According to Central Bank statistics, 76,422 private residential mortgage accounts were in arrears at the end of March, that’s more than 10% of all 703,106 accounts. Meanwhile, almost 121,000 mortgages have been restructured to allow families to remain in their homes.
David Hall is the CEO of the Irish Mortgage Holders’ Organisation, a not for profit body that works to facilitate debt resolution between lenders and mortgage holders. He has stated that the European Central Bank gave Irish banks 18 months to clear their loan books. That process is now ongoing in the major banks. David Hall comments, “That will mean fast and furious loan sales of family homes to protect the balance sheet of their portfolios.” Hall now believes that a home repossession guillotine is on the way that will dwarf the present homeless crisis. MABS has
David Hall comments, “That will mean fast and furious loan sales of family homes to protect the balance sheet of their portfolios.” Hall now believes that a home repossession guillotine is on the way that will dwarf the present homeless crisis. MABS has been the
MABS has been the state-funded Money Advice and Budget Service for over 20 years. Since the 200 economic crash, the agency has increasingly had to deal with mortgage debt. Indeed, calls to the MABS helpline increased from 5,000 in Q2 to more than 6,054 by Q1 2017. Two representatives of MABS, Liam O’Connell and Carmel Dolan, attended a meeting of Clare County Council’s Social Development SPC to give a presentation. In 2014 ACC Bank closed with the loss of 180 jobs, Carmel Dolan had worked at the bank for 13 years, including 6 years as a case manager on mortgage arrears cases. Now with MABS, she offers advice on mortgage arrears. Clare MABS employs six people at its office in Ennis. It also has an office in Shannon which is open one day a week and outreach services in other parts of the
Two representatives of MABS, Liam O’Connell and Carmel Dolan, attended a meeting of Clare County Council’s Social Development SPC to give a presentation. In 2014 ACC Bank closed with the loss of 180 jobs, Carmel Dolan had worked at the bank for 13 years, including 6 years as a case manager on mortgage arrears cases. Now with MABS, she offers advice on mortgage arrears. Clare MABS employs six people at its office in Ennis. It also has an office in Shannon which is open one day a week and outreach services in other parts of the
Clare MABS employs six people at its office in Ennis. It also has an office in Shannon which is open one day a week and outreach services in other parts of the county. At present Clare MABS advises over 100 people in mortgage arrears, 70 of these are involved in court processes.
As a dedicated mortgage advisor (DMA), Carmel Dolan works with clients to find solutions to their problems, she also evaluates proposals offered by banks and says she challenges these if necessary. Ms Dolan told the meeting that 106 repossession cases were involved in court proceedings in Clare during July. Of these 25 were clients of MABS, 19 attended the court. Others at the court were represented by 16 solicitors.
In this instance over 60% of those in mortgage distress were not represented in court. Some may have been aware that their case would be adjourned, but others are either too frightened or have given up.
Clare MABS presently assists over 100 clients with late-stage mortgage arrears, to date, the agency has had only five cases restructured with long-term solutions agreed. A 5% success rate seems somewhat under-whelming. “Five might not seem like a lot,” said Ms Dolan, “but we feel it is a massive achievement to get these people out from having their home repossessed.”
Apart from these 5 cases, MABS has 11 clients undergoing trial test periods to show that they can honour a restructured arrangement; 12 cases are under assessment and 10 clients are seeking personal insolvency arrangements.
Under the Abhaile Scheme, MABS can offer people with late-stage mortgage arrears a €500 voucher to be used for legal advice. To date, Clare MABS has issued 74 vouchers, €37,000 in total, so that people could obtain their own independent legal advice.
MABS also encourages people to make use of FLAC, the free legal advice centre, which has seven duty solicitors in Clare providing advice. Often people do not know about this service. Carmel Dolan cited an example of one person who had been paying a solicitor €400 for each court appearance prior to becoming aware of the FLAC service.
At the end of the presentation, Cllr Tony O’Brien posed some questions about the Mortgage to Rent Scheme which is available to some people in mortgage distress. It was explained that applicants must meet an income threshold to qualify for this scheme, they must also have completed the Mortgage Arrears Resolution Process (MARP) with their lender and must be eligible for social housing support.
In practice, the scheme depends on a voluntary housing association getting involved. What happens is that a person surrenders their home to the lender. on the understanding that the lender will sell the property to the housing association which will then rent it back to the person living in the house.
This means that the person in mortgage debt and their family can continue to live in their home, paying an affordable rent to the housing association that is means tested. The proceeds from the sale of the home to the housing association go towards paying off some or all of the mortgage debt. The housing association will be responsible for property maintenance issues and the occupier will also have the option of buying back the property after five years.
While this all sounds eminently reasonable, Liam O’Connell of MABS said the big problem is that most voluntary housing associations do not have sufficient funds to participate in the scheme. For this reason, only three successful cases have been completed in Clare. “I find that incredible,” said Cllr Tony O’Brien.
Cllr Gerry Flynn highlighted another problem with the scheme. He pointed out that while these families are grateful to remain in their homes and paying a differential rent to a housing association, the balance of the mortgage debt still hangs over them. Cllr Flynn strongly believes that Government intervention is needed to provide a debt forgiveness scheme to give relief to hard-pressed victims.
Mortgage distress is a real and present threat to 33,000 families who have been in arrears for more than two years. It is also an issue for more than 15,000 people who are in long-term arrears with a buy-to-let property.
David Hall of the Irish Mortgage Holders Association believes that if something isn’t done soon, the extent of this problem will prove even bigger than the housing crisis and turn into a catastrophe for those people who are struggling with indebtedness. This year to date more than 500 families have been threatened with eviction from their homes. They and many others live in constant fear.
Director of service Liam Conneally issued an important message at Clare County Council’s special meeting on housing last Monday; “The Mortgage to Rent Scheme is in place, and for people who are in distress the key thing is that there is help available. The Local Authority is here for you, MABS is there. Make contact with us and if we can’t help with your specific problem, then we will put you in touch with someone who can. The clear message is that you are not on your own.”