Sunday 26 March 2017

Government U-turn to help protect homeowners from vulture funds

Pressure: David Hall
Pressure: David Hall
Charlie Weston

Charlie Weston

The Government has performed a U-turn to ease the burden on homeowners in mortgage arrears.

The new deal between Fine Gael, Fianna Fáil and Independents means those in mortgage default will be in a stronger position to challenge their bank.

The deal, details of which have been seen by the Irish Independent, will see stricken debtors having the option to appeal to an independent body if the bank rejects their proposal to restructure their repayments.

And vulture funds will be forced to have at least two solutions on offer for mortgage holders who are in arrears, under the new Programme for Government.

This will come about because the Central Bank's code of conduct on mortgage arrears is set to be put on a statutory footing.

The move will mean all lenders will have to provide at least two solutions to those in arrears. These are likely to be split mortgages and the mortgage-to-rent scheme.

The code would apply to banks and non-bank lenders. Some 47,000 mortgages are in the hands of non-bank lenders, often referred to as vulture funds. At the moment there is a question mark over the legal status of the code, especially as it does not apply to non-bank lenders.

David Hall, of the Irish Mortgage Holders Organisation, who advised Independent TDs on the arrears crisis, said the new policies represented a radical departure from the approach of the last Government.

"The Government has done a U-turn on some policies that deal with those in debt and mortgage arrears," he said.

Among the other proposals on the mortgage arrears issue is the setting up of a new one-stop shop State agency to help those in debt, including small and medium enterprises' (SME) debt.

This will provide a range of services, including having a role in negotiating with creditors.

Already approved schemes - such as the new Money Advice and Budgeting Service (MABS) dedicated mortgage arrears service and the provision of legal aid for distressed borrowers - will come under the new debt agency.

Limits

Courts hearing repossession, debt and insolvency cases will be centralised in Dublin to help people in debt, and people will be able to ask for their cases to be heard in private, it has emerged. Also, the monetary limits on deals that can be secured from the insolvency services are to be reviewed.

The Central Bank will be asked to hire consultants to investigate if the mortgage arrears figures it supplies are accurate.

Mr Hall said: "These policies represent a radical change... and coupled with other items to be considered, will help keep people in their homes.

"Vultures will have to think twice about purchasing home loans as they will be required to adhere to a code of conduct and unlike the current situation they will be required to offer specific solutions," he said.

Some 88,000 homeowners are in mortgage arrears, representing 12pc of home mortgages. A total of 120,739 accounts have been "restructured", according to the Central Bank.

Irish Independent

Promoted articles

Also in Business