Fine Gael has pledged to force lenders in receipt of State support to renegotiate mortgage terms with struggling householders in danger of losing their homes.
The party outlined a range of policies on housing today, including the introduction of a cap on mortgage interest supplement payments and new legislation to stop lenders imposing penalty rates where rates have been rescheduled.
“As a country and as a people we have all taken on a monstrous burden of debt from our banks that we will end up repaying for generations to come,” finance spokesman Michael Noonan said. “Fine Gael believes it is time for ordinary families who are in mortgage distress to get a break now.”
Fine Gael would prevent repossessions by making taxpayer-backed banks allow homeowners to renegotiate mortgage terms. It would also oblige mortgage providers in receipt of State support to cut costs by €100 million instead of hiking interest rates.
A Deferred Interest Scheme (DIS) will also enable borrowers who can pay at least two-thirds of their mortgage interest to defer payment of the unpaid interest for up to five years.
The party has previously promised to put aside €120 million in additional mortgage interest reliefs for the “negative equity generation”. This would be financed in part with the abolition of relief for new buyers from June 2011.
It would also introduced a new negative equity insurance to give security for prudent lenders and borrowers against future risks of negative equity.
“In the event that a family is forced to sell their home due to adverse economic circumstances, any difference between the loan value and the sale proceeds is paid for by the insurance scheme,” Mr Noonan said.
“This means that families with mortgages covered by such insurance will no longer be left to shoulder the burden of negative equity.”
Mr Noonan maintained up to 40,000 mortgages are in arrears of more than three months, with 28,000 of these in arrears for more than six months. “Last year alone, 600 people had their homes repossessed, leaving families homeless and banks making a loss,” he said. “Without action, this can only get worse.”
He said every family and business should do everything they can to service their debts.
“However, where families and businesses have made best efforts and still are unable to repay their debts, we’ll support them through the recession and help them back to a point where they can manage their debt.”