Bill proposing more State aid for mortgage arrears backed by iCare

Strong support for a proposal for greater State support for people in mortgage arrears made by the Master of the High Court has come from one of the newest organisations set up to deal with the problem.

Icare was set up by the Irish Mortgage Holders’ Association to buy suitable homes from banks where the mortgage holder can’t pay the mortgage and is eligible for social housing.

In the legislation written by the Master of the High Court, Edmund Honohan, with the help of others – the National Housing Co-operative and Fair Mortgage Bill 2018, into which iCare had an input – Mr Honohan suggests that property owned by people who cannot afford to pay their mortgage should be bought and rented back to them. The Bill has been sent to the office of the Dáil Ceann Comhairle, and proponents hope that Fianna Fáil will sponsor its passage through the Oireachtas.

‘Nama for the people’

"It is a Nama for the people," said iCare's David Hall. "Why can't a mini-Nama buy the [distressed] loan and sell it back to the customer at a discount or restructure the loan? Why is it that vulture funds can bundle these loans into a sale?"

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Mr Hall said that some 120,000 mortgages had been restructured since the financial and property crisis erupted.

Of these, 84 per cent had been dealt with in one of four ways. Twenty-three per cent, or 27,000 mortgages, had been split (that is, the part of the debt that the holder can no longer pay was set to one side, at zero interest while the part that can be paid continued to be); 33 per cent have had their arrears capitalised (that is, the arrears folded into the main amount outstanding); 15 per cent are on reduced interest rates; 13 per cent have had the repayment term extended; and the remaining 16 per cent have been dealt with by the property being sold.

“Those four solutions are all done to keep you in your home. What happens if all those are sold to a vulture fund?” asks Mr Hall.

In Mr Honohan’s Bill, the new housing co-operative society could use State funds to buy homes at risk of repossession, handing the property to a non-profit housing provider who would then rent it back to the occupants, allowing them to remain there.

Compulsory purchases

The co-operative could also use compulsory purchase orders if a bank did not accept the offer to buy the mortgage at a written-down price.

Mr Hall said that Mr Honohan’s Bill – “or a variation of it” – needed to be passed by the Oireachtas.

“The risk of hundreds of repossessions [suggested by Mr Honohan] is absolutely correct,” he maintained.

This analysis is not shared, however, by barrister Ross Maguire of New Beginning, which provides legal advice at affordable rates and funding for people in mortgage arrears.

“I would say that mechanisms exist and are fully functioning, and there is no potential for mass repossessions in this State,” said Mr Maguire. “The Master [Mr Honohan] has been saying it for years but is crying wolf. It’s not going to happen; no chance.”

Arguing that Abhaile, the advice arm of Mabs (the Money, Advice and Budgeting Service) was working well, as were mortgage-to-rent housing associations such as Clúid, were dealing effectively with the crisis, he suggested Mr Honohan was out of touch as his court was no longer dealing with the repossession cases. "The danger I see," said Mr Maguire, "is that of whipping up fear . . . It's a bit like the water issue – whip it up and off you go."