Right now in Ireland one in eight mortgages are in trouble. This represents 95,158 households which are in arrears or have already had their debt restructured. Of these mortgages in arrears 72% have been behind in payments for more than six months and of these the average amount owed is €21,000. For people owing so much, repayment looks impossible without a major transformation in personal circumstance.
In the current economic climate this clearly will not happen for the vast majority of homeowners.
For these reasons there have been calls for a mortgage forgiveness scheme. Economics Professor Morgan Kelly for instance, has called for such a program and has estimated that it would cost between €5-6 billion. While this is a lot of money it’s a small sum for something that would take tens of thousands of families out of distress. It is also miniscule when compared to the vast amounts that have been pumped into failing banks to protect those who gambled recklessly on the financial markets.
Despite this Enda Kenny has said that “there will not be general debt forgiveness because that’s asking every taxpayer who is paying their way to pay for all of the others”. Clearly the government deems it acceptable to ask the taxpayer to pay the way for reckless financial institutions but not to prevent the slide of thousands of families into deeper poverty!
The Labour Party has also backtracked on commitments to support struggling families. In their election manifesto they promised the establishment of a debt management agency that would “support families who make an honest effort to deal with their debts, including non-mortgage debt, providing protection from their creditors where appropriate, so that they have time to sort out their affairs”.
In a recent interview however Joan Burton expressed reservations about such a course of action and suggested that the banks (the very institutions that created this crisis in the first place) should be obliged to set up such an agency instead. Rather then provide solutions this government has done nothing but engage in farcical buck-passing.
In the meantime thousands are left to flounder, struggling to meet their families’ most basic needs.
Reduce all mortgages to cost!
The depth, scale and devastating personal and social consequences of the mortgage crisis are clear. The government has excused its inaction and in reality, unwillingness to tackle the issue, through a pathetic and shabby argument framed around “fairness”. The claim is that it wouldn’t be fair on those who are really struggling but are managing to keep up their mortgage repayments, if those failing to do so are assisted. This is coupled with a general point that taxpayers overall shouldn’t have to pay for the mortgage crisis – again that it wouldn’t be fair.
It’s necessary to inject some bitter reality into this feeble “debate” around the mortgage crisis issue. The bitter reality being that the taxpayer has already paid the most obscene sums imaginable – up to €85 billion in a bank bailout which can only be described as titanic, began by the last government and continued seamlessly by the current one – to pay for the property bubble!
There is no need whatsoever, for a further state subsidy to private speculators through a state sponsored repayment of hyper-inflated mortgages in full. This would amount to a further bailout for the social parasites. It’s also worth mentioning that struggling mortgage holders who are paying far above and beyond what their house is worth in their mortgage and interest repayments, are being doubly crucified as the legacy of the robbery of ordinary people by the property developers and their partners in crime, the banks, continues.
The solution to the mortgage crisis is in fact, a no brainer. Quite simply, all mortgages should be written down to the estimated cost of the building material and labour of each house. Given that house prices have not reached rock bottom according to most serious analysts, it’s the only fair option. In other words – let the private speculators and profiteers take their losses. There is no credible argument in opposition to the latter. The arguments of the establishment that it’s a ludicrous suggestion that the super-rich who caused the crisis should be made to pay, have been undermined by their own actions.
The economic crisis, that has been caused by the private ownership of wealth – an emblem of the latter being the havoc wreaked on human lives by the private ownership of the banking system – is worsening, such that the unthinkable “haircut” was imposed on some bankers in the second EU/IMF deal for Greece by the very politicians who represent the interests of the super-wealthy and of the profit system. Although this deal was rotten and punished the Greek workers horrifically, the reality of this “haircut” illustrates that it is possible to impose losses.
Ultimately, the mortgage crisis illustrates the perilous policies that have been pursued in terms of the banking sector. The banking sector must be taken into full and democratic public control and ownership with working people and the unemployed at the heart of its management. In this instance, any wealth of the elite that remains could be utilised in the interests of the majority, and the toxic debts could be rebuked and not paid, with the necessary mortgage write downs implemented and a banking sector that operates as a service.