The Keane Report on distressed mortgages – the bullet point version

The long-awaited Keane Report into the issue of debt forgiveness issued its findings today. Here’s the basics.

• The report does not advocate blanket debt/negative equity forgiveness and instead indicates that the issue of mortgage difficulty can only be considered on a case by case basis
• Measures taken by the banks so far may not be enough and it will have to be recognised by borrower and lender that some mortgages are currently unsustainable and that other solutions will have to be found.
• It proposes three solutions to help mortgage holders;

·        Trade down mortgages: where you sell your house and carry whatever excess balance, or negative equity, with you to your new home which will have a much smaller mortgage, ensuring your overall debt is lower

·        Split mortgages: where your debt is split and you pay off an amount that is affordable every month while the remainder of the loan is warehoused and paid off when you get some extra cash or, in worst case scenario, is settled by sale after death

·        Sale by agreement: where all other options have been explored and then the house is sold to regain some of the debt and the rest is dealt with by the bank and the owner on an agreed basis.

• The State also plans to introduce two “mortgage to rent” social housing schemes using approved housing bodies and the leasing of houses by banks to local authorities in appropriate circumstances.
• The report also wants the Money Advice Bureau to work more closely with banks and it proposes some changes to the current bankruptcy laws