Banks Relent To Help Debt-Hit

Ireland's banks have succumbed to Government pressure to offer a moratorium on debtors.

The ten biggest mortgage lenders in Ireland finally pledged today to offer homeowners more time to pay back arrears before taking legal action against them.

The matter had been discussed in the Daíl on last Tuesday and Wednesday, with the Labour party calling for a two year delay before banks could take legal action against homeowners who were struggling to repay their mortgage.

During the debate, Labour TD Ciaran Lynch said that given the economic downturn and the massive increase in unemployment, huge difficulties were being faced by families in meeting their mortgage repayments.

Following the debate, The Irish Banking Federation (IBF) has announced customers who are unable to maintain mortgage repayments will be offered arrangements on a six-monthly basis, with no legal threat.

Under the current statutory code of conduct, lenders must wait six months from the time the arrears first arise before beginning legal action for repossession.

In the case of the two recapitalised banks, AIB and Bank of Ireland, the moratorium is for 12 months.

The "statement of intent" agreed and supported by IBF mortgage lenders, who include the ACC Bank, AIB Bank, Bank of Ireland, Bank of Scotland (Ireland), EBS Building Society, Irish Nationwide Building, Society, KBC Bank Ireland, National Irish Bank, Permanent TSB and Ulster Bank, said the move was further reassurance to homeowners who find themselves genuinely unable to maintain mortgage repayments.

A spokesman for the IBF said: "While it is important to always make the distinction between customers who are unable to pay their mortgage and those who are unwilling to pay, IBF mortgage lenders have as their goal to work with their customers who face genuine difficulties in order to find solutions that do not involve legal action.

"The basis for such solutions is for the customer to talk to his/her lender at the earliest opportunity so that a mutually-acceptable arrangement can be agreed, implemented and reviewed thereafter on a six-monthly basis."

The IBF said that under the code, lenders must adopt flexible procedures for handling mortgage arrears and assist the borrower as far as possible. Lenders must wait at least 6 months - 12 months for the two recapitalised banks, AIB and Bank of Ireland - from the time of arrears first arising before applying to the court to commence legal action for repossession.

(DW/BMcC)