Sir, – Until we address the current mortgage crisis there will be profound social and economic consequences for this society. A Private Members’ Bill before the Dáil today, the Family Home Protection Bill, will help do that, and we are calling on the Government to support it.
According to the latest figures from the Central Bank, one in 12 mortgages is in arrears of more than 90 days (as of September 2011). At the current rate, the figure will be one in four in just two years. This would represent nearly half a million men, women and children in Ireland.
The families who took on this debt were not greedy. They sought to own a home in which to raise their children. They were encouraged by the banks, regulators and government.
Now those homes are threatened. Under Irish law, once a mortgage is in arrears, the lender can seek possession of the home, and the law is weighted exclusively on their side. In determining whether or not to allow a family be evicted from their home, the courts cannot have regard to matters such as the conduct of the lender, the long-term sustainability of the mortgage, or the social consequences of repossession and eviction.
This is despite the fact that the main lenders have received massive subvention from the State precisely to help them deal with mortgage losses. AIB, for example, was recapitalised to the tune of €2.5 billion to cover losses on residential mortgages. As of last September, the bank had written down just €600,000 in residential mortgage debt for borrowers. (Bank of Ireland received €1.8 billion, and had at that point written down nothing.)
So what can be done? The new Personal Insolvency Bill goes some way towards providing a realistic means for ordinary people to extricate themselves from overwhelming debt. But this solution depends entirely on the co-operation of the lenders, which, as the above shows, is unlikely to be forthcoming.
The Family Home Protection Bill, being proposed by Stephen Donnelly TD, would help redress this imbalance, and encourage lenders to engage more fully with a new personal insolvency process. It provides for judges to be given discretion to assess matters other than the black-and-white terms of the written contract when faced with a lender seeking to take possession of a family home. These matters could include, for example, whether the borrower had made a credible offer under a Personal Insolvency Arrangement.
Article 45 of the Constitution of Ireland provides that in the “control of credit” the State’s “constant and predominant aim” must be the welfare of the people as a whole. Our State has failed to follow this constitutional principle of social policy and families across the nation are now paying the price.
The Family Home Protection Bill would help adjust the balance of power between the lender and borrower, and would serve society’s interest in encouraging the banks to make realistic deals to help recovery and facilitate families staying in their homes. We call on the Government to support it. – Yours, etc,