Mortgages until the ’80s could solve debt problems, says Insolvency Department

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Extending mortgage payments for people into their 80s and 90s could help 95,000 people who still owe a lump sum at the end of their mortgage term, the state’s insolvency agency said.

There are almost 30,000 people in long-term mortgage arrears who have not paid off their mortgages for over a year, but there are another 95,000 people – accounting for about 13% of all mortgages and 14, € 5 billion in debt – which faces a shortfall in repayment of the balance at the end of the term of the mortgage loan.

This group includes many people who borrowed heavily during the economic boom and may have subsequently restructured unaffordable mortgages, but are now in their late 50s, 60s and 60s and are nearing retirement with no one. means of repaying unpaid sums of money.

Michael McNaughton, director of the Insolvency Service of Ireland – the public body that helps restore the creditworthiness of insolvent people – said recent court cases extending monthly mortgage payments and reducing them for people nearing retirement in their 80s or 90s could be a way to solve this large amount of unsustainable mortgage debt.

The Circuit Court last week dismissed an objection from a bank allowing a 68-year-old indebted Waterford handyman to stay in his house for life with reduced repayments of € 93 per month with the overdue mortgage of € 97,000 to repay from the sale of his home after his death.

‘Complementary solution’

Mr McNaughton said the state’s rental mortgage program – where a borrower switches ownership of their home to renting out as a social housing tenant – was a solution that could help but was ” quite restrictive ”. Therefore, extending a person’s mortgage payments into the ’80s or’ 90s was “a supplement” to the state-supported program and a “viable alternative” to repossession.

“These types of solutions are aimed primarily at 25,000 people overdue and over two years late,” he said.

“But I also think this might be a way forward for older borrowers who may not technically have arrears but have no way of paying off the mortgage in their working life.”

Some borrowers face shortfalls due to interest rate only arrangements. When loans have been restructured because they could not afford to repay, some are faced with the full repayment of a lump sum that was “stored” in the years following the real estate crash to be paid at a fixed rate. later date.

“There are a lot of mortgages that have been restructured, but they’re not necessarily viable,” McNaughton said.

The Central Bank urged lenders and borrowers to engage with each other on developing plans to meet the lump sum payment due at the end of the mortgage terms and to begin clearing the “warehoused” portion. »Debt if the borrower can before the end of the term.

Mr McNaughton said investment funds that bought distressed mortgages from banks engaged more with borrowers than some banks and accepted “innovative solutions”.

Long-term repayment agreements can generate income for the funds from these distressed loans and allow them to sell tranches of similar loans as part of securitization deals, he said.

Non-bank entities such as Start Mortgage and Pepper Ireland held 54% of all home loans overdue by more than a year at the end of March.


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