Flac critical of Coalition on mortgage arrears

The Government has been accused of making “bewilderingly little progress” in introducing measures aimed at tackling the problem of mortgage arrears and increasing the level of support available for distressed borrowers.

The Free Legal Advice Centres (Flac) has published detailed analysis into progress made in dealing with the problem of arrears since the beginning of the summer.

Last May the Government said plans under consideration included granting Circuit Court judges the power to overrule a lender’s unreasonable refusal of a personal insolvency arrangement. Also planned was an expansion of the mortgage-to-rent scheme to be achieved by increasing the property value thresholds that applied, as well as enhanced information and advice for borrowers.

According to Flac, some changes to personal insolvency legislation rushed through the Oireachtas in July affect only "those in arrears or in arrangements on January 1st, 2015, and even for those the necessary court rules are not yet in place to allow for review by judges".

Mortgage to rent

The advice centre said there had been no visible change or improvement to the mortgage-to-rent scheme that would allow people to move from being borrowers in arrears to becoming tenants in social housing. The scheme was launched more than three years ago but by last August only 110 cases had been completed.

Flac also said that while the Insolvency Service of Ireland and the Money Advice and Budgeting Service have increased the level of information available to borrowers in distress, no legal advice and representation scheme is available to people seeking to negotiate mortgage debt solutions or for those facing repossession.

Flac's review of progress in getting solutions to help keep people in their homes found the Government "knew last May what [it] needed to do, but there has been bewilderingly little progress in putting these measures in place," said Flac director general Noeline Blackwell.

Fair system

She said the organisation’s assessment over the last number of years was that there must be an independent and fair system of identifying what is a mortgage solution and that people should get the financial, legal and money advice they needed to deal with lenders and the courts. Alternative accommodation must be available for those whose mortgages are unsustainable.

The Government knows “focused and sustained action is needed immediately to put proper systems in place for people in debt so their mortgage arrears do not lead to homelessness. The problem is implementation,” Ms Blackwell said.

“The last six months since promises were made have seen almost no improvement in systems which would allow them to take control of their debt and to gain security in their homes.”

Meanwhile, yesterday's launch of the charity Step Change's telephone-based service aimed at people who are struggling with unsustainable debt has been welcomed. StepChange is funded by €6 million in grants from AIB, Bank of Ireland, KBC, Permanent TSB and Ulster Bank.