Kenny: Closing loophole won't mean repossessions
THERE will be no mass repossessions of homes when the Government closes off a loophole in housing legislation next year, Taoiseach Enda Kenny has said.
Just over 1,351 properties have been repossessed since the Central Bank started compiling figures.
Lenders are reluctant to repossess homes, while Central Bank rules prevent them from taking ownership of homes if mortgage holders are co-operating with the lender.
If this country had the same level of repossessions as in Britain there would have been 20,000 repossessions since the crisis began, analyst at Davy Stockbrokers Conall MacCoille said. But Mr Kenny told the Dail his Government had "no intention of having a rash of house repossessions".
Public Spending Minister Brendan Howlin said it was a "priority" of the Government to ensure "families maintain the family home".
Mr Howlin said the Personal Insolvency Bill will be in place to allow families to reschedule debt.
"I don't expect, in truth, any mass repossessions of houses, certainly for family homes, next year," he said.
Before December 2009, banks used a 1964 law as the basis to repossess homes. This was repealed and replaced in 2009, which, due to a drafting oversight, applied only to loans taken out after December 1, 2009.
The flaw became apparent in a July 2011 case overseen by Judge Elizabeth Dunne.
She ruled a lender wasn't entitled to repossess a home used for security on a defaulting €93,000 loan because demand for repossession and repayment was made in July 2010.
The Government told the IMF, EU and ECB that it would fix the flaw with the legislation by March. It is expected that most of the repossessions will be in the buy-to-let sector, where around a third of the mortgages are in trouble.
Yesterday, the barrister who brought the case that exposed the flaw in the law on repossessions said judges should be given the powers to refuse an order for possession coming from a bank.
Ross Maguire SC, of the mortgage-support group New Beginning, said courts should have the discretion to refuse a repossession if a bank has been unreasonable in refusing an offer as part of the new personal insolvency legislation.