Irish Times "918 homes repossessed last year; 40% drop in cases started"

A total of 918 orders were granted for family homes - still a tiny number.

Séamus Coffey, Karl Deeter and I have witnessed quite a few of these and we have encouraged journalists along to see what is happening. We have yet to see an order being granted where we would disagree with the decision. They are only granted when almost nothing is being paid and or the borrower does not show up in court. Many are for vacant houses.


"the number of applications by banks to repossess homes fell almost 40 per cent from 8,164 in 2014 to 5,021 last year."

This is interesting.

I am confused by the legal issues. I thought that it meant that many cases could not proceed but could then be started from fresh. So I would have expected the numbers of applications to increase, and not decrease.

Brendan
 
Well it looks to me that maybe we are turning a corner if the figures for new applications for repossessions has dropped 40% it's a good thing.

But what is true is that the whole thing is a shambles from beginning to end and there surely is a better way of doing things than going to court constantly, for years, without legal or financial representation.
 
Repossessions of family homes should only be happening in very exceptional cases. The tools are there to deal with most cases where people want to stay in their homes. We have come a long way with our Insolvency laws where we now have PIA's and we have a game changer, imo, in Section 115 A of the Personal Insolvency Act. For those debtors who want a completely fresh start we now have a one year discharge period from bankruptcy. I'm not sure you'd find better debt laws anywhere else in Europe, we just need to start using them more often.
 
demoivre said:
Repossessions of family homes should only be happening in very exceptional cases.
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Totally disagree.

If a mortgage can be restructured on a long-term sustainable basis, for the benefit of both lender and borrower, then that should obviously take place.

If a lender is being unreasonable or irrational in not accepting a reasonable restructuring proposal from a borrower or his/her PIA, then it is helpful that a facility now exists whereby an application can be made to the Court to impose a restructured arrangement (although I suspect successful applications in this regard will be very rare).

However, we have to accept that there are thousands, if not tens of thousands, of non-performing mortgages that can never be restructured on a sustainable basis and lenders must be allowed to enforce their security interests in such circumstances, in a timely and cost-effective manner.

Otherwise, we will have to accept high mortgage rates with all the damaging consequences that entails for our domestic economy.
 
demoivre said:
Repossessions of family homes should only be happening in very exceptional cases.
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Repossessions are only happening in very exceptional cases - i.e. where the borrower is paying little or nothing and not bothering to show up in court.

In my view, they should be happening far more often. There are many vacant houses and it's very difficult for the lender to get an order for possession. There are people living in very large houses which they can no longer afford, and the courts are reluctant to give an order to the lender if the borrower is paying something, although the mortgage is clearly unsustainable. And then you have plenty of people taking a free ride - paying nothing and getting away with it for years.

Brendan
 
Brendan Burgess said:
There are people living in very large houses which they can no longer afford, and the courts are reluctant to give an order to the lender if the borrower is paying something, although the mortgage is clearly unsustainable.
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An unsustainable mortgage can be made sustainable through a PIA. Correct me if I'm wrong but I thought that the main idea behind the Insolvency laws was to keep people in their family homes where at all possible. The big problem, as I see it , is that that there are many people out there who would hate to see Johnny and Mary get a debt write down of a €100k to make their mortgage sustainable, but there is an indifference when the likes of Denis O Brien's company Millington gets a €119,000,000 debt write down when they bought Siteserv. We need to move on.


Brendan Burgess said:
And then you have plenty of people taking a free ride - paying nothing and getting away with it for years.
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And that I don't agree with either.
 
demoivre said:
Correct me if I'm wrong .
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Delighted to.

There are many people living in large houses which they can no longer afford who are not insolvent. They have plenty of equity in their home and can sell them. They won't qualify for a PIA.

demoivre said:
the likes of Denis O Brien's company Millington gets a €119,000,000 debt write down when they bought Siteserv.
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Delighted to correct you again.

This implies that Denis O'Brien got some sort of a write-down at our expense. Siteserv was an insolvent company which could have been just put into liquidation or receivership with their 900 employees let go. The debts were written down to make it saleable.

Denis O'Brien paid the market price for it. He did not benefit from any write-down. If there had not been a write-down he would simply not have bought it and the company would have been wound up. He could probably have bought the assets cheaper from the liquidator.
 
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demoivre said:
An unsustainable mortgage can be made sustainable through a PIA. Correct me if I'm wrong but I thought that the main idea behind the Insolvency laws was to keep people in their family homes where at all possible. The big problem, as I see it , is that that there are many people out there who would hate to see Johnny and Mary get a debt write down of a €100k to make their mortgage sustainable, but there is an indifference when the likes of Denis O Brien's company Millington gets a €119,000,000 debt write down when they bought Siteserv. We need to move on.
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Ah, so you're saying that any unsustainable mortgage can become sustainable if somebody else picks up a sufficient amount of the tab.

Fair enough but I don't really want to pay somebody else's mortgage. Sorry.
 
Sarenco said:
Because I suspect lenders would rarely reject a reasonable proposal to restructure a mortgage on a sustainable basis. Why would they act in such an irrational fashion?
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Sorry to burst your bubble on this one Sarenco but unfortunately the majority of banks are prepared to in many cases decline reasonable proposals from customers which would peacefully resolve the arrears position to the benefit of both parties.
In my own experience in the industry I am constantly amazed at the amount of "reasonable" proposals that are declined by ASU Departments because they don't fit within the narrow box of solutions. Believe it or not banks do not encourage their arrears support staff to "think outside the box" in terms of working with clients to find an appropriate solution. They tend to operate a "fear of making a mistake" type of process where poor decisions are made purely because a decline of a proposal is never seen as a "wrong" decision.
I am operating in the sector and many would see me as a proponent of the banks. However I frequently resort to tearing my hair out when I see some of the decisions that are declined purely because of the whim of an individual. Institutional thing does that to you over time!!
 
demoivre said:
Correct me if I'm wrong but I thought that the main idea behind the Insolvency laws was to keep people in their family homes where at all possible
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No this was not a stated purpose of the insolvency laws as far as I am aware and I have read the 2012/2013 Acts a number of times. the legislation was to help those with unsustainable debt including mortgage debt to reach solutions with their creditors. In many cases these solutions could include the sale of the family home.
 
44brendan said:
In my own experience in the industry I am constantly amazed at the amount of "reasonable" proposals that are declined by ASU Departments because they don't fit within the narrow box of solutions. Believe it or not banks do not encourage their arrears support staff to "think outside the box" in terms of working with clients to find an appropriate solution.
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Hi 44brendan

I could well imagine that relatively junior officials within an ASU Department might adopt a "computer says no" approach but I would have thought that would be likely to change in most cases where a case moves up the managerial food chain in anticipation of an application being brought by a borrower under Section 115A of the Personal Insolvency Act.

Happy to bow to your experience if you don't think that would be the case.

In any event, it doesn't really take away from my core point that there are still thousands, if not tens of thousands, of non-performing mortgages that can never be restructured on a sustainable basis.
 
Sarenco in other countries there is what is termed the inter-generational mortgage.

Imagine if we did that. Bear in mind that apparently the Central Bank eventually realised that an interest only mortgage was in fact sustainable, and I think that is accepted in Dame Street.

Why not the inter-generational mortgage?

[I do realise the limit of thinking in Dame Street. Eventually when somebody is forced to pay rent much higher than a mortgage - the dozy intellectuals [opinion] will realise - hey we better drop the deposit 1% for every month you can show you can pay a hugely higher rent]
 
Yep, the Central Bank changed its guidelines some time ago to clarify that a interest-only mortgage for the life of a borrower can be considered a sustainable restructuring option where there is a reasonable prospect that the borrower will be in a position to meet the interest-only payments in retirement and that there will be sufficient assets on the demise of a borrower to repay the outstanding principal out of his/her estate.

To be honest, the whole idea of inter-generational mortgages sends a shiver down my spine. The way they work, as I understand it, in countries such as Japan and Switzerland, is that a borrower's offspring has the right, but not the obligation, to take over a borrower's IO home loan. The obvious consequences are increased social inequality and high property prices.

Great deal for the banks though - a ready made cohort of perpetual debt slaves. Nice.
 
Sarenco said:
Great deal for the banks though - a ready made cohort of perpetual debt slaves. Nice.
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To be fair there could be a rationale for this type of mortgage. Operating similar to the Bond market a type of non repayable loan where interest is perpetually serviced with inflation ultimately reducing the real value of a loan to a fairly negligible level.
Example would be that I purchased my 1st house in Dublin for 33,000 pounds. If I had taken an IO mortgage at that time for the full value of the property I would still owe c€41k which even at the low end of the property cycle would be an extremely manageable debt for me to either pay off or transfer ultimately to my children.
Taking say an 80% LTV there is definitely scope for such a product to be marketed. From a bank perspective I have always felt that a large element of repayable debt is wasted as no sooner is it repaid than the banks have to find alternative customers to lend that money to. Ie the banks get paid back the money only to lend it again.
Agreed that it is "outside the box" but could certainly work for certain categories of clients.
 
44brendan said:
From a bank perspective I have always felt that a large element of repayable debt is wasted as no sooner is it repaid than the banks have to find alternative customers to lend that money to. Ie the banks get paid back the money only to lend it again.
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That's really why I think "no term" loans are a great deal for banks - minimal underwriting costs, essentially annuity business.

From an individual borrower's perspective, I certainly agree that long term IO arrangements are advantageous during periods of high inflation. But the reverse is also true where deflation becomes embedded in an economy.
 
Brendan Burgess said:
Delighted to.

There are many people living in large houses which they can no longer afford who are not insolvent. They have plenty of equity in their home and can sell them. They won't qualify for a PIA.
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And rightly so. I would have thought that it was blindingly obvious that we are talking about cases of negative equity.

Brendan Burgess said:
Delighted to correct you again.

This implies that Denis O'Brien got some sort of a write-down at our expense. Siteserv was an insolvent company which could have been just put into liquidation or receivership with their 900 employees let go. The debts were written down to make it saleable.

Denis O'Brien paid the market price for it. He did not benefit from any write-down. If there had not been a write-down he would simply not have bought it and the company would have been wound up. He could probably have bought the assets cheaper from the liquidator.
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That's your erroneous conclusion. The only point I'm making is that banks do write downs all the time, but mostly only in the legal process when it's Johnny and Mary.
 
Sarenco said:
Ah, so you're saying that any unsustainable mortgage can become sustainable if somebody else picks up a sufficient amount of the tab.

Fair enough but I don't really want to pay somebody else's mortgage. Sorry.
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You're paying anyway if the borrower goes bankrupt to deal with the shortfall after a house is repossessed and sold.
 
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