Irish Finance Minister Michael Noonan said on Wednesday that the nation’s government will begin imposing sanctions on banks that fail to assist distressed homeowners but added that banks would likely comply with the request.
The recent financial crisis nearly left Ireland bankrupt, prompting the government to request a bailout from international authorities in 2010. Taxpayers in the country put about 40 percent of Ireland’s annual economic output into efforts to recapitalize banks, yet the country’s home mortgage crisis remains one of the worst in the euro-zone, Fox Business reports.
Data from Ireland’s central bank published last week revealed that, by the end of December, nearly 12 percent of all residential mortgages were in arrears for more than 90 days. About five percent of home loans had been restructured, indicating that a large number of Irish homeowners had faced difficulties in meeting loan agreements. About 19 percent of buy-to-let properties were also in arrears by the end of December.
“The government acknowledges that the mortgage arrears situation is one of the most serious social and economic issues facing the country,” Noonan said, according to Fox Business. “It is a cause of distress to many families. It is also an impediment to economic recovery.”
Noonan also said that since banks have been sufficiently recapitalized, the institutions have enough capital to deal with troubled home loans. Ireland’s central bank will force lenders that received taxpayer aid to review all residential home loans and will impose sanctions, beginning in 2014, on lenders that fail to reach agreements with homeowners on loans that are “unsustainable.”