Mortgage nightmare
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AMONG the fears inflicted on individuals and families by the financial crisis, one of the most nightmarish is the fear of losing one's home. The danger of house repossessions has not yet assumed the importance of rescuing the banks or repairing the public finances, but it will certainly receive more and more attention as events unfold.
The Economic and Social Research Institute has estimated that 350,000 mortgage holders are in, or close to, negative equity. Of these, 35,000 could find themselves in default and at risk of foreclosure. Applications for mortgage interest relief have risen by 50pc. They will certainly swell when interest rates rise again, as they must.
Meanwhile, in the first nine months of 2009 the staff of the Money Advice and Budgeting Service (MABS) interviewed 14,000 new clients, and the MABS helpline received over 18,000 calls. This compares with 16,000 new clients and 11,000 calls for the whole of 2008.
The Government recognises the extent and urgency of the problem. A "code of conduct on mortgage arrears" was published by the Financial Regulator last February.
In a Dail speech last Tuesday, Minister of State Martin Mansergh strongly defended the Government's position. He pointed out that the code of conduct provides for "active management of arrears problems" agreed by borrower and lender, and, crucially, that repossession must be a last resort.
But other parts of his message were bleak. He said that granting a lengthy moratorium to defaulters was highly dangerous -- for the usual reason, its probable effect on the financial markets. He also thought it unnecessary because of the steps the Government has already taken or plans to introduce shortly.
Sadly, these steps may prove inadequate if the situation worsens. The word "unnecessary" does not take sufficient account of the grim reality for many families. Frequently a householder loses his or her job, strenuously seeks another without avail, continues to pay mortgage interest out of savings, and approaches the authorities only out of desperation.
Possibly such a case can be met by the "active management" envisaged in the code of conduct. If not, how can a dilemma be resolved? If people lose their homes, the task of rehousing them will fall on the Government. And it will cost even more than a mortgage subsidy. This question deserves to move higher up the Government's agenda.
Irish Independent
