Banks only recover 34% of the mortgage debt they are owed if the borrowers go bankrupt, new analysis has shown.
Customers go into bankruptcy if banks reject insolvency proposals put forward by personal insolvency practitioners.
The analysis has been compiled by a firm called Insolvency Resolution Service, which today published a study based on the cases it had handled.
The Insolvency Resolution Service dealt with 100 proposed deals which were rejected by banks and therefore the borrowers went bankrupt.
Of the 100 cases AIB was owed the largest amount of mortgage debt at €6.9m, followed by KBC Bank Ireland at €6.3m, Danske Bank at €5.2m, Permanent TSB at €4.5m and Bank of Ireland at €3.4m.
Mitchell O'Brien, from the Insolvency Resolution Service, said the banks did not want family mortgage debt written down while the people were still able to remain in their homes.
He said despite new laws limiting the extent of the veto of banks "debtors continue to opt for bankruptcy rather than accept bad deals offered by banks."
"Government needs to wake up to the realities distressed borrowers are facing dealing with mortgage lenders," he stated.
According to the Central Bank, there are 34,000 owner occupier mortgages two years or more in arrears.
Mr O'Brien has advocated that banks opt to take part ownership of the borrower's home in a "debt for equity" arrangement instead of rejecting insolvency proposals.
