The Dáil will this week debate a Labour Party motion calling for a two-year moratorium on the repossession of family homes by all banks covered by the Nama scheme.
Labour Party leader Eamon Gilmore called for an amendment to the Nama legislation to provide for such a moritorium, during the debate on the scheme in the House last month.
The call was rejected by Minister for FInance Brian Lenihan.
The motion, tabled for debate in private members' time tomorrow and Wednesday, notes the rapid rise in unemployment in the last 12 months and says the number of families in mortgage arrears “could be as high as 35,000”.
It says that the number of repossession orders issued by the High Court increased by 120 per cent last year and says there is a prospect of a significant increase in home repossessions once the Nama legislation has been passed, and legal proceedings in such cases are transferred to the Circuit Court after December 1st.
The Labour motion says that, in the majority of cases, “the public interest is best served by ensuring that families can remain in their homes for as long as possible, so long as reasonable efforts are made to meet the borrowers’ obligations”.
It states that “irresponsible lending practices engaged in by many financial institutions” have contributed to the growing problem of mortgage arrears and goes on to note “the unprecedented assistance that has been provided to the banks through the blanket guarantee, recapitalisation and the Nama proposals”.
Labour is calling on the Government to introduce a statutory moratorium scheme that would provide for a minimum period of 24 months from the time a mortgage first goes into arrears, before repossession proceedings can be taken.
It also requests that the Government make provision for mediation services under the scheme to assist borrowers in coming to satisfactory arrangements with lenders, such as extending the period of a mortgage, putting a mortgage on an interest-only basis, or rolling up interest for a period.
It calls for the Government “to establish as a principle of public policy that, where possible and subject to reasonable limits, a family making a reasonable and honest effort to meet their obligations should be assisted to remain in the family home”.
Labour spokseman on housing, Ciaran Lynch, who will move the motion, said the “dramatic downturn” in the economic situation and particularly the massive increase in unemployment had created huge difficulties for families in meeting mortgage repayments.
“As a result of the big increase in numbers on the Live Register and the collapse of many small businesses, couples who bought homes over the past decades and who took on heavy mortgages in good faith, based on the incomes they were then earning, suddenly find that the loss of one or both jobs simply leaves them unable to meet the monthly repayment.”
He said public representatives from all parties had reported a significant increase in the number of people coming to clinics who were unable to meet repayments. Housing organisations and the Free Legal Advice Centres had also warned of the need for urgent measures to protect mortgage holders in arrears.
“While the number of actual repossessions to date has been modest, there is a significant increase in the number of applications coming before the courts and there is a real fear that once the position of the banks is solidified by the enactment of the Nama legislation, a flood of repossession orders will be unleashed,” Mr Lynch said.
“The ESRI recently estimated that as many as 35,000 mortgage holders could be in be in trouble by next year. This is a ticking social time-bomb that must be defused.”
Minister for Finance Brian Lenihan has already rejected Labour’s calls for a moratorium on repossessions.
During the committee stage debate on the Nama legislation last week, he told the Dail a total of 20 homes were legally repossessed by the six financial institutions covered by the State guarantee in the nine months to the end of September “in the entire State”.
Mr Lenihan told Labour’s deputy leader Joan Burton there was no “avalanche of repossessions” in the guaranteed institutions, which he said the Labour Party leader had claimed.
Most of the repossessions involved subprime lenders, Mr Lenihan said.
Last month in the House he accused the Labour leader Eamon Gilmore of “scaremongering for political purposes” in relation to the issue of repossessions.
The motion will be debated in Private Members’ time in the Dáil on Tuesday and Wednesday from 7pm to 8.30pm.