Wednesday 26 October 2016

Government leaves door wide open to wave of repossessions, claims McGrath

Published 23/09/2015 | 13:44

An estimated 7,000 repossessions cases are expected before the courts in the next six weeks
An estimated 7,000 repossessions cases are expected before the courts in the next six weeks

The Government has left the door wide open for banks to repossess thousands of homes by failing to close a legal loophole exposed by the Supreme Court, Fianna Fail has claimed.

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The party’s Finance spokesperson Michael McGrath today said banks can secure repossessions without having to comply fully with the Central Bank’s Code of Conduct on Mortgage Arrears.

The ability by banks to flout their legal obligations was highlighted by the Supreme Court in May.

The ruling found that courts can only reject repossession applications in cases where banks do not wait the required period of time before initiating legal proceedings against the homeowner.

Read More: Autumn avalanche of thousands of home repossession cases is on the way

But a number of other obligations under the code of conduct can effectively be ignored by banks as a result of the loophole, Mr McGrath said.

Notably, these include the requirement on lenders to make every effort to agree an alternative payment arrangement with the homeowner.

Fianna Fáil finance spokesman Michael McGrath
Fianna Fáil finance spokesman Michael McGrath

Homeowners can no longer cite these provision as a defence in a bankruptcy hearing.

Mr McGrath said his party fears repossessions will increase as banks will continue to flout their obligations due to the loophole exposed during the Supreme Court case in May.

“In the eyes of the court, which is the body that ultimately has to approve the repossession, the code of conduct on mortgage arrears is in shreds.

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"And the Government seems to be oblivious to that fact, not prepared to take action.

"And again, it is a further example of the Government siding with the banks, making it easier for them to repossess homes by not closing this loophole,” Mr McGrath said.

“Essentially the banks can go ahead, seek to repossess a home, yeah they might get a rap on the knuckles for not complying with the code, but that’s not a whole lot of use to you as a family if you’ve been kicked out of the house and now in emergency accommodation or you’re begging for rent supplement from the community welfare officer,” he added.

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Mr McGrath said his party has tabled legislation which ensure all banks comply with the full provisions in the code of conduct.“This is a key protection that must be urgently reinstated, he told reporters.

But the Cork South Central TD said he was left “shocked” after the matter of the loophole was not referred to in the Government’s legislative programme published this week.

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