Counsel calls for laws to protect households facing repossession

THE GOVERNMENT should not rely on the creativeness of the courts to come up with a legal response to the home repossession crisis, senior counsel Cormac Ó Dúlacháin told the Respond housing association’s national conference in Naas, Co Kildare yesterday.

He said the Government’s request to lenders to exercise restraint and to defer seeking possession was “nothing more than window dressing”.

Mr Ó Dúlacháin said the Government could consider a number of solutions, including emergency legislation that would suspend contractual obligations for a limited period of time. “In the event of a drop in income, a household could seek protection for up to three years provided it paid a defined percentage of its household income to the financial institution,” he said.

Another option was to abolish negative equity by ensuring that a homeowner retained a 10 per cent equity in the net value of the house, even if he or she defaulted. This would give the homeowner funds to fall back on and would encourage lending institutions to be more prudent in their approval of loans, he said.

Mr Ó Dúlacháin also highlighted options such as a home loan compensation fund which would provide interest-free loans to people in arrears. He said the past nine months had seen a huge focus on the rescue of institutions and there was no shortage of legal ingenuity and invention in finding solutions. “It appears the law can do more for dormant and deserted building sites than for houses in which people live,” he said.

Noeline Blackwell, director general of the Free Legal Advice Centres, said the situation where people who could not pay debts could end up being jailed for up to three months must be ended. Some 276 people spent an average of 20 days in prison last year for debt-related offences, she said.

She said courts should have the right to reschedule a loan where it found the loan was reckless.