Lenders seeking seizure of homes must wait two years
Published 07/03/2011 | 05:00
BANKS and building societies will have to wait two years before they can start legal action to repossess a home under the new Fine Gael/Labour Programme for Government.
Households have also been promised that there will be no increases in income tax.
However, a property tax, water charges and a hike in the top VAT rate are set to hit hard.
The lower paid and pensioners could get some financial relief as the programme includes a commitment to review the universal social charge (USC) and reverse the cut in the minimum wage.
The plan holds out hope for the 80,000 mortgage holders in financial distress.
Under the new deal, lenders must wait two years instead of one before initiating legal action to repossess a family home.
At the moment when a mortgage holder is in arrears and has not worked out a deal to repay what he or she owes, a lender can start legal action after a year. But if a homeowner is co-operating with the lender, moves to repossess the home cannot be made.
Recommendations of a government-appointed group on mortgage arrears are heavily criticised in the new Programme for Government.
The expert group, which was headed by insolvency specialist Hugh Cooney and included Central Bank regulator Matthew Elderfield, made recommendations that are "inadequate to address the scale of the crisis" for mortgage holders.
The main one was that mortgage holders in trouble should be able to defer some of the interest on their loan for up to five years.
Instead, the new Fine Gael/Labour plan sets out a range of measures to help strapped homeowners:
- Banks and building supported by the State will have to cut standard variable rates by 0.25pc by making internal savings.
- First-time buyers who bought between 2004 and 2008 will get extra interest relief. This could be worth €166 a month on a €300,000 mortgage.
- The State's Money Advice and Budgeting Service (MABS) will get legal powers to help protect families from creditors.
- Changes to bankruptcy laws will be fast-tracked.
The programme also appears to endorse the State's agreement with the IMF/ECB to introduce a property tax.
It says there will be a site valuation tax and adds that account must be taken of those in mortgage distress, while at the same time addressing the need to fund local government.