Figures from the Court Service showing the rate at which homes are being repossessed climbing by more than 500 per cent in 12 months are alarming but hardly surprising.
What is troubling is not the percentage increase but the fact that most of the near-600 repossession orders were for homes rather than investment properties.
All told, 383 of the 586 orders were for owner-occupied homes while just 97 were for buy-to-lets properties – numbers which give lie to the notion that banks are targeting buy-to-let borrowers first.
The figures will put more pressure on a Government which has identified home repossessions as its Achilles’ heel ahead of the next general election. It is acutely aware that a slew of court-enforced actions could undo the narrative it is weaving about green shoots turning into sturdy saplings and then enduring tree trunks of recovery.
Those in power – already grappling with a housing and homelessness crisis – will dread the mortgage crisis moving from numbers on a page to real-life horror stories of evictions and enforced homelessness. Today’s news may spur the Government on when it comes to finally introducing accessible solutions to help those in mortgage arrears to keep a roof over their heads.
Proposals include easier access to split mortgage and mortgage-to-rent schemes but the portents are not good. The Government has not covered itself in glory when trying to put manners on the banks as is evident in its impotence in its dealings with banks and their inflated standard variable rates for 300,000 mortgage holders.
Long road
The reality is that when it comes to home repossessions we are only at the start of a long road. A recent analysis of the mortgage crisis completed by UCC economist Séamus Coffey found there had been around 1,000 court -forced repossessions since the crisis started. Out of context that may sound like a lot but according to the most recent Central Bank figures, more than 110,000 of the 760,000 mortgages in the State were in arrears at the end of 2014.
Until recently banks have adopted a “kick the can down road” strategy when dealing with arrears. This approach adopted at the height of the crisis was in part borne out of a paralysing fear that the entire financial system was about to come crashing down.
It wasn’t until 2013 when the Government enacted legislation effectively circumventing the 2011 Dunne judgment – which stopped many repossessions in their tracks – that banks started taking action against heavily indebted mortgage holders and many of the repossession cases now coming to a head in the courts relate to pre-2009 loans.
Government action on the Dunne judgment coincided with new guidelines from the Central Bank on mortgage arrears resolution targets which pushed the banks into dealing with arrears in a meaningful way – and one way of dealing with arrears is repossession, however unpalatable it may be.
Potential solutions
It is through this prism the latest Court Service figures must be viewed. A repossession court order being granted does not necessarily mean a home is repossessed and it is clear the banks are using the courts as a tactic to bring reluctant debtors to the table to discuss potential solutions.
They have repeatedly said there was a minority of borrowers in arrears who have refused to engage with them.
Legal proceedings brings the two sides to the table and often case do not come to a court . Even if they do and repossession orders are granted, banks can choose not to execute them and deal with borrowers instead, albeit it on a most unequal footing. At that point the gun is pointed at the distressed borrower’s head and all the bank needs to do is pull the trigger.
