Fianna Fáil motion likely to stall solution for mortgage arrears
FF wants independent mortgage-resolution office
Fianna Fáil spokesman on finance Michael McGrath: “I don’t trust the banks.” Photograph: David Sleator
It shouldn’t come as a surprise. At the end of March, 95,554, or 12.3 per cent, of mortgages here were in arrears of 90 days or more. Roughly 54,000 are 12 months or more behind on their payments.
A key tool in Honohan’s box of solutions is the use of split mortgages, which involve warehousing part of a loan for a period of time to give the borrower some breathing space and the ability to make repayments on the balance.
It might or might not be repaid, depending on the circumstances of the borrower as the term of the mortgage rolls on.
Just 144 split mortgages have been put in place to date out of 142,000 mortgages in arrears and it’s fair to say that some banks are lukewarm on the idea. Nevertheless, Honohan wants to see a greater use of them in resolving this thorny issue.
Private members’ motion
Yesterday, Fianna Fáil tabled a private members’ motion seeking to row back on some of the recent changes made to the code of conduct on mortgage arrears.
The changes lifted the ceiling on the number of calls that banks could make to customers in mortgage arrears and the 12-month moratorium on them initiating repossession proceedings.
Fianna Fáil, the lead party in government when this crisis blew up in 2008 and under whose watch the 2010 version of the code of conduct was framed, wants an independent mortgage-resolution office that would mandate what offers banks must make in certain circumstances.
Specifically, it calls for the reinstatement of a maximum number of successful contacts that a bank is allowed to have in any one month, and the 12-month moratorium on repossession proceedings.
For those facing an offer to surrender their tracker mortgages, Fianna Fáil wants a third party to verify if the offer from the bank is in their best interests.
In addition, it wants the Central Bank to require that banks record all calls with borrowers and store them so that the regulator’s staff can access them if it get a complaint.
It also wants an obligation on a bank seeking an order for repossession to first obtain written confirmation from the Central Bank that it has exhausted every other course of action available to keep a family in their home.
Similarly, it wants the Central Bank to pass a verdict on whether a borrower can be properly classified as “unco-operative”.
“I don’t trust the banks,” Fianna Fáil’s spokesman on finance Michael McGrath told me yesterday when discussing the Bill.