Hi demoivre
In the case you quote, the lender would probably have offered a split mortgage of €150k to the borrower. So they would not need to go to the ISI. ( It's unlikely that the lender would accept an effective write down of a mortgage to €100k on a house worth €150k)
If the lender did not offer a split, the borrower could apply for a PIA and the court might enforce a write down of €150k.
We would need to know why 19,000 mortgages were classified as unsustainable.
I have called for the Central Bank to publish a definition of sustainable mortgage.
The simple version of my definition is "a mortgage is sustainable for the borrower and for the lender if the borrower can afford to pay the market rate interest on the current value of the property"
In your example, €600 a month would represent 3% of €240,000. So the lender should just park the €60k and charge interest on what the borrower can afford.
In fact, the banks are more generous and would split that mortgage 50/50 so that the borrower actually pays down capital with the €600 a month.
Brendan