Fianna Fáil Finance Spokesperson Michael McGrath has described his party’s new “Family Home Mortgage Settlement Arrangement Bill” as a vital opportunity to deal with the worsening crisis of home repossessions in the country.
Deputy McGrath commented “Since the start of the year, the banks have seriously ramped up their efforts to repossess family homes where the mortgage is in arrears. Some court districts have reported hundreds of cases being listed before them. It appears the banks have been emboldened by the recent increase in property prices and feel that this is an opportune time to move against families in mortgage arrears.
“The Taoiseach told the Dáil this month that he was ‘not happy’ at the situation where some banks ignore the recommendations made by the personal insolvency practitioners to deal with distressed mortgages. Our bill addresses this very issue and removes the bank veto on sustainable solutions for mortgage debt.
“To date, the banks have been allowed evade their responsibility to seek a sustainable restructuring arrangement by being able to use legal action as a means of meeting the targets in the Mortgage Arrears Targets Programme. Our intention with this legislation is to help families and individuals, who have fallen behind in their mortgage, to put in place an arrangement with their bank which will allow them to stay in their home with a sustainable monthly mortgage payment. The legislation seeks to tackle the current haphazard and inconsistent manner in which the arrears problems in tackled.
“At the moment the Insolvency Service of Ireland is being completely underutilised. To the end of 2014, the Insolvency Service had approved just 199 Personal Insolvency Arrangements involving secured debt – and it is not known how many of these relate to family home mortgages. This is in the context of 118,000 family home mortgages in arrears, with almost 60,000 of those in arrears of a year or more.
“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. Under our proposal, the mortgage holder would be represented by a personal insolvency practitioner (PIP) who will bring a proposal before the courts. There is a range of orders which the court can make including a split mortgage or debt for equity arrangement. In parallel, we are suggesting a system of state and creditor funded insolvency practitioners be established. These would take on cases where the debtor’s payment capacity is so impaired that existing PIPs are unwilling or unable to do so.
“Our legislation would allow for a judge to take information a range of information into account when considering a proposal put before the court by a PIP. The Family Home Mortgage Settlement Arrangement would have the effect of diluting the power of the banks to dictate the nature of arrangements for mortgages in arrears and make an order for the best possible restructuring arrangement to be put in place. We have built safeguards in to our proposals to strike a balance between the reasonable interests of borrowers and lenders including a mortgagor:
· may enter into a Family Home Mortgage Settlement Arrangement once only;
· must have exhausted the appeals process as set out in the Code of Conduct on Mortgage Arrears;
· have completed a Prescribed Financial Statement and has made a statutory declaration confirming that the statement is a complete and accurate statement of the mortgagor’s assets, liabilities, income and expenditure.
Fianna Fáil is confident that our proposals would lead to 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 reduce the control that the banks currently have over the process.”