SOLVING the mortgage crisis without the viable option of repossession is no longer going to be a prospect. The Government is going to move to clear up the legal loophole currently blocking the repossession of houses.
Grasping the nettle, the Coalition is also clearly making a policy decision to tell the banks to sort out the problem – even if that does mean repossession. The instructions will be clear that this option should only be used as a last resort in dealing with distressed mortgages.
The majority of people in mortgage difficulty will remain in their home.
But repossession will be there in the background.
No politician is going to get up in the Dail and directly call for repossessions.
And the focus will remain on helping out those who have engaged with the banks from the off, rather than deliberately failing to make repayments and failing to address the problem.
The vast bulk of cases will result in resolutions along the lines of split mortgages, interest only, or debt writedowns – and there won't be blanket writedowns of negative equity.
The pieces of the jigsaw are finally falling into place as the banks return to normal business. They have been capitalised to ensure that they can deal with the mortgage crisis.
The Central Bank has also supervised the banks' retraining of their staff to deal with mortgage arrears.
The Government has passed the reforming Personal Insolvency Bill with an agency for dealing with those overcome by personal debt to start work in the summer. And addressing the loophole in the system will also see the system unclog.
The Dunne judgment has effectively called a halt to repossessions. Although technically about the buy-to-let market, the loophole has caused uncertainty on dealing with residential homes. The legal loophole is preventing banks seizing homes of borrowers in default following a High Court ruling in 2011 which drew possessions to a halt.
The legislation on the Dunne judgment is intended to bring certainty to the whole area.