FG warns of repossession 'disaster'

The chairman of the Public Accounts Committee (PAC) today warned Ireland is facing repossession "disaster" if steps are not taken now to aid homeowners struggling to pay their mortgages.

"The Master of the High Court has confirmed that 600 new cases of repossessions have come before the courts in just one month. This is a clear [sign] that the banks are now willing to move on repossessions following the Nama bailout," Fine Gael TD Bernard Allen said.

"This is happening despite the fact that the IMF [International Monetary Fund] has confirmed that Irish banks now have sufficient financial resources to help the most distressed home-owners restructure their debts to avoid repossession.

"With so many people struggling to keep up with mortgage payments it is vital that action is taken now to force the banks to make repossession the absolute last resort; if this doesn’t happen we could be facing a repossession disaster in this country which could have major implications for any fragile, economic recovery."

Mr Allen said there were a number of options available such as shared shared equity schemes, extended interest only periods, mortgage breaks etc. "Every option should be looked at; it is the least that Brian Cowen who led Ireland down this disastrous economic path can do," he said.

The Fine Gael TD said it was time for the Government to "stand up to the banks up to the banks and offer some hope for the people of this country".

Earlier this month, the Government approved new measures to help people who are struggling to pay their mortgages.

Last week, it emerged 600 new cases for repossession of homes have come into the High Court Master’s list since early last month and most of those involve outright default of loans over a year or more.

Responding Felix O'Regan of the Irish Banking Federation (IBF) said there were steps being taken "day by day, week by week" to tackle the issue of mortgage arrears and that this was reflected in a decline in the official numbers of repossessions and cases going before the courts.

Mr O'Regan said the Courts Service had confirmed the figure of 600 included "a host of other things," including cases that have not yet gone to trial. He said the most recent figures given showed 229 new repossession cases for the first half of this year, compared to 493 for the first six months of 2009, adding that all cases going before the courts did not end in repossession.

"We all have a very responsible role to play on this important issue, and it's not helped by people playing politics with numbers or with issues and unduly alarming people," he said. Mr O'Regan added his overriding message for those struggling with their repayments was to communicate with their lenders on working out a repayment plan.

A new five-step system allowing homeowners with mortgage arrears to agree new repayment terms with banks and building societies is to be set up in line with the recent recommendations of a Government-appointed advisory group on personal debt. However, banks will still be able to take court action against anyone who is more than 12 months behind with their home-loan payments.

The group’s report, published on July 6th, says a moratorium forcing the banks to wait for one year before taking legal action against people in arrears should not be extended further as this may discourage borrowers in difficulty from facing up to their problems.

The report says lenders are not taking court action against anyone who has approached them in an effort to tackle their arrears problems. A second report in September from the Mortgage Arrears and Personal Debt Expert Group will deal with negative equity and debt forgiveness.

A spokesman for Money Advice and Budgeting Service (Mabs) said the expert group had some welcome suggestions but that his organisation was waiting for the report in September and hoping would "comprehensively address negative" equity and debt forgiveness. The spokesman said the expert group was also examining the architecture set up in other countries to deal with the issue of those in mortgage difficulties.

He noted although those on tracker mortgages were relatively safe from mortgage rises for the time being, matters were worse for those on variable mortgages.

The Financial Regulator said in May that 32,321 mortgages - 4.1 per cent of 791,000 mortgages in the State - were in arrears for more than 90 days during the first quarter of the year.