Ex-IRA man's road to ruin likely to be repeated across Ireland

Few people represent the extremes of Ireland's recent history more than Thomas McFeely.

By 2008, the 63-year-old had transformed himself from Irish Republican Army hunger striker in Belfast to millionaire property developer in Dublin. Then the real estate bubble popped. Now bankrupt and facing criticism after residents of one of the properties he developed were forced to move because of fire-safety concerns, McFeely last month lost a battle to keep his home in one of the Irish capital's most affluent areas.

"It is the latest episode of the unfortunate situation that has befallen the country," Justice John Hedigan told the Dublin courtroom as the Irish government seized the property.

Such rulings will become increasingly familiar in Ireland as one of the biggest property bubbles in European history unwinds, a crisis masked this year by falling bond yields as investors bet that the worst is over. Yet for Irish banks, whose losses forced the government to follow Greece in seeking a bailout, the true cost of the debacle is about to hit.

"It's the year when the world has to change, in the way we deal with this problem," said Garry Stran, head of the arrears unit in Allied Irish Banks, the nation's largest mortgage lender. "This time next year, when we're looking back, we should have an absolute clear line of sight that we have restructured a significant number of people."

Lenders that were bailed out by taxpayers and are owned by the state are looking at a previously unthinkable mix of repossessions and debt forgiveness as they confront the spectre of loans that will never be repaid.