MORTGAGE LENDERS are leaving it to the courts to deal with the "social wreckage" caused by giving loans to people who cannot afford to repay them, Mr Justice Brian McGovern has said.
Granting five orders for possession at the weekly chancery summonses hearing yesterday, the High Court judge questioned the means by which mortgage lenders give out loans. "I wonder what realistic testing is done by banks and mortgage companies when you see a situation like this . . . in such a short space of time."
The judge was referring to a case where a mortgage of €220,000 was given in May 2007, on which only six repayments had been made, leading to arrears of €25,163 and an outstanding balance of €265, 240.
The judge granted an order for possession to Start mortgages with a stay of three months in the case, which he described as a "hopeless" situation.
An order for possession was also granted to Start for a Co Galway property on which a debt of €208,191.92 was outstanding. The defendant had made a proposal to pay €500 a month, but this was rejected by the subprime lender, as monthly repayments were supposed to be €1,600 and arrears of €21,635.60 had already accrued.
Orders for possession were granted on consent of the defendant in three cases, including one case involving a family home in which two children lived.
A loan of €130,000 was drawn down in March 2006, and by May 2008, arrears in excess of €15,000 had accrued. The court heard how the defendant had made several payments by cheque, but the cheques were returned due to insufficient funds.
As a result, no payment had been received since November 2007.
Giving the order for possession, the judge granted a stay of four months, as Christmas was intervening, which could make it difficult for the defendant to arrange alternative accommodation.
The judge adjourned several of the cases in order to give the defendants a chance to make repayments or solid proposals to make repayments and dispose of arrears.
He adjourned a case involving a family home for three weeks, after the defendant gave an assurance to pay €8,000 before Christmas, saying he would be able to pay between €4,000 and €5,000 within a week.
Adjourning the case, Mr Justice McGovern reminded the defendant: "You entered into an agreement and if you don't abide by the terms of that agreement, I have to uphold the law."
The original loan was for €75,000, but arrears of €18,001.83 had accumulated, leading to an outstanding balance in excess of €79,000.
The judge also adjourned an application by EBS building society involving a debt just short of €4.8 million. The multi-million euro mortgage had been granted in respect of nine properties including an industrial unit at Hebron Industrial estate in Co Kilkenny and a bar/nightclub in Waterford.
The court heard how the defendant had sold one of the properties, in order to pay off €325,000 of the arrears and was currently selling a house in Co Tipperary to pay of the remainder of the arrears, which were in excess of €200,000.