DUBLIN ? The Irish government has pumped enough money into its broken banks, but the bailed-out country cant afford to provide major relief of home-loan debts, and will need to carefully tailor plans to help distressed borrowers, the head of the Irish central bank said Wednesday.
For its part, the Irish central bank will review its so-called mortgage arrears code and allow banks to be more actively involved with debtors, Patrick Honohan told a gathering of lawyers in Limerick City.
Ireland slid into a European Union and International Monetary Fund bailout program in November 2010, when its banks could not absorb huge losses on property loans when the countrys property bubble burst.
However, the government does not have the money to help all distressed home-loan borrowers and must direct fair and technically efficient aid to those most in need, Honohan said.
Although the banks have been provided with enough capital to allow for loan modifications in respect of loans that are clearly unaffordable, unnecessary debt forgiveness could quickly erode that buffer, placing a further burden on the government finances, which they are in no condition to absorb, he said.
The government has said it will implement recommendations of its Interdepartmental Group on Mortgage Arrears, known as the Keane report, that was published late last year, and bring in new plans announced in January for new insolvency and bankruptcy laws.
Irish central bank figures published last month showed the number of Irish residential home loans in arrears had increased again, with 9.2% of all mortgage home accounts in the Irish republic in arrears for more than 90 days at the end of December.
And approximately 14% of all accounts were in arrears for over 90 days or had been restructured and continue to perform, the central bank figures showed.
However, Honohan said Wednesday that most home-loan borrowers whose properties are worth less than their mortgage debt are servicing their loans.
Copyright copy; 2012 Dow Jones Newswires
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