SUBPRIME LENDER Stepstone Mortgage Funding Ltd was reckless and should never have given a loan to an older couple who are both now on disability allowance, a High Court judge has said.
Mr Justice Brian McGovern said the lender had offered “false hope” to the Galway couple who were 61 and 55 when they took out a €120,000 loan in November 2007. The court was told the couple had only met four repayments since the mortgage began and now owed arrears of €45,000.
Counsel for the couple said the mortgage was unsustainable on the day it was taken out. The interest rate was over 8 per cent, and the only income the couple had at the time was from taxi driving.
They had both been seriously ill for some time and were both now on disability.
He said there was a small “glimmer of hope” for his clients in the form of the planned new mortgage to rent scheme, which would involve voluntary housing group Clúid purchasing the mortgage, and the couple paying rent to Clúid. The scheme would be up and running by July, he said, and asked for an adjournment until after that date.
Mr Justice McGovern said it came as no surprise the lender had been subprime and had been “lending at exorbitant rates of interest”, but it took “two to tango”.
“If we had any regulation at the time it may not have happened,” he said. “Stepstone Mortgages, who clearly should never have advanced the money . . . are still entitled, despite their recklessness, to repayment.”
He granted the order for possession with a stay of execution of nine months to give an opportunity for the family to come to some arrangement.
In a separate case involving GE Capital Woodchester Homeloans Ltd, the court was told of another family that hoped to avail of the mortgage to rent scheme. Its legal representative said the couple were both on social welfare and were “working on the basis that they were on a list” for the scheme.
After being given time to consider their position, the Co Meath couple agreed to an order for possession, but with a stay of nine months.
Nine orders for possession were granted by Mr Justice McGovern yesterday, including six family homes. He refused to grant an order in a case involving Stepstone Mortgages after hearing it had refused to inform the borrower she was entitled to appeal a decision not to reschedule her mortgage repayments.
As part of the code of conduct on mortgage arrears, the Mortgage Arrears Resolution Process requires that an appeal be considered. Counsel for the lender had argued the process was introduced after legal proceedings had been initiated and so did not apply.
However, following on from a ruling by Ms Justice Mary Laffoy, Mr Justice McGovern said while objectively there was “little or no prospect” the borrower would succeed in an appeal, he would adjourn the case.
