The news that Allied Irish Bank is to explore limited “debt forgiveness”, for mortgage holders in severe difficulty, will come as a blessed relief to many homeowners currently experiencing oppressive financial problems.
The Bank has indicated that it will take this very pragmatic approach to those who are finding it nigh impossible to meet their responsibilities in the current economic climate.
Many will have borrowed vast sums, in good times, to build or buy the home of their dreams but those aspirations have quickly turned to nightmares as they battle to meet monthly liabilities which are now way beyond their means.
Great numbers of those in difficulty face an added problem, in that the homes for which they forked out hugely inflated sums are now worth far less than the amounts paid. This negative equity has left them with little choice. Even if they choose to downgrade they will be left with massive obligations which they will still be unable to meet.
There has, understandably been a level of disquiet in certain quarters from those who believe that some are being afforded an abdication of their responsibilities. Those who have exercised caution in all of their dealings believe that the onus remains on those who borrowed huge sums to discharge their liabilities.
That may well be true but the fact remains that many are in situations which they could never have foreseen. When they entered into burdensome financial obligations they firmly believed that they would be in positions to meet those debts and never doubted their ability to do so.
However, life has changed immeasurably for many people in this country, not just in the higher echelons, who borrowed aggressively and irresponsibly, but in huge numbers of average earning households. They have been victims of this crash and deserve some sympathy as they battle to keep, literally, the proverbial roof over their heads.
By offering some respite to such people not only will they benefit but the financial institutions, who might otherwise lose almost all of the monies owed to them, will at least recoup parts of the debts, which must surely be the better option.
This proposal, though not palatable to those still facing large obligations whilst also in negative equity, is sensible for severely impaired mortgage holders and the wider economy.
Offering a measure of “forgiveness” to those who were honestly adversely affected by one the worst property bubbles ever experienced demonstrates a compassion which is badly needed at this time.
We have no doubt that should the proposal be adopted across the banking sector the financial institutions will implement it with due diligence and that those who are most deserving of sympathy will be the worthy beneficiaries.