Irony that homeowners were safer when the market was in most parlous state

TAXPAYERS face a moment of reckoning. Almost a decade after the crash, bailed-out bank Permanent TSB has finally decided to flog the mortgages of struggling homeowners in a €3bn portfolio deal. A further €1bn of buy-to-let mortgages will also be put on the block.

Predictably, the decision has been met with fury from some corners.

Debtors’ advocate David Hall – founder of IMHO, which established iCare, an approved not-for-profit housing organisation – characterised the move as “abysmal”. But the failure to deal with the large volume of home loans in deep distress has been a drag for borrowers, banks and taxpayers alike.

It leaves the State caught between a rock and a hard place. On the one hand, non-performing loans have hampered the banks’ performance and drained their resources. On the other, many borrowers who were encouraged to borrow beyond their means during the lending frenzy have until now escaped an inevitable fate.

This move was always going to happen.

In the immediate wake of the crash, the banks held off repossessing homes, knowing it was politically toxic.

At Government-level, there was no appetite to deal with the issue either.

In the meantime, some borrowers took advantage of the political stasis and entered into strategic default.

In many ways, it suited both the banking and political world to allow borrowers to stay in their homes when properties were in negative equity. At least it kept the lights on when property prices crashed.

But the irony and hardest yard for many borrowers was they were safer in their homes when the market was in a parlous state.

Their greatest risk was when, as now, the market recovered.

Now their homes have risen in value, international funds are swarming in seeking value amid growing concerns about consumer rights.

The big question is why the banks failed to deal with non-performing loans in a more timely manner. Some would argue they are subcontracting politically toxic jobs to outsiders.

Where was the will to look after our own and try to solve the problem sooner?