Change mortgages to nonrecourse loans. Where is the rescue for negative equity?

Bubbles burst. Wages fall. Taxes rise. People suffer. Hope extinguishes. Depression, despair and family discord arise. Emigration once again. And FF have confidence in Cowen!
But at the end of September last, the number of mortgages in arrears or rescheduled stood at 70,000 out of a total of 788,000 mortgages in the country. So that is one in 11 mortgages.

Of this 70,000, some 40,500 were in arrears. For a mortgage to count as ‘in arrears’, there must have been no payment made on it in three months. These amounted to €7.9bn outstanding mortgages and the mounting arrears on these mortgages totalled €630m.
The general picture is that today there are over 200,000 mortgages in negative equity.
In total, the figure is about €12bn and is the result of the 42pc fall in house prices, from the peak, which we have seen over the past three years.
If prices fall further, let’s say by 55pc from peak, the negative equity picture darkens to over 330,000 families — or about half of all properties bought since 2000. And this will get worse, if house prices fall yet further.
Negative Equity. I agree with David McWilliams on this one.
On the issue of negative equity, a way forward would be to adopt the American system of non-recourse loans. This means that the loan is fixed to the house and not the person. So the person can hand back the keys and the loan doesn’t follow her around for the rest of her life. This means that the principle of co-responsibility is instated whereby the lender, as well as the borrower, is responsible.
If the bank made the mistake of lending too much to an individual, the bank pays. It gets the property and the individual is free to rent down the road or somewhere else. In this way, we do not penalise the person for his mistake indefinitely.
The person doesn’t get off scot-free either as they will not be allowed to stay in the house because it is the property of the bank and the bank will have to sell it.
But the person can start again and starting again is the essence. Once we create a system that allows the person, or the family, to start again we facilitate the return of hope. It is hope — the idea that tomorrow will be better than today — that gets us out of bed in the morning.