister claimed that Government support for the intervention and the role of the Central Bank had helped to see 12,000 mortgages restructured over the last number of years.

‘Out of all of those restructurings, 89% are meeting the terms of the revised arrangements,’ he said.

‘The magnitude of the restructuring has shown the commitment of this Government to meeting an issue that can cause huge concern and anxiety.

‘Recent years have shown that in order for this issue to be dealt with, it requires the intervention of the Central Bank and the Government and that has happened over the last number of years.’

There was a ‘massive fear’ that citizens had regarding what could happen to their loans and their homes.

‘We have found a way of responding to those difficulties, but what we are seeing now with NPLs (non-performing loans) is because there is an amount of debt for which there is no engagement. It does create a cost on the bank- ing system, and that cost in turn creates risk for our economy and additional cost and risk for other citizens.

‘That is why it is so imperative that anybody who does continue to find themselves in difficulties with their mortgage should engage with their banks. The agency Abhaile is available to help, and is advertising again the supports that are available.’

He added: ‘We have a strengthened system of personal insolvency protections in place and this offers the best environment in which outstanding personal issues can be resolved.’

But Sinn Féin finance spokesman Pearse Doherty said the latest Central Bank statistics on arrears made for sobering reading.

The banks could not be left off the hook for their role in allowing the long-term arrears crisis reach this point, he said. ‘If left to their own devices, individual banks will not resolve their non-performing loans problem.

‘That is an amazing criticism of the banks after nine years of this crisis,’ he said.

Comment – Page 12 senan.molony@dailymail.ie

‘Refuse to engage for years’