Noonan says repossession threats are to get owners to engage

Banks are using the threat of repossession to get home owners to engage with them, Minister for Finance Michael Noonan has said.

Mr Noonan is in Brussels at a meeting of finance ministers where he was asked for his reaction to figures published in The Irish Times showing banks are attempting to repossess more than 7,000 homes across the State.

“I don’t think the figures show a lot of houses being repossessed by banks. I think what the figures show is the banks using the courts to get people to engage with them who haven’t engaged,” Mr Noonan told reporters.

“The Government position is we don’t see repossession as a solution and we don’t want repossession to be a solution, but there is a whole menu of solutions.

“Over 90,000 mortgages have been restructured over the last three years. In December alone, 2,500 mortgages have been restructured.

“What we want people to do is to engage with their lenders and see if they can work out a restructuring that will be suitable for their particular case, but we don’t see repossession as part of the solution.”

The Data released to The Irish Times by the courts service indicates that, as of January 1st, some 7,101 civil bills for repossession had been lodged by the banks across the State’s 26 circuit courts.

The largest volume, 1,420, are lodged in Dublin Circuit Court, followed by 564 in Meath, 543 in Cork Circuit Court and 412 in Galway. The next-highest number, 405, are active in Co Kildare, underlining increasing distress among mortgage holders in the commuter counties around Dublin. In Wicklow there are 255 active bills for repossession lodged by banks.

The legal rights organisation Flac (Free Legal Advice Centres) proposed that early financial and legal advice be provided for people trying to negotiate a restructure of their mortgage debt. The group has proposed a three-point solution to the problems of those in arrears on a family home.

The group said that if the Government was serious about tackling mortgage arrears on family homes in a way that would keep people in their family homes, it would have to provide adequate financial and legal advice in a timely way to people who are trying to negotiate restructure of their mortgage debt.

An independent service which could objectively assess whether a sustainable mortgage restructure was possible and what that it might be would also be required.

Thirdly, radical reform of the mortgage-to-rent scheme in order to allow those with recognisably unsustainable mortgages to ensure reasonable housing was required.

Flac director Noeline Blackwell said the organisation had long predicted that a rise in repossessions “was bound to result when lenders have an absolute discretion to decide whether a loan is sustainable or not”.

“The Central Bank’s Code of Conduct on Mortgage Arrears has proved to be ineffective as a counterbalance and even when it is working perfectly, it is only a tick-box exercise.

A real effort to keep people in their family homes will need a much stronger commitment from government to solve this poisonous problem in our society,” Ms Blackwell said.

It was “entirely wrong that poor, over-indebted people have been expected to go in to negotiate the roof over their own heads with lenders on their own unless they can get assistance from MABS, organisations such as Flac, or from private professionals working pro bono.

Flac’s senior policy analyst Paul Joyce said the State’s own figures showed that the number of re-possession applications on family homes was “rising inexorably” and would continue to do so as lenders dealt with those cases where arrears and difficulty had become more entrenched.

The advocacy body said it was known that about 38,000 households had been in arrears for more than two years and said this was the only category of mortgage arrears that is increasing in the last number of reports from the Central Bank.

“This means that the extent of the problem can be quantified, ” Flac said.

It said it did not accept that all of these cases were unsustainable mortgages.

Separately, the People Before Profit group said the escalation of home repossessions showed the “utter failure” of government insolvency and banking policies.

People Before Profit said the escalation in the number of repossessions also showed the need to “take the bailed out banks into full public ownership and entirely change their mandate”.

TD Richard Boyd Barrett said "the looming avalanche" of repossessions showed the need for the banks to be put under public ownership and put a stop to 'for profit' banking".

“It simply beggars belief that banks which are only still standing because of a massive bailout by the citizens of this country are being allowed to turf many of those same citizens out of their homes.”

Independent TD for Roscommon South-Leitrim Michael Fitzmaurice said he would urge support for the Bill being proposed by Labour TD Willie Penrose on the insolvency problem.

He said it would “put pressure on the banks to sort out mortgage and other debt problems in a more sympathetic way”.

Figures released to The Irish Times by the courts service indicate that, as of January 1st, some 7,101 civil bills for repossession had been lodged by the banks across the State’s 26 circuit courts.

The largest volume, 1,420, are lodged in Dublin Circuit Court, followed by 564 in Meath, 543 in Cork Circuit Court and 412 in Galway. The next-highest number, 405, are active in Co Kildare, underlining increasing distress among mortgage holders in the commuter counties around Dublin. In Wicklow there are 255 active bills for repossession lodged by banks.