Noonan says people will lose homes in some circumstances in mortgage crisis

Some people with mortgage difficulties will lose their homes, Minister for Finance Michael Noonan has said.

“Regretfully, it will have to be accepted that not all mortgages, due to individual circumstances, will or can within reason be made sustainable and that there will be circumstances where the person will have to lose ownership of the home,’’ he said.

“Indeed, in such cases it may be in the best overall long-term interests of all parties.’’

Mr Noonan said that where appropriate in such circumstances, the mortgage-to-rent option was now available to allow a family, their lender and the housing authority to agree a solution that would allow the family to remain in their home as a social housing response to an unsustainable mortgage.

Appropriate action

Mr Noonan said that when the lender could not secure a constructive engagement from the borrower, while fully complying with the code of conduct, there might be no other option but to commence legal proceedings.

“Indeed, if the lender fails to take appropriate action in such cases, it may incur even more losses and could have further costs for wider society,’’

Mr Noonan said he was concerned about reports suggesting banks might be presented with obstacles to selling properties legally in their possession, either by way of a voluntary arrangement or at the conclusion of the legal process and court judgment.

The Minister was replying to a Fianna Fáil private member's motion proposing a number of measures to tackle the mortgage arrears crisis.

These include a Central Bank report on the banks' performance to date on reaching the resolution targets and consistent rules for split mortgages. Steps would also be taken to ensure that the cost of engaging a personal insolvency practitioner (Pip) was not a barrier to availing of the new service.

Fianna Fáil finance spokesman Michael McGrath repeated the party’s demand for an independent mortgage resolution office.

He said he believed it could sit within the new insolvency service, adjudicate and have the final say in relation to mortgage arrears.

Mr McGrath said there should be uniformity in the way in which solutions such as split mortgages were rolled out.

Strategic default

“I would call on the Central Bank again to ensure we have that uniformity,’’ he added. “I think it is part of the reason why the number of split mortgages being agreed is not as high as we would like it to be.’’

Mr McGrath said a number of banks had returned to the theme of strategic default in recent Oireachtas hearings. AIB had said about 20 per cent of its customers in mortgage arrears were strategic defaulters.

“We need to get a handle on this,’’ he added. “We need to get independent verification as to the extent of the problem.’’