‘Don’t go easy on mortgage arrears families’
EU bank boss’ stark message for homeowners
A TOP EU banking boss has urged the Government not to go easy on Irish families in mortgage arrears.
European Central Bank chief Mario Draghi warned rates could rise if the Government’s plans to help distressed borrowers go through.
Under proposed legislation, courts could take into account the circumstances of those who have fallen into arrears.
The Land And Conveyancing Law Reform Bill was first proposed by junior minister Kevin Moran and brought to Cabinet by Justice Minister Charlie Flanagan.
Last month, Cabinet approved the drafting of the Bill, which could provide courts with the opportunity to be lenient towards borrowers.
But in laying out his opinion of the Bill, Mr Draghi blasted the Government’s proposals, warning bank charges could increase if it is pushed through, The Sunday Business Post reported.
Mr Draghi said in a letter to the Government: “It is important to carefully consider the impact of the draft law in order to ensure legal certainty and to prevent moral hazard from arising in the relationship between creditor and debtor.”
The ECB blasted the Bill, warning Ireland it could have an impact of the rates banks charge.
It said additional costs incurred by the proposed legislation could be passed on to future borrowers, adding: “The impact of the draft law on these factors, and in particular on the ability of the lender to enforce security and the potential corresponding increase in default rates, should also be carefully considered. This is because additional costs are likely to be passed on to future borrowers and could result in a significant impact on mortgage pricing and availability.”
The Land and Conveyancing Law Reform Bill is the latest legislation that attempts to address issues faced by banks as they attempt to get rid of legacy debt.
As many homeowners who bought during the boom years struggle to pay their mortgages, banks are coming under increasing pressure from Europe to reduce their levels of bad loans.
Additional costs are likely to be passed on to future borrowers ECB BANK SUNDAY BUSINESS POST
IT is outrageous ECB chief Mario Draghi is trying to block a move that would help Irish families stay in their homes.
Europe’s leading bank boss wants the Government and the courts to show no mercy to those who face eviction, claiming this would lead to a so-called moral hazard.
There was no such worries expressed by Mr Draghi when the banks and developers who caused the crash were allowed to walk away from debts which the taxpayer had to pay.
He would do better to go after the rogue bankers rather than help them put Irish families out of their homes.