Debtor's Moratorium 'Does Not Go Far Enough'

The Labour party has hit out at the states banks for "not going far enough" after the unprecedented bank consortium announcement yesterday accepting a six-month moratorium.

The ten biggest mortgage lenders in Ireland finally pledged to offer homeowners more time to pay back arrears before taking legal action against them in an announcement by the Irish Banking Federation (IBF).

However, Labour TD Ciarán Lynch said today that although the “Statement of Intent” published by the IBF gave some reassurance to homeowners, he believed it did not represent a realistic attempt to address the situation.

Mr Lynch said: "Last week in the Dail, I put forward a motion proposing a moratorium that would provide for a minimum period of 24 months from the time that mortgages first go into arrears, before repossession proceedings can be taken, where a borrower makes reasonable efforts to meet their obligations to pay the mortgage on a principal private residence.

"If somebody is made redundant this week, it may well be some time in 2012 before their prospects of a getting another job improve to any extent, and before they can get back on their feet. Labour believes that a 24-month moratorium makes far more sense."

The Minister for Finance, Brian Lenihan today unconditionally welcomed the announcement by the IBF saying its offer was further reassurance to homeowners who are in difficulty.

Commenting on the announcement, Minister Lenihan said: “The government wants to ensure as far as possible that difficulties in relation to mortgage arrears do not result in legal proceedings. Home repossession generally is the last resort for the lender and we want to keep it that way. A better method of dealing with arrears cases is early intervention and engagement between lender and borrower”.

(DW/KMcA)