Fianna Fáil Finance Spokesperson Michael McGrath has described the measures announced by government to deal with mortgage arrears as timid and lacking ambition following four years of indifference on the subject.
Deputy McGrath commented, “Over the last four years the Government has denied the existence of a problem in relation to how the banks are allowed to dictate the pace and nature of how mortgages are restructured. A huge amount of unnecessary distress has been heaped on families as a result of the failure to address this issue. We welcome the fact that a court may, in certain circumstances, effectively overrule the bank and impose a solution but we need to see the details of how this will work. It comes of course in the wake of the government consistently stating that such a plan would be unconstitutional.
“We know from how the banks used the personal insolvency legislation that they will exploit any weakness in the legal framework governing how they deal with mortgage distress. Borrowers going to court need to have independent and timely legal advice. This needs to be a fundamental part of the solution. We also need to legislate to ensure consistency in treatment across banks in relation to split mortgages and other solutions.
“It is my view that there is a need for a complete culture change on the part of the banks in how they deal with customers and an independent mortgage resolution process to ensure that fair treatment is given to families. I am very doubtful if what is being proposed today will be adequate to achieve this very necessary culture change.
“I welcome the increase in the thresholds relating to the Mortgage to Rent. However this was just one of the problems relating to the scheme. The scheme, although well intentioned, has proven too bureaucratic and involves too many agencies. The house effectively has to be sold twice, first the occupier sells it to the bank and then the bank sells it to the Housing Agency which needs to receive approval from the Department of the Environment. There is potential for it to fall through at any stage. This process needs to be streamlined urgently. The banks must resolve what happens to the residual debt once the property is sold to a housing association as this appears to be a major stumbling block. The banks have to recognise that in some cases the debt is irretrievable and they will have to write off a proportion of it.
“MABS have a strong track record of supporting families in financial distress and an expansion of its role is welcome. I have consistently called for the setting up of a system of state and creditor funded insolvency practitioners. These would take on cases where the debtor’s payment capacity is so impaired that existing Pips are unwilling or unable to do so.”