Repossession moratorium should be doubled - report

The current moratorium imposed on lending institutions from repossessing homes of people who have defaulted on their mortgage payments needs to be extended from 12 to 24 months, according to a report published today by the Oireachtas Committee on Social and Family Affairs.

The report, which examines the high level of debt in Irish society, considers how best to protect those at risk of defaulting on mortgages and advises on how to manage high levels of personal debt caused by the economic downturn.

An estimated 35,000 people are now in arrears, the report claims, while repossession orders soared by almost 100 per cent last year.

Among more than twenty recommendations contained in the report, is a proposal that the current arrangement which obliges the capitalised banks (BOI and AIB) to wait twelve months before they can initiate legal action against homeowners who fall into arrears, be extended to all the financial institutions.

However, ultimately the Committee believes that twelve months is not an adequate timeframe and advises that the Government immediately work with the banks to extend the moratorium to two years. According to the committee this measure will give homeowners the "much needed breathing space to try and arrange their financial affairs and will mean they won’t loose their homes."

In addition, there needs to be a strong incentive for homeowners who encounter genuine difficulty in meeting mortgage repayments to engage with the lender in order to reach some accommodation the report says.

The cross-party committee interviewed a range of agencies for the report, including the Irish Banking Federation, Monetary Advice and Budgeting Service (MABS), Central Bank, Community Welfare Officers and Irish Financial Service Regulatory Authority.

Some of the other key recommendations of the report include a radical overhaul of the Mortgage Interest Supplement Scheme, and special assistance for those in mortgage arrears. The report also suggests that utility companies should refer customers to MABS prior to disconnection, while those who avail of the Financial Regulator’s Code of Practice on Mortgage Arrears should not have their credit rating damaged.