New law will allow banks to repossess homes by summer
BANKS will be free to repossess homes and investment properties by the summer after the Government published new legislation.
The new law will overturn a High Court ruling blocking them taking homes and buy-to-let investments. It is expected to be enacted by the summer.
It came as credit ratings agency Moody's says it is not changing the negative outlook it places on Ireland's so-called credit rating. Analysts are concerned about the slow pace of repossessions of houses from those in long-term mortgage arrears.
But the legislation to address the loophole caused by the so-called "Dunne Judgment" is expected to result in a surge in the number of repossessions.
More than 23,500 residential mortgage accounts are two years or more in arrears.
The Land and Conveyancing Law Reform Bill is to be distributed to TDs next week.
Publication of the legislation comes just days after Ulster Bank sent out letters to homeowners in arrears threatening to take back their homes.
And Justice Minister Alan Shatter's move to publish the legislation comes just days ahead of a deadline set by the troika to restore the right of banks to take back properties where owners are behind on their payments.
Mr Shatter insisted that he was not giving banks a new right to repossess homes. The move was merely to correct problems with legislation enacted in 2009.
He added that he was "deeply aware of the issues that arise where repossession proceedings relate to family homes".
The problems date back to a ruling by Ms Justice Dunne, who found certain registered properties could not be repossessed because of a loophole in the Land and Conveyancing Law Reform Act 2009, which was introduced on December 1 that year.
As a result, repossessions of homes and buy-to-lets have almost ground to a halt.
David Hall of the Irish Mortgage Holders Organisation criticised the move.
"This will give banks carte blanche to repossess properties, while many of them have yet to prove that they have done anything to tackle mortgage arrears."
Moody's is the only credit ratings agency to keep Ireland's status ranked at 'junk', or below investment grade.
The Government had been hoping that this month's successful 10-year-bond auction – the first since before the bailout – would lead to a better rating.
Moody's, however, says one of its concerns is the "poor asset quality of the Irish banking system".
"Irish banks have not yet begun implementing the Central Bank of Ireland's new requirement to repossess homes when mortgages have been non-performing for a lengthy period," Moody's said in a note to investors.