A “LEGAL vacuum” is preventing banks from promptly repossessing homes owned by individuals who have fallen into mortgage arrears.

Pat Farrell, chief executive of the Irish Banking Federation, said a High Court ruling last year, which found a gap in legislation, was impeding the repossession of homes from people who took mortgages before December 1st, 2009.

He was responding to comments from Central Bank governor Patrick Honohan, who said this week that banks needed to be more aggressive in repossessing buy-to-let properties.

Mr Farrell told RTÉ that a number of legislative and practical obstacles were an impediment to reaching resolution with some struggling mortgage holders.

He pointed to the “legal vacuum” created by last year’s court ruling which found that the Land and Conveyancing Law Reform Act only applied to mortgages created after its commencement on December 1st, 2009.

Speaking to The Irish Times, Mr Farrell said that last year’s court ruling was “acting as a practical barrier where banks, as a last resort, are realising security on the loans through repossessions”.

The IBF is seeking a restoration of the legal situation prior to that judgment, he said. He pointed to 75,000 restructured mortgages as an example to show banks were helping struggling customers.

The banks have submitted mortgage arrears resolution strategies showing how they intend to deal with customers who are in arrears.

Mr Farrell said the Central Bank deputy governor, Matthew Elderfield, had set out a timetable of practical issues to be deployed using options outlined in the Keane report to help borrowers.

“The banks are now working to a Central Bank timetable which will see these solutions coming on stream between now and the end of the year,” said Mr Farrell.

He said it was in the banks’ interest to ensure they “make arrangements” with borrowers and they will have “another suite” of solutions “beyond forbearance” coming into use later this year.