Families sinking under mortgage debt need help now

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ALMOST three years ago, in the Sunday Independent of May 9, 2010, I argued the case for a radical approach to the then emerging mortgage arrears crisis.

Proposing the idea of dividing mortgage debt between the bricks and mortar structure and the plot of land on which it stands, I observed that ” … if more remedial action is not taken now, we will have thousands of families with high debt levels over the coming decade. Such widespread and chronic debt levels would have considerable social and economic consequences, so it is vital that we take actions now to alleviate it, for everyone’s sake”.

At that time around 4 per cent of homes were in mortgage arrears for over 90 days.

While a lot has happened since – a general election that ignominiously ejected the previous government and returned a new one with a historic majority – on the mortgage crisis front the situation has become dramatically worse. Three times worse, to be precise. Today, more than 86,000 mortgages – around 11.5 per cent of the total stock – are in arrears of more than 90 days.

The change of government was meant to herald a massive change in policy on mortgage debt. The new Fine Gael/ Labour Government came into office with a Programme for Government that devoted a page-and-a-half to distressed mortgages and housing.

One of Fine Gael’s pre-election commitments – to direct banks in receipt of State aid not to pass on interest rate increases – was abandoned within months of taking office. So too was the promise to expand the Money Advice and Budgeting Service to become a debt management agency with quasi-judicial powers.

Around 18 months ago, in another piece in this paper, I

said: “The first step this Government needed to take to tackle this crisis was not to allow the decision-making and initiatives around debt resolution to rest with the banks.” That was in autumn 2011.

If anyone had told me then that we would, in early 2013, still be listening to the Taoiseach and the Government hemming and hawing about how it might tackle the mortgage crisis, I would have thought they were deluded.

Yet, that is precisely where we are. It is mid-February 2013 and this Government has still to take any effective action to force the banks to act.

Last Wednesday I asked the Taoiseach, on behalf of hundreds of thousands of mortgage holders across the country, when the Personal Insolvency Bill would be commenced. The Taoiseach’s reply was: “I expect it will be in early summer.”

The biggest crisis facing families and households, and the Government does not expect its only substantive response so far to kick in until “the early summer” – another four to five months, at best.

More and more people are falling into serious arrears. The number is growing weekly. Can the Taoiseach really be content to watch that figure grow past 12 per cent or 13 per cent before it even begins its one serious measure to date?

Those people may get property tax demands before they get any hint of relief from the Government.

It is now 18 months since the Keane report was published. It contained interesting proposals such as split mortgages and mortgage-to-rent schemes, but, as we have discovered, only one mortgage-to-rent scheme and only 12 split mortgages have been proposed in the intervening year- and-a-half.

Thirteen mortgages tackled in 18 months at a time when 180,000 residential mortgages are in some form of arrears.

The banks’ response to this crisis has been appalling. They received €9bn to help deal with mortgage modification. They were expected to use that funding intelligently and responsibly for the benefit of their mortgage customers.

The banks spent the boom designing a raft of derivatives that helped investors and savers lose so much money, surely a fraction of that ex-pertise could now be put to designing a solution for suffering families. They cannot wait until early summer. They cannot wait until Easter. They cannot even wait another month. This is not a party issue. TDs and Senators from all sides are meeting families in distress every week; they all want action, but the ball is in the Government’s court.

It must now adopt what the Governor of the Central Bank has described as a “directive” approach and insist on specific policies from the banks for dealing with this issue. They got the €9bn, now we want to see them honour their side of the bargain.

This problem is actively getting worse by the day – and too many days of inactivity have passed already.

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