Limited benefit to bank hoops

Opinion: banks face difficulty enforcing security if forced through more hoops

Bank of Ireland chief executive Richie Boucher insists that interest will have to be paid on the warehoused portion of a split mortgage.

Bank of Ireland chief executive Richie Boucher insists that interest will have to be paid on the warehoused portion of a split mortgage.

Wed, Jul 9, 2014, 01:00

Yesterday, the Oireachtas finance committee issued its report in relation to the mortgage arrears resolution processes. It contained no fewer than 47 recommendations, a factor no doubt of trying to accommodate the ideas and wishes of the committee’s 27 members.

Why we need so many members on the committee is anyone’s guess. The United Nations Security Council only has 15 members and it’s charged with trying to maintain international peace and security.

One reporter asked for the top three recommendations from the report. Independent TD Stephen Donnelly replied by citing numbers 1, 2, 5, 7, 17, 20, 23, 27, 33, 34, 35, 46 and 47. To be fair, he was smiling when he read them out.

And Donnelly has been one of the better performers on the committee when grilling the banks, along with chairman Ciarán Lynch, Fianna Fáil’s Michael McGrath and Sinn Féin’s Pearse Doherty.

There are a number of good proposals in this report. The committee has called for the mortgage-to-rent scheme to be reviewed. The small take-up to date suggests that the committee is right to say that it is not “fit for purpose”.

It has also recommended that retired people should be able to continue their repayment schedule into old age, on a case-by-case basis. This might seem strange given that retired people are on fixed incomes that at best are only about half of what they were earning at work.

Continue repayments

But in many cases it would be cheaper for the retiree to continue to meet the mortgage repayments than to sell up and move into rented accommodation or seek housing from the State. And it would apply in cases where the sale of the property on the death of the owner or owners was likely to cover the residual loan.

Many of the other recommendations will play well with those in arrears.

For example, lenders found to have breached the code of conduct on mortgage arrears should “face disciplinary action by the Central Bank”.

People in mortgage arrears, who meet certain criteria, should have a right to a resolution process. Michael McGrath suggested that this should be a statutory right.

The committee calls for a “national plan” to assess both the risks and potential supports for families at risk of repossession. It also calls for a review of the insolvency and bankruptcy regimes, which have only recently been restructured, to reduce costs.

A “consistency of approach” in the way the various banks – AIB, Bank of Ireland, Permanent TSB and Ulster Bank – deal with customers in mortgage arrears is sought.