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Topical Issue Debate - Mortgage Arrears

Thursday, 19 January 2012

Dáil Éireann Debate
Vol. 752 No. 2

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Deputy Dessie Ellis: Information on Dessie Ellis Zoom on Dessie Ellis There are roughly 100,000 distressed mortgages in the State, with €1 billion in arrears owed. Some 8.1% or 62,970 mortgages are 90 days or more behind with payments. The average amount of the arrears is just over €17,000. There are 46,371 mortgages in arrears for over 180 days. The average arrears in these cases is approximately €21,000.

The director of FLAC said that the number of distressed mortgages has increased by 55% in the past year. People are in massive arrears and struggling to pay their mortgages. Many simply cannot. Local authority housing policy dictates that if a person voluntarily surrenders their home, they are not accepted as having a housing need and so are not placed on a housing list. Through this, they are barred from access to such services as the rental accommodation scheme, or RAS, rent supplement and voluntary housing.

This may make some sense in discouraging people who do not have a housing need from surrendering their home and clogging up the massive housing waiting lists when they can afford to pay their mortgages themselves. However, given the extraordinary situation for many mortgage holders, this means that in order to ensure they are deemed to have a housing need in the case of being unable to pay their mortgage, they are forced to have their home repossessed [267]at a cost to the State through court time instead of giving up their home when it was obvious that their mortgage was untenable. This is not speculation; it is happening.

The Government needs to explore how it will deal with cases such as this, thereby avoiding court costs and not forcing people to go to court when they should be able to give up the home they cannot pay for and have a recognised housing need. Of course, this would have to be a delicate, measured approach so as not to encourage those who can pay to give up their debt in favour of social housing or rent supplement.

For many of these families, becoming homeless would be and has been a complete shock to their system and way of life. Families are also being forced to move away from areas where their roots have been established and their children have been placed in schools and creche. These are also being penalised with the result of further marginalisation and the problems it brings as well as the stresses it incurs. It is very important that the message is got out that due to financial hardship, people will not be abandoned or penalised. Local authorities should be instructed to examine each case and if it is established there is a genuine case, this impediment should be lifted.

The State has both a moral and an ethical responsibility. A large number of 450,000 people in this category are unemployed through no fault of their own.

Families should not be penalised because of our economic woes and the Celtic tiger era pressure that forced many families and individuals to take out the unsustainable mortgages which are the bedrock of our problem today.

Minister of State at the Department of the Environment, Community and Local Government (Deputy Jan O’Sullivan): Information on Jan O'Sullivan Zoom on Jan O'Sullivan I thank Deputy Ellis for raising this very important matter. I share, as does the Government, his concern about the many people in our society who are in difficulty with their mortgages.

The Government is acutely conscious of the difficulties many households are facing in terms of mortgage arrears. In October 2011 we published the report of the interdepartmental working group on mortgage arrears which report, as Deputies are aware, was subsequently the subject of an extensive Dáil debate. There is no question of persons eligible for social housing being barred from local authority social housing lists. I wish to state that clearly.

The implementation of the report’s recommendations is a key part of the Government’s ongoing efforts to tackle mortgage difficulty. A steering group, chaired by the Department of Finance, has been established to oversee and drive the overall implementation of the report’s recommendations and report regularly to the Economic Management Council and to Government on this. In addition to the Department of Finance, the steering group consists of senior representation from the Departments of the Environment, Community and Local Government, Justice and Equality, Social Protection and Public Expenditure and Reform. The Central Bank is also represented on the group.

Separate working groups have also been established to progress the individual work streams of this broad work area and these groups report to the overall steering group. Significant progress has already been achieved across a number of the individual work areas. The Minister for Justice and Equality will very shortly publish the heads of the personal insolvency Bill. On the issue of mortgage to rent, I have advanced work with a number of lenders and an approved housing body to pilot a scheme in order to test the practicalities associated with such a measure in advance of a wider roll-out. I reiterate to the Deputy there is good progress in this area.

Regarding engagement with the banks, the Central Bank, as the regulator of credit institutions, has now received mortgage arrears resolution strategies and implementation plans from all mortgage lenders and these are being considered. Work has commenced on the necessary [268]steps to put in place the mortgage advisory function as recommended by the interdepartmental group. In addition, my Department had taken steps previously to take account of the critical interface between the Central Bank’s mortgage arrears resolution process and the social housing needs assessment process. The previous situation, whereby a household in arrears effectively needed to be made homeless before a local authority could carry out an assessment of social housing need, clearly made little sense in our new economic circumstances.

New provisions under the social housing assessment amendment regulations, introduced in July 2011, now require a local authority, in determining a household’s need for social housing support, to consider whether the household’s mortgage has been deemed unsustainable under the mortgage arrears resolution process set out in the Central Bank’s code of conduct on mortgage arrears. In effect, this means assessment of needs can be carried when there has been an assessment of the difficulties of the mortgagee.

Deputy Dessie Ellis: Information on Dessie Ellis Zoom on Dessie Ellis I thank the Minister of State. I am glad to hear we are considering these mortgages before people end up losing their homes. That is very important. However, the practice until lately, which varied in different local authorities and was a source of frustration, was to look at the situation at the very last minute, when people were virtually outside the door with the banks on their backs. That never made any sense. I am glad the Minister of State is looking at this.

We do not know the pressures people have been put under and the stresses that have been placed on them. These may have led to people attempting or actually committing suicide. I do not know this because there are no figures available but it has probably happened. It is extremely important, therefore, that we follow this up and do not put people under such pressure. We have enough problems in life.

I appreciate what the Minister of State has stated and look forward to seeing a resolution of this issue.

Deputy Jan O’Sullivan: Information on Jan O'Sullivan Zoom on Jan O'Sullivan The first advice, which is what we all give, is that people should engage with their lender as early as they can. Similarly, the lending institutions need to engage. I wish to be clear about that. We want local authorities to be proactive and to engage with people when they are in difficulties before they are at the point of being on the street, as the Deputy observed.

The new measures provide a means by which an authority can carry out a needs assessment at any time after a mortgage has been deemed to be unsustainable and before repossession proceedings have been instituted. Perhaps all local authorities need to be reminded about this area. Certainly the intention is that they would be proactive and would assess the difficulties a person has well in advance of repossession of the house.


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