I have just circulated this note to journalists
Mortgage Resolution Bill will increase the level of arrears, not reduce them.
A comment by Brendan Burgess
· Number of mortgages rescheduled over the past 8 years: 120,000
· Number of family homes repossessed on foot of a court order over the past 8 years: 2,476
· The level of mortgage arrears has halved since the peak
· The number of court proceedings started by the lenders to repossess houses has fallen by 50% since the peak.
· Households in negative equity have fallen from over 300,000 to under 100,000
The vast majority of people who struggle with their mortgage engage with their lender and continue to pay what they can. The lenders are able to restructure 90% of these mortgages and most of the customers get back on track. To date, over 120,000 mortgages on family homes have been restructured.
But a significant minority of people act irresponsibly because they know that they can get away with it. They make no effort to pay and they refuse to engage with the lender. The lender has effectively no sanction other than to initiate proceedings. Even then, the legal process is so convoluted and so tilted against the lenders that it’s virtually impossible for them to gain an order for possession except where the property is abandoned or the borrower consents to the order. Over the past 8 years, a total of 2,476 family homes have been repossessed by court order. I repeat, in the same period, 120,000 mortgages were rescheduled.
The problem with the Fianna Fáil
Mortgage Arrears Resolution (Family Home) Bill 2017 is that it is based on the false premise that the problem lies with uncooperative lenders and it absolves the borrowers from all blame.
This Bill will further reduce any incentive for struggling borrowers to pay their mortgage. They can refuse to do so now in the hope that this new quango will write down some of the debt while leaving them in their home.
The best way to reduce the arrears problem is to give the proposed Mortgage Resolution Office the power to grant a lender an order for possession of the family home where it deems that the borrower has not been paying a sustainable amount and/or engaging in the process. The realistic prospect of losing one’s home in the short-term would increase people’s engagement with their lenders. The earlier such engagement begins, the easier it is to reach a sustainable solution.
And, then by all means, address the small number of cases where take legal action against responsible borrowers in an effort to pressurise the into surrendering their home. The Mortgage Resolution Office can be given the power to order the capitalisation of old mortgage arrears and the restructuring of the mortgage in those few cases.
About the author
Brendan Burgess is the founder of the consumer website Askaboutmoney.com. He actively campaigns on many mortgage issues
· Mortgage Arrears
· The loss of tracker mortgages
· The very high mortgage rates in Ireland.
He was a member of the government’s Expert Group on Mortgage Arrears in 2010 , and in 2016, he published a report “What Really goes on in the Repossession Courts” with Séamus Coffey and Karl Deeter