Fianna Fáil Finance spokesperson Michael McGrath has described a further increase in the number of mortgages in arrears for more than 720 days as a damning indictment of the government’s strategy in relation to distressed mortgages. He was reacting to the latest Central Bank figures which showed that 37,778 mortgages are now in arrears for more than 2 years, a 13% increase in 12 months.
Deputy McGrath commented “This week the Government rejected Fianna Fáil legislation in the Dáil which would have dealt directly with this issue by removing the power of veto from the banks in relation to mortgage restructuring arrangements. The problem has been allowed to worsen and it is now reaching a crisis point with a wave of repossession actions coming before the courts. At Limerick Circuit Court today, there are more than 200 home repossessions applications listed to be heard. Unless decisive action is taken, hundreds of families will be losing their homes in the months ahead. It should also be borne in mind that, for every family home repossessed, another three are voluntarily surrendered or sold by the mortgage holder under duress from the bank.
“The falls in early stage arrears should not be considered as cause for self-congratulation as these are typically the easiest cases to deal with. The reality is that there are still a huge number of arrears cases to be dealt with. In fact of the total stock of 78,699 residential accounts that were in arrears of more than 90 days, just 28.1 per cent were classified as restructured at the end of December, compared to 29.3 per cent at the end of September.
“I am also concerned about the robustness of some of the restructuring arrangements put in place. Arrears capitalisation continues to be the most popular form of restructure (25.8%). However at 71.3% it also has the second lowest success rate. Unless the reason a mortgage account fell in to arrears was temporary in nature and the borrower’s repayment capacity has been restored, they will not be able to meet the new repayment, which will almost certainly be higher. In many cases the reduction in repayment capacity is enduring so a restructure to reduce the monthly repayment is necessary. In most cases a split mortgage would be a far more effective means of dealing with the problem. While these have increased in number, there are still a huge amount of cases to which they should be applied.”