Judge criticises lack of inquiry by lenders

A HIGH Court judge has criticised some financial institutions for granting mortgages without “any proper inquiry” into the applicant’s ability to repay the money.

Mr Justice Brian McGovern voiced his concern as he granted 12 orders for repossession yesterday – including one where a couple had repaid just €50 off their mortgage since September 2008. The Co Donegal couple were alleged to be spending €90 a month on television channels and €1,000 a month on cigarettes.

Mr Justice McGovern said “during the years of the Celtic Tiger, everybody had a dream to own their own home”. However, he added, “lending agencies had a responsibility to ensure people’s capacity to repay” and it was clear some agencies had offered loans “to people who had no capacity ever to repay their debts”.

Counsel for Start Mortgages presented details of the Donegal couple’s finances, claiming they were spending €90 a month on television channels and €1,000 a month on cigarettes. Both were now unemployed.

Counsel said Start Mortgages had been paid the €50 in November 2010 but it had proven very difficult to contact the couple since.

There had, however, been an offer at one stage to pay €200 a month, he said. The monthly loan repayment was €1,015 and the account was now more than €32,000 in arrears. The couple was said to have moved out of the house, which was water damaged.

Mr Justice McGovern said having a television and reasonable access to channels was “almost a necessity” but he wondered was it “really necessary” to spend €90 a month. He granted the order for repossession with costs but imposed a stay of six months.

In another case before the court, a young mother of two became tearful when she described being frightened of her mortgage company, Stepstone Mortgages. The court heard the woman had arrears in the order of €5,000 on her repayments, which had initially been set at about €1,600 a month, for a 40-year term, in 2007.

She said she had been paying €232 a week under an agreement with the company but had increased this to €300 a week until she became unemployed. She was living on €370 a week in social welfare and was prepared to pay €260 of that to the mortgage company along with €1,600 she had as a loan from her father.

Mr Justice McGovern adjourned the case until February 21st.