Repossessions grow despite moratorium on legal action

ORDERS FOR possession of property granted to mortgage lenders at the High Court continued to increase in 2010 despite a 12-month moratorium on legal action.

Figures compiled by The Irish Times show 311 orders for possession were granted at the High Court in 2010, compared to 293 in 2009, 238 in 2008 and 109 in 2007. The figures also show the average indebtedness of borrowers before the courts had increased by a third.

An order for possession is granted to a lender when a homeowner falls behind with repayments on a mortgage.

As part of a code of conduct on mortgage arrears, introduced by the Financial Regulator, lenders must wait 12 months from the time arrears first arise before applying to the courts to start legal action.

The 12-month delay has meant extra time for borrowers in arrears to rectify their situation. However it has also meant that those who do end up facing the courts are in considerably deeper debt.

The average mortgage arrears of those against whom orders for possession were granted in 2009 was €32,500, but in 2010 the figure was €43,320. The average size of mortgages, which included some commercial properties, was just over €400,000.

Of the 311 orders granted, 56 properties were already vacant and 54 owners had consented to the repossession.

Additional homeowners agreed, but did not formally consent to repossession as they felt it might have consequences for them when they applied to be housed by their local authority.

Where orders were granted, the average stay or postponement given by the High Court was 10 weeks. Some borrowers, particularly families, were given as long as six months to leave their homes while in many cases involving vacant properties, no stay was given.

Many borrowers did not appear in court and did not send legal representation on their behalf; some had legal representatives and some appeared on their own.

The largest number of orders for possession was granted to Start Mortgages, which had a third of the total. A tenth was granted to Bank of Ireland, with the remainder divided between about 20 other lenders, including Stepstone Mortgages, ACCBank, Bank of Scotland Ireland and GE Capital Woodchester Homeloans.

Even in cases of obvious hardship, legal costs were almost always awarded to the lender. However, they were generally only granted at Circuit Court level because lenders had the option to pursue the orders through the Circuit Court instead of attending the more expensive High Court.

In a handful of cases, lenders did not seek their costs.

Many other properties were repossessed through the Circuit Court system. The most recent figures available, for the first six months of 2010, show 138 orders for possession were granted there.

New measures to protect homeowners in mortgage arrears began on January 1st. They include a scheme to allow borrowers to defer the payment of interest, as well as a ban on penalty interest and arrears charges and a strengthened 12-month stay on repossessions.