* Central bank governor says banks not doing enough
* Says government debt resolution regime should be backstop
DUBLIN, March 14 (Reuters) - Ireland's central bank is working to encourage lenders to engage more directly with borrowers who are struggling to pay their mortgages, making the government's new debt resolution regime a backstop, the country's central bank governor said on Wednesday.
The number of problem mortgages in Ireland grew sharply in the last three months of 2011, with nearly one in seven Irish home loans not being fully repaid, raising fears about the sufficiency of bank capital to weather the storm.
"Early engagement, fair procedures, tailored forbearance or rescheduling adapted to individual debtor circumstances ... are watchwords in the development of a sufficient response. That has not yet been achieved by the banks," Central Bank Governor Patrick Honohan told the Limerick Law Society.
"The banks' ... role in ensuring a realistic and effective approach to loan recovery ... must continue to be developed," he said.
The government in January announced the framework of a new non-judicial route for homeowners struggling to pay their mortgages to discharge their debt and an easing of bankruptcy rules.
But Honohan said the onus is also on banks to engage with debtors to avoid having to use the new framework.
"Banks should in most cases be able to arrive at arrangements with their debtors that do not require use of the new legislation," he said.
The Central Bank is to review its code of conduct for mortgage arrears to avoid hampering engagement with borrowers. The current rules limit the number of unsolicited communications each month from the bank to the borrower.
Getting the balance right between writing off loans and putting too much pressure on struggling borrowers is of "immense national importance," Honohan said.
Almost 100 billion euros ($130.26 billion) of mortgage debt that is outstanding in the banks is guaranteed by the government in Ireland.
"Achieving the right balance between realism in what can be collected and prudence in managing the limited but adequate capital resources that have been provided to the banks by the government is vital," Honohan said. "Failure in this regard would press on the already fragile finances of the state."