Sunday 24 March 2019

Law aimed at helping families facing repossession 'will stop new lenders coming here'

(Stock Image)
(Stock Image)

Charlie Weston and Cormac McQuinn

GOVERNMENT legislation aimed at helping borrowers in mortgage arrears will discourage new leaders coming into the market.

Justice Minister Charlie Flanagan got Cabinet approval for a bill which aims to broaden the matters a judge needs to take into account when considering repossessions.

But consumer advocate Brendan Burgess said the bill will ensure no foreign lenders will enter this market, and will encourage lenders to charge the highest mortgage rates in the Eurozone.

He said we need to make it easier, not more difficult, for the lenders to repossess houses when the borrower has paid nothing for years.

The Land and Conveyancing Law Reform Bill was first proposed as a Private Members’ Bill by Minister of State Kevin ‘Boxer’ Moran.

The bill sets out that judges in repossession cases would be required to take into account a refusal by a lender to find resolutions to the arrears issue.

Some 28,000 mortgage accounts are in long-term arrears, with many of these homeowners threatened with repossession.

Estimates of the number of repossession cases in the courts system vary from 7,000 to 20,000.

The planned legislation would also require the court to take into account the borrower’s refusal to engage in meaningful engagement with the bank to find such a resolution.

Before granting a possession orders, judges would have to assess whether making of the order would be proportionate in all the circumstances of the case.

The courts would have to take into account a family’s circumstances, including the impact a loss of a home would have on children.

Last month the Irish Independent reported that the bill was sent to the European Central Bank for approval.

The issue of so-called vulture funds buying up books of distressed mortgages has been controversial in recent years.

It is understood that the ECB raised issues about a proposal in the bill that would allow judges to take into account whether or not the lender in a case was the original mortgage lender.

However, sources said the Government will engage further with the ECB with the intention that the measure be included when the bill goes to committee stage.

Mr Burgess said the legislation was “completely unbalanced”.

“It absolutely ensures that no foreign lender will ever enter the Irish market so the Irish banks can start charging the highest rates in the eurozone.”

This country has the second highest variable mortgage rates after Greece.

Mr Burgess added: “This is an attack on responsible borrowers who will pay for this bill, not the banks.”

He said the legislation would make it more difficult to repossess a home when a borrower defaults.

“We need to make it easier, not more difficult, for the lenders to repossess houses when the borrower has paid nothing for years.”

Campaigner for those in debt David Hall countered that there has been an imbalance in favour of banks for too long.

Mortgage rates are high because banks are greedy, not because it takes five years to repossess a property, he said.

Online Editors

Also in Business