Government vows to close loophole preventing banks repossessing homes
The Government has promised to remove a legal loophole which has stopped banks repossessing properties.
The measure, which was contained in the quarterly agreement with the troika, won't be introduced until borrowers' homes are protected by the new personal insolvency legislation.
The Government will move to remove "unintended constraints on banks to realise the value of loan collateral under certain circumstances," it said in the latest update to its bailout programme yesterday.
The move is likely to hit the 37,000 people who own buy-to-let homes and have a mortgage, as well as some of the 11,000 people who have restructured their loans. Until now, these landlords have been protected by the legal ruling that effectively made it impossible to repossess homes.
Before December 2009, banks used a 1964 law as the basis to repossess homes. This was repealed and replaced in 2009, which, due to a drafting oversight, applied only to loans taken out after December 1, 2009.
The flaw became apparent in a July 2011 case overseen by Judge Elizabeth Dunne. She ruled a lender wasn't entitled to repossess a home used for security on a defaulting €93,000 loan because demand for repossession and repayment was made in July 2010.
The change to the law will be accompanied by a health service shake-up next year, including workplace and rostering reforms, according to the new agreement with the troika.
The report, compiled after the eighth review of Ireland's bailout programme in November, also states that further cuts will be made to drugs costs and that health spending would be contained within the €13.6bn budget.
An increase in hospital charges for private patients also looks likely as the agreement pledges to improve the charging regime for private patients in public hospitals and increase the collection of charges to "fully account for costs".
The agreement is the Government's economic blueprint for the year ahead and was finalised just weeks before Finance Minister Michael Noonan delivered Budget 2013.
The troika agreement also states that the Credit Union movement must be restructured to ensure financial stability and long-term sustainability.
The Government pointed out that any public resources provided for the restructuring will be recouped via a levy on the credit union industry.
Some €250m will be transferred to a credit union fund by the end of this year.
It's estimated that one in four credit unions is in trouble in the State, with regulators in the Central Bank demanding regular financial reports from those in difficulty and restricting the amount of loans they give out.
Other key pledges/demands:
- Commission for energy regulation responsible for overseeing the price-setting powers of Irish water.
- Government to set out its methodology for the next round of stress tests for banks.
- Ensure NAMA maintains high standards of governance, accountability and transparency, and reduces costs.