Courts 'can't handle deluge of property repossession cases'
System ill-prepared for 31,000 actions so far
The Irish court system is ill-equipped to deal with the growing number of applications for repossession of residential properties, the latest research has shown.
In fact, the current system totally lacks the capacity to deal with the 31,000 Irish mortgage holders against whom the banks have initiated legal proceedings, according to research by the country's biggest stockbroking house, Davy.
Applications for repossession proceedings of residential properties by lenders are climbing following the closure of a legal loophole last year, with multiple official bodies, including the Central Bank, warning that they will soar this year.
"The pipeline is colossal and the courts can't handle it," said Davy banking analyst Stephen Lyons.
The small number of courts that deal with these cases - which are only fully operational for nine months of the year - and the fact that repossession cases end up competing with other civil matters (such as family law) for court time, means the courts system is very limited as to how many repossession cases it can process, Mr Lyons said.
Each repossession proceeding typically passes by specialist judges or registrars at least twice, while multiple sittings often happen due to borrower challenges, inadequacy of documents or the judge's discretion.
As a result, it is just not possible to handle the approximately 31,000 mortgage holders to whom the country's four biggest banks have sent legal letters, Mr Lyons said. That figure dates from April of this year, when it was revealed by senior executives of AIB, Bank of Ireland, Permanent TSB and Ulster Bank appearing before the Oireachtas Finance Committee.
The courts' lack of capacity to deal with repossessions was highlighted several times by the IMF/EC/ECB Troika, but that was before a legal loophole preventing repossessions, created by a case known as the Dunne judgment, was closed.
The system has also faced serious cuts since then; 2013 was the fifth consecutive year in which its budget was reduced.
An Expert Group on Repossessions recommended in a report published in December that the courts' capacity to operate effectively in light of any increased demand "be kept under review".
Mr Lyons pointed out that making the repossession process easier, particularly in the case of family homes, is not desirable either.
"It should be noted that a massive spate of repossessions is not desired by anyone, including banks. Repossession is the costliest outcome. The fact that repossessions are so time consuming and the most expensive outcome is actually encouraging more desirable out-of-court arrears resolution options like split mortgages or interest rate concessions.
"Though it is still important to have a viable repossession process available - in some cases it is the only option, and it also shows borrowers there is a consequence to non-engagement, which prevents against moral hazard," he said.
Mr Lyons supports a fast-track repossession system solely for buy-to-let properties, as advised by the Troika,
"So many of these properties are in trouble, with rent receivers already appointed. It just makes sense," he said.
Sunday Indo Business