The Government is grappling with the mortgage arrears crisis, concerned that a flood of repossessions are inevitable unless action is taken. As ever, much of the blame is being deflected to the banks, who are accused of not engaging properly with mortgage holders in distress and being too slow to come forward with solutions. To some extent these criticisms are valid, but there are deeper issues at play of which ministers are well aware. The thruth about this crisis is that there is no simple solution.The Government is correct to push banks and borrowers to engage in talks and to ensure banks put forward meaningful, long-term solutions. It is also appropriate to examine the new insolvency regime and to modify it where necessary. Even if all that is done, however, there are a group of people in arrears who are refusing to engage with the banks and another group who simply cannot by any criteria afford to pay their mortgages. Much of the debate suggests that the banks or the State should step in to help. If this is going to happen, it cannot be on an ad hoc basis. However it is constructed, the cost is going to fall somewhere – either on the shareholders of the banks, still the State in the case of AIB and Permanent TSB, or on the exchequer, in the case of public supports for mortgage holders in difficulty. In some cases this may be appropriate for economic or social policy reasons. But whatever solutions are devised must be transparent and clearly thought through. Government action may limit the number of repossessions, but eliminating them entirely will not be possible.
There are other aspects to housing policy which also need to fit in with whatever is proposed. These include measures to boost the supply of new housing and also greater availability of social housing. These issues will not be solved overnight, but properly planned policies can make a difference over the next few years. In the meantime the Government needs to ensure that the system deals are equitably as possible with those in mortgage arrears, but within a framework which acknowledges the limits to what it can reasonably do.