Thousands of people struggling to pay their mortgages could see their monthly repayments fall by up to a third if proposals from international financial services group IFG are accepted by the banks and the financial regulator.
That’s according to a report in last weekend’s Sunday Independent.
Under the proposed debt-for-equity scheme, the amount owed by borrowers to their banks would be reduced in return for the handover of a share of their homes to an independent trust.
IFG estimates that around 10,000 homeowners would be suitable for the scheme if it is introduced.
IFG chairman Frank Ryan said that while the company’s debt-for-equity swap plan did not amount to debt forgiveness, it would enable both banks and their borrowers to “get out the other side” without suffering the effects of bad mortgages.
Citing in its proposal the example of an individual struggling to meet a €1,190 monthly repayment on a €220,000 mortgage, IFG says that a debt-for-equity swap — in which 35 per cent of the home is given over to a trust — would see the mortgage drop to €145,000. Repayments on this reduced principal would fall by €405 a month to a more manageable €785.
The Sunday Independent said that the initiative is being considered by a number of senior figures within the Irish banking sector, with a view to forwarding it to the Financial Regulator for its consideration.