Thousands of Irish to lose home ownership

Thousands of Irish people will lose ownership of their homes under a scheme to deal with the country's worsening mortgage arrears problem, Finance Minister Michael Noonan said on Wednesday. A government-commissioned report has recommended "mortgage to rent" schemes that will allow indebted borrowers to continue to live in their homes and pay rent to a housing body which has either bought or leased the property from the bank.
"Losing ownership is a big issue and that's going to cause a lot of grief but actually losing the roof over your head is a much bigger issue," Noonan told reporters after the report was published. "The priority is that people will continue to live in their own homes with the minimum of disruption and make whatever contribution they can make."
The number of households in arrears on their mortgage for more than six months has doubled since 2009 to around 32,000 on the back of a disastrous property crash, and the government-commissioned report said that figure would continue to grow. Half of the loans in arrears were written by the three main Irish lenders - Bank of Ireland , Allied Irish Banks and permanent tsb - with the remainder lent by Irish subsidiaries of foreign banks such as Royal Bank of Scotland .
The state, which is directly exposed to the arrears problem after taking over large parts of the banking sector, needs to come up with a solution to help create a floor for property prices, restore spending power to indebted homeowners and fulfil an election pledge.
But a blanket debt or negative equity forgiveness scheme, at an estimated cost of around 14 billion euros, would heap further losses onto the banks' balance sheets and be far too expensive for the heavily indebted state. The government was also worried that wholesale write-offs could encourage borrowers to purposely fall behind in their repayments in the hope of getting bailed out.
Analysts said the new proposals would not provide a quick solution. "There are no real hard measures that would make an immediate tangible impact on arrears and the whole mortgage problem," said Dermot O'Leary, chief economist with Goodbody Stockbrokers in Dublin.