From next
year borrowers in the Republic of Ireland who have unsustainable mortgage debt
may be able to ask for debt forgiveness.
However,
Moody’s have said this will increase banks’ losses on existing mortgage books.
Currently
Irish mortgage borrowers who default on their loan can lose their home and be
liable for the total outstanding debt for at least 12 years.
From 2013
mortgage borrowers who qualify as insolvent will be able to enter a Personal
Insolvent Arrangement (PIA) with their creditors, if at least 65% of total
creditors agree, which for most people will effectively mean their mortgage
provider.
This
arrangement would see the mortgage reduced to the current market value of the
property, while the borrower would continue to live in it.
Although
this may resolve the mortgage arrears and negative equity situation for the
banks and eventually aid the recovery and strengthen the bank’s balance sheets,
mortgage audit company Rockstead says this legislation will not benefit holders
of Irish residential mortgage backed securities (RMBS).
In February
2012, Moody’s said that originators of Irish RMBS would not be required to buy
back loans subject to PIA. As the majority of the servicing is undertaken by
the originator in Ireland, the power to veto a PIA will therefore rest with the
originator.
Rockstead
says it is generally acknowledged that the Irish market has significant issues
to address and the lack of qualified staff in collections, recoveries and
quality assurance oversight has not helped asset holders to address these
issues with urgency.
Related Articles:
Channel: Wanderer of the Skies - April 14, 2012
“… Your nation of Iceland is being used as a testing ground for the rolling out of financial strategies for the betterment of your planet. It would be wise to follow their progress in this respect, as it will be the fate of all nations in a very brief period of time. We have always advised you that such an action would never come from the larger powers and nations of the world, but they will follow in lockstep once the actions begin their domino effect…..”
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.