Fianna Fáil Spokesperson on Finance Michael McGrath has stated that there is now a clear strategy on the part of banks to step up legal action for repossession of family homes in cases where people have fallen in to arrears on their mortgage. He was speaking ahead of a Dáil debate on the Fianna Fáil Family Home Mortgage Settlement Arrangement Bill which removes the bank veto on proposals to restructure a family home mortgage through the personal insolvency process.
Deputy McGrath commented: “The banks have really ramped up repossession actions in recent times. The rapid rise in house prices in 2014, particularly in the Dublin region, has given them the opportunity to substantially reduce the losses they would face from selling a home in mortgage arrears. Having kicked the can down the road for a number of years, the banks are now emboldened by the complete lack of legislative protection and by an acquiescent government that wants to sell the state’s holding in the banks at the first opportunity. Banks are using a variety of tactics including direct court action as well as selling off parts of their loan book, a method that essentially amounts to outsourcing of repossession.
“Widespread family home repossession is not a phenomenon that Ireland has experienced since independence. However, we do know that it will lead to significant social upheaval. We only need to look to the impact of the laissez-faire approach to mortgage difficulty in the UK in the 1990s to see the devastating social consequences of potentially thousands of families losing their home. As it stands, in the absence of a significant legislative initiative, the 37,484 people in arrears for more than two years are at a very high risk of losing their homes. That is why we are appealing to the government to accept the legislation we are bringing forward today to give families a fair chance to put in place a restructuring arrangement that will allow them to stay in their home.
“Under current legislation repossession proceedings must be commenced by civil bill. In 2014 a total of 8,164 civil bills for an order of possession were lodged in the Circuit Court. In general these cases are heard by the county registrar. While there are excellent county registrars throughout the country, their role is essentially procedural and it is not a suitable mechanism for dealing with what is essentially a very sensitive matter of an action to repossess a family home is. Last week in the Seanad, Minister Kevin Humphreys stated “if all of these cases were to heard by a member of the Judiciary, it would have significant resource implications for the courts.” He essentially accepted that the massive wave of repossession actions the state is witnessing cannot all be heard at circuit court level denying families an opportunity to put their case forward.
“At the moment the Insolvency Service of Ireland is being completely underutilised. Fewer than 1,000 cases were processed in the first year when it was expected to be 15,000. We would utilise the insolvency structure that is already in place in order to allow people who have fallen in to arrears on their mortgage to get an order specifically relating to the family home. This is very important as it ensures that there are no additional costs imposed on the State from the setting up of a new structure.
“Fianna Fáil is confident that, if our proposals are adopted, there would be a considerable improvement in the current situation with a much higher proportion of successful restructuring arrangements being implemented. It would put the interests of the mortgage holder at the centre of the process and act to dilute the control that the banks currently have over the process.”