American homeowners aren’t the only ones struggling to keep their mortage payments current. The housing market slump has expanded to other parts of the globe and the pressure to keep mortgage loans out of default is spreading. However, homeowners in Ireland may soon get some much needed relief as banks discuss loan modifications to help those that are financially strapped.
Mortgage Modification Talks
One of the top banks in Ireland, Allied Ireland Bank (AIB), has submitted a proposal to help overburdened homeowners by writing off a portion of the mortgage debt. Essentially, this would put the bank in an ownership share of the home in return for being able to write off some of the debt held by the mortgage holder. The intent of a “write-down” is to be a type of mortgage modification that reduces the payments for the homeowner, while the bank increases its stake in the upside of the mortgage loan through partial ownership. However, the problem is that these write-downs are often unregulated and can lead to problems for the homeowner if the home ever ended up in foreclosure.
As for homeowners in Ireland, the banks assure that any loan write-downs will be governed under strict rules to prevent any mortgage scams. On the other hand, banks are concerned that this program may lead to abuse consumers, whereby they intentionally default on their loan to obtain a write-down of their debt. In any event, the matter is becoming pressing as it was reported that nearly one in eight homeowners in Ireland have already had their mortgages modified to obtain relief from their debts. Minister for Finance, Michael Noonan id dedicated to find a solution to provide debt relief for Ireland’s struggling homeowners.