My Irish Independent article on mortgage defaults

The article was expanded from this blog post. Here's a taster:
A mortgage default crisis lurks underneath the surface. Yet all we hear is talk. Cheap talk about a government bailout, without concrete action, only creates incentives for borrowers to defer payments in the hope of a better deal, hastening a crisis.

Half measures like the mortgage relief plan and suspension of repossessions won't work. President Obama's $75bn (€55bn) rescue plan did not stop 2.8 million foreclosure filings in the US in 2009. Band-Aid cannot stop arterial bleeding. Emergency procedures are needed.

Here's why. An estimated 200,000 Irish mortgages are under water.

Monthly payments are significantly in excess of prevailing market rents for similar properties, meaning that the payments are good money thrown after bad. It makes little economic sense to continue to make these high payments when many borrowers can ill afford them.

You can read the full article here.