Sunday 24 September 2017

Howlin forces U-turn on €20m sum for State coffers

Minister for Public Expenditure and Reform Brendan Howlin
Minister for Public Expenditure and Reform Brendan Howlin
Sarah McCabe

Sarah McCabe

A €20m cash injection set for the State's coffers has been stopped in its tracks following mistakes at the Department of Public Expenditure and Reform and the organisation tasked with funding State housing schemes.

The Housing Finance Authority (HFA), which finances State-supported housing projects for people on low income, had agreed to pay a €20m dividend to its beneficial shareholder, the Government, last April. The State has implemented a renewed push for dividends from its commercial subsidiaries in recent years.

But Minister for Public Expenditure and Reform Brendan Howlin instead requested that it be used towards writing down mortgage arrears accrued on local authority housing. A third of local authority houses were in mortgage arrears as of last October, with a massive one in four behind on their payments by over six months. Local authorities dealing with distressed borrowers implement what the HFA calls a "mortgage arrears resolution process", based on the Central Bank's Code of Conduct on Mortgage Arrears.

The HFA, however, was not legally entitled to dole out the money in this way – with the result that neither the State or distressed borrowers in local authority housing have benefited from it as of yet. The €20m remains unallocated, sitting in HFA's reserves.

Both legislative changes and an amendment to the HFA's remit, its Articles of Association, must be completed before the money can be used towards addressing mortgage arrears. It is currently only legally permitted to pay out to local authorities and approved housing bodies. The HFA, whose chief executive Barry O'Leary joined last August, said these changes were likely to be completed this year, though no exact date has been set. "It is understood that the HFA will make the payment of €20m as soon as legislation is amended; however, the execution of the Amendment is not in HFA's control and the timing of it is uncertain," said the organisation's annual report.

This is not the first blunder in the Government's dealings with the HFA. An accounting mistake in 2012 whereby loans from the National Treasury Management Agency to the HFA were counted twice meant that the Department of Finance's calculations on national debt were incorrect – to the tune of some €3.6bn.

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