What is Abhaile?
It is the latest Government plan to tackle the problem of mortgage arrears. This new national service “marks a departure in State assistance by providing free, independent expert advice and support on financial and legal issues” and its number one objective is helping people “stay in their home wherever possible”.
It will see people who need help given vouchers to obtain expert advice from financial and legal advisers in order to resolve serious debt issues. They can get assistance in court where needed, have access to solicitors, and get help obtaining legal aid. They can also get financial advice from a dedicated mortgage arrears adviser, a personal insolvency practitioner (PIP), or an accountant.
Who is behind the scheme?
The Department of Justice and the Department of Social Protection. Minister for Justice Frances Fitzgerald said Abhaile would help people struggling with their debts get "access [to] independent expert advice and help on getting solutions into place". Minister for Social Protection Leo Varadkar said the Government did not want "to see anyone foreclosed into homelessness".
How will it work?
The first part of Abhaile is the aid and advice scheme under which the Money Advice and Budgeting Service (MABS) will act as the first port of call for homeowners. It will direct borrowers to the most relevant advice depending on their circumstances. The expert help is provided free under a "voucher" issued by MABS, working closely with the Insolvency Service of Ireland, the Legal Aid Board and the professional accountancy bodies.
Anything else?
There will also be a significant information campaign managed by the Citizens Information Board to be launched in a few weeks' time to promote the scheme to households most in need.
Is that it?
No. Further components, which will require legislative change, are currently being prepared by the Government, in accordance with the programme for government commitments and the Action Plan for Housing and Homelessness.
How much will the scheme cost?
It is expected to cost up to €15 million between 2017 and 2019.
Are mortgage arrears still a problem?
There are about 85,000 mortgages in arrears with 33,000 of these in arrears of more than two years. The value of mortgage accounts in longer-term arrears of more than 360 days is just a little shy of €10 billion.
That is a pretty big deal?
It really is and and it is probably worse than it sounds. Of the 33,000 people in serious arrears, about 6,000 are in the system to some degree or another, either with MABS, personal insolvency practitioners or groups such as the Phoenix Project, the Irish Mortgage Holders Association or New Beginnings. That means about 25,000 homeowners are in long-term arrears and not engaging with the system in any meaningful way. Whether or not Abhaile is the way to help them remains to be seen.
Does the Insolvency Service of Ireland not already do all the stuff Abhaile is going to do?
It certainly does some of what the new scheme will do. The ISI’s role is to help people deal with unsustainable debts and while some of that debt is related to mortgages, not all of it is. It runs an information service and has people in courts offering distressed debtors advice. It also keeps lenders in check – to a point – and allows people access to personal insolvency practitioners at no cost. But it is very much scratching the surface of the problem and less than 10 per cent of those who need its help have sought it.
How much impact will Abhaile have?
It depends on who you listen to. The Government and the Insolvency Service of Ireland are both optimistic while the spokesman for the Association of Personal Insolvency Practitioners, Eugene McDarby, said the initiative "may be just the push people in dire straits need to seek advice on their finances". However, David Hall of the Irish Mortgage Holder's Organisation was unconvinced. "Emergency action is required and this must involve all service providers being given debtors' details under data protection legislation to allow direct one-to-one proactive contact be made to offer help."
