Inside the property repossession courts, where only one in five borrowers turn up

Repossession is an emotive topic and one that touches on some of the Irish people’s deepest fears of being dispossessed. We have been attending residential property possession hearings in courtrooms in Dublin, Wicklow and Cork to observe first hand what happens.

We have documented almost 300 cases since the start of February.

Some commentators are giving the impression that the 8,000 cases currently before the courts will result in 8,000 families losing their homes. The bulk of mortgage cases we saw won’t end in a repossession.

Court can be intimidating. Most people who turned up were very worried, although, curiously, some seemed nonchalant. The county registrars do an initial rapid-fire run through cases, quickly adjourning or striking out most of them. Where the borrowers showed up, the county registrars listened carefully to them and were usually very polite, while stressing the seriousness of the situation.

In the cases we monitored, only about one in five borrowers showed up in court, so the majority don’t realise how fair the court system is to them.

An odd quirk of the system is that, in practice, every case is automatically adjourned at the first hearing for between three and six months.

We have seen three cases where the borrowers wanted to surrender their homes, but the county registrar adjourned the cases. In one case, the borrowers claimed that they had signed the voluntary surrender forms on two occasions but that the lender had lost the paperwork. Even though the lender wanted possession and the borrowers consented, the county registrar still adjourned the case.

Made homeless

Repossession cases are almost always painted as a struggling family made homeless by an avaricious, uncaring bank, despite the family’s best efforts to keep their home. In fact, of 15 cases where the lender sought an order for repossession and where the borrower showed up in court, only two orders were granted. The other 13 were adjourned against the wishes of the lender. There were 13 other orders for repossessions of family homes where the borrower did not appear.

In all cases where an order was granted, a stay of execution for up to nine months was put on the order. Many of the homes involved will not actually be repossessed as the borrower still has a chance to resume repayments.

One of the two who showed up in court who had a repossession order granted against him had arrears of €118,000 and had not made a payment since August 2010. His only defence was that the bank had not made him a written offer. The county registrar granted an order for repossession but put a stay on the order for eight months to give the borrower an opportunity to sort it out with the banks. The county registrar advised him: “Talking is not going to sort it out. Sending in forms is not going to sort it out. The only thing for you to do to avoid losing your home is to start making repayments.”

The other borrower who had a repossession order granted against him had made no repayments since November 2011 and had arrears of €69,000 on a mortgage of €343,000. He was living in the house on his own, having separated from his partner two years ago.

These were the only cases where people who showed up had an order for possession granted against them. We saw no case where a borrower who was making some repayment and who showed up had an order granted against them.

In one extraordinary case, the borrowers had made no repayment since 2009. They had not communicated with the lender but they showed up in court, and while the lender wanted to proceed with the possession order, the county registrar adjourned the case for four months to give them another chance.

The fact is that people who attend court and who make some payment will be given fair treatment by the courts. But the county registrar in Wicklow was particularly clear about this, stating on numerous occasions that borrowers have to make some kind of payment and that no payment at all is simply not acceptable. Her attitude makes sense, given that even people on social welfare are obliged to pay something towards their rent, whether they are in social housing or private rented accommodation.

State help

There are probably some cases (outside our research) where people engage with the lender, pay something every month and show up in court, but it is still not enough to keep the home. In these cases, the State should step in and help them with their repayments. But the many who don’t pay, and who don’t show up, deserve to lose their homes.

The figures in our table tell an interesting story. We can have faith in our legal system. The courts protect those deserving of protection and allow those who don’t deserve it to meet their fate.

So will there be a tsunami of repossessions? Well, not within the next year or so, given that all cases are adjourned automatically for up to six months and, in the few cases where an order for repossession is granted, there is usually an eight-month stay put on that order.

The court system is being used by the lenders to get the borrowers to engage and to pay something. It is not being used to repossess family homes. The headlines spreading panic and touting tens of thousands of repossessions are wildly overstated. It is perhaps, a case of “the storm before the calm”.

Karl Deeter is the compliance manager at Irish Mortgage Brokers; Brendan Burgess runs the website askaboutmoney.com; and Séamus Coffey is a lecturer in economics at University College Cork