Home loans should be sold to ethical co-operatives, says Master of High Court

The Master of the High Court, Edmund Honohan has said home loans should be sold to ethical co-operatives instead of vulture funds.

His comments come after Permanent TSB, which is 75 per cent State-owned, said it plans to sell about €3.7 billion worth of loans, including 14,000 owner-occupier home loans and 4,000 buy-to-let mortgages.

Speaking on RTÉ’s Morning Ireland, Mr Honohan said PTSB should sell its loans to an ethically-funded co-operative. There are already moves afoot to tap into the ethically-funded market in Northern Ireland and elsewhere. This is necessary to avoid a repeat of the mistake made following the Famine, he warned.

If PTSB held back, it would be a question of applying the law to make it less attractive to Vulture Funds to come in and trump whatever an ethically-funded co-operative could do, he said.

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Mr Honohan, whose role it is to deal with cases on their way to trial in the High Court, asked how people already in arrears were supposed to come up with funds to do a deal with Vulture Funds.

“Where are they going to borrow from when they already have bad credit rating?” he said.

He maintained the solution is a co-operative mechanism such as is operated elsewhere in Europe, where up to ten per cent of housing is co-operative. In Norway, which has a population of five million people, there are one million co-operative homes, he added.

Mr Honohan also said he had drawn up a Bill to address the issue of home repossessions. He had been prompted to do so after he saw advice that people had received from the Taoiseach’s office.

“Why is the Taoiseach’s office so misinformed about home repossessions?” he asked.

“On a daily basis people come in (to court) asking to stave off repossession.”

Write to the Taoiseach

He had advised people involved in repossession proceedings to write to the Taoiseach to see what their options were.

One man showed him a letter from the Taoiseach’s office advising him to contact Abhaile, the free service to help people in mortgage arrears.

“Is this a sick joke? Abhaile is merely a voucher for €200 worth of legal advice. Why is the Taoiseach’s office so misinformed?”

Mr Honohan pointed out that in recent years 15 Bills were drawn up to deal with repossessions.

“They are all sitting there because there is no mechanism for Opposition TDs to draw up a Bill.”

He said the Bill he has drawn up has put elements of those 15 Bills together and it needs an all-party approach.

“Spell it out in one concise Bill. Apply the existing law and the Vulture Funds will go away,” he said.

Mr Honohan said if he were Taoiseach he would advise people to go see a Pip (Personal Insolvency Practitioner) as at present the banks are thwarting mechanisms for debt settlement.

He also pointed out that there are hundreds of repossession orders that are not being acted upon and asked what would happen if people vacated these homes. “They are essentially squatters, where would they go?”

In cases of “strategic default” he said it should not be assumed that people could afford to pay.

“The real defaulters are the husbands who have not told their wives that they haven’t been paying the mortgage.”