Don't pay mortgage without debt deal, says IMHO head
HOMEOWNERS have been advised to stop paying their mortgage – if they are prepared to give the keys back to the bank but can't get a deal on the remaining debt.
David Hall, of the Irish Mortgage Holders Organisation (IMHO), denied his mortgage boycott advice was irresponsible. He claimed banks were offering to pay for people to have their furniture moved out, but would not offer deals on the debt still owed when a property was voluntarily surrendered.
Mr Hall said the IMHO was now putting in place a "no surrender" policy.
"Where a bank will not come to an agreement on the residual debt the borrower should stop paying the mortgage and stay in the property. They should not surrender it. There is no benefit to the borrower surrendering the property."
It is estimated that up to 10,000 homeowners are engaged in a stand-off with banks who want them to surrender their homes.
"This policy is designed to help those who are being bullied by banks to hand back their homes. Many of these people are being forced into silent repossessions," Mr Hall said.
Mr Hall claimed some banks were offering incentives for borrowers to leave their homes, such as payments of furniture removal costs.
But if the borrower leaves and the bank takes possession of the house, there is often no deal on the residual debt offered, he said. People who stop paying their mortgages and refuse to leave the home will be open to repossession action.
The IMHO boss said his organisation would offer advice and legal assistance to those who adopt its "no surrender" policy.
The move by Mr Hall's group is a considerable step-up in the battle between banks and distressed borrowers. But he denied he was creating more problems for those who are already in arrears and already at risk of losing their homes by advising them to stop co-operating with the bank.
He insisted that people in these situations were already out of the mortgage arrears resolution process and so had few protections, as the banks had assessed them to be in an unsustainable position financially.
"This is not being irresponsible. In some parts of the country if you give up the house you cannot get on the local authority housing list," he said.
Central Bank protections for homeowners in arrears do not apply to those who refuse to co-operate with their lender, leaving them open to legal action for repossession.
Mr Hall claimed that some banks had upped the ante by telling TDs and senators in the Oireachtas Finance Committee that they will veto personal insolvency debt write-down deals.
This meant that the solutions being offered by some banks were so unattractive that some borrowers may be better off bankrupting themselves.
The Irish Banking Federation said it had no comment to make on the mortgage boycott call.