Homeowners defaulted on mortgages within weeks
BORROWERS who were charged annual percentage rates in excess of 7pc and 8pc defaulted on their loans within weeks, a court heard yesterday.
A High Court judge urged banks not to place homeowners in a "Catch 22" situation where they have been upfront with their lenders about their financial situation but are not facilitated when they try to settle their affairs.
Judge Elizabeth Dunne made the appeal as she granted several possession orders against homeowners who had defaulted on their homeloans just weeks and months after drawing down their loans.
One investor who took out a €272,000 remortgage on a property with sub-prime lender Start Mortgages in Monaghan in April 2008 had defaulted in July of the same year.
Arrears of €35,000 had built up on the property which is vacant. Seven properties, including family homes, investment properties and commercial premises, were possessed by lenders against borrowers -- the vast majority of whom did not turn up in court to explain their circumstances.
Judge Dunne granted several orders allowing banks to place charges on debtors' homes and other properties to satisfy outstanding debts and court judgments. The High Court heard borrowers who were charged annual percentage rates in excess of 7pc and 8pc had defaulted on their loans within weeks of their first drawdown.
In another case, a Donegal couple who took out a €200,000 loan with Start Mortgages in May 2005, defaulted in August of the same year.
The loan was taken out to consolidate other borrowings and for home improvements, but arrears of more than €51,000 had built up over a period of 39 months.
The High Court was told the property, a family home, is now abandoned. Judge Dunne noted there was not a "huge urgency" on the part of Start Mortgages to deal with the arrears.
Judge Dunne also said that it was difficult to "piece together" the difficulties faced by defaulters when they did not appear in court.