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THE MAIN PARTY in government last week took credit for a purported decline in mortgage arrears cases, claiming on Facebook and Twitter that “Fine Gael has helped the number of primary home mortgages in arrears fall by 42.5% since 2013″.
They added: “That’s nearly 61,000 people and families who are safer and more secure because of Fine Gael”.
Is that all true? Do those numbers check out? And is it really “because of Fine Gael”?
Padraig O’Mara got in touch with us on Twitter to ask FactCheck to look into it, so we did.
(Send your FactCheck requests to factcheck@thejournal.ie, tweet @TJ_FactCheck, or send us a DM).
Claim: Fine Gael is responsible for the decline in the number of primary home mortgage arrears since 2013, which has left nearly 61,000 people “more secure”.
Verdict: Mostly FALSE
What was said:
Here’s the graphic in question:
There are roughly three parts to this: the 42.5% decline; whether Fine Gael has helped bring it about; and whether “nearly 61,000″ people are “safer and more secure because of Fine Gael”.
We’re going to evaluate each part and then arrive at an overall verdict for the entire tweet, at the end.
Let’s check out those numbers first.
In response to our request for evidence, Fine Gael directed FactCheck to recently published Central Bank figures on mortgage arrears.
To download a spreadsheet containing the Central Bank data, click here.
The latest figures show that the number of mortgages in arrears in June 2016 (82,092) is 42.55% lower than in June 2013 (142,892).
So the first part of the claim is accurate, although for some reason Fine Gael used “42.5%” rather than “42.6%” in its tweet.
However, for the sake of completeness and to provide context, it should be noted that the total value of these mortgage arrears is significantly higher now than it was in 2013.
In June, the total value of primary home mortgage arrears was €2.46 billion. In June 2013 it was €2.02 billion – that’s a 21.6% increase.
A party spokesperson cited a number of policies and developments which they claim contributed to the fall in the number of primary home mortgages in arrears.
This is tricky. We know that the number of mortgages in arrears has fallen, but figuring out what causes contributed to that, and how much, can be a bit messy.
Nonetheless, let’s have a look at what Fine Gael presented as ways in which they helped bring this about.
1. Personal Insolvency Bill
This was a significant piece of legislation passed by the Dáil in December 2012, and very much championed and pushed through by then Justice Minister Alan Shatter of Fine Gael.
Among other provisions, it shortened the period of bankruptcy from 12 to three years in Ireland, and allowed for a “Personal Insolvency Arrangement” (PIA), whereby the person in debt (the debtor) could come to a more structured arrangement with their creditors (those to whom they owe money – usually banks).
In the case of debts of up to €20,000, it also allowed for a “debt relief certificate”, whereby, if a debt remained unpaid for three years, it would be written off.
To oversee these measures, the law created a new Insolvency Service of Ireland (ISI) in 2013.
Since then, it has reached 2,728 arrangements between debtors and creditors – Personal Insolvency Arrangements, Debt Relief Notices, Debt Settlement Arrangements – and 1,330 bankruptcies.
Of these 2,728 arrangements, roughly half (1,365) were PIAs, which are primarily mortgage-related.
These figures would have contributed to the falling number of mortgages in arrears, so it would be difficult to reasonably propose that the passage of the Personal Insolvency Bill, and the creation of the ISI, at the behest of a Fine Gael minister, has not contributed to the 42.6% decline in question.
However, let’s put those numbers in perspective.
In June 2016, there were 60,800 fewer primary home mortgages in arrears than in June 2013. So the 1,365 PIAs achieved by the Insolvency Service of Ireland are equivalent to just 2.25% of that decrease.
And this doesn’t take into account the fact that not all the mortgages associated with these PIAs are primary home mortgages.
Indeed, we know that of the mortgage debt associated with new applications brought to the ISI so far in 2016, for example, 61% of it related to buy-to-let mortgages, and not primary home mortgages.
This suggests that so far the ISI could reasonably be estimated to have achieved, at absolute most, a fall of 0.96% in the number of primary home mortgages in arrears, but it is certain to be less than that.
So the Fine Gael bill, via the Insolvency Service of Ireland that it created, can reasonably be said to have contributed to the 42.6% decline in the party’s tweet.
But it was not a significant contribution.
2. Central Bank mortgage arrears targets
In March 2013, the Central Bank gave six banks performance targets to encourage them to find sustainable solutions to arrears for their mortgage customers.
The targets appear to have have some measure of success. By November 2013, the banks were 13% ahead of target, allowing the Central Bank to then increase the targets.
By April 2015, the Central Bank observed:
Under the Central Bank’s assertive supervisory engagement the capacity and approach of the banks for dealing with distressed borrowers has materially improved, with a significant shift from relying on short term forbearance, to longer term sustainable solutions.
This changed approach has resulted in sustainable solutions being proposed to the majority of those in arrears, and concluded in 62 per cent of these cases.
So this initiative has had a significant impact on restructuring mortgage debt, and therefore on the number of mortgages in arrears.
However, the Central Bank is independent in its actions, and the benefit from this initiative cannot reasonably be attributed to Fine Gael or Fine Gael ministers in government.
We don’t know why Fine Gael presented actions taken by the Central Bank as being attributable to Fine Gael, when they’re not.
3. Insolvency Service of Ireland suspends fees
In October 2014, the Insolvency Service of Ireland (ISI), announced it was waiving its fees, which had ranged from €100 to €500.
However, the ISI is (again) an independent statutory body, and there is no evidence that this decision was influenced by anyone in Fine Gael.
Indeed, the ISI’s Director Lorcan O’Connor stated at the time that the decision was prompted by research conducted by the market research firm Behaviour and Attitudes, and concluded: “Application fees were raised by some people as a potential barrier, so we have removed them”.
4. Abhaile
Fine Gael also pointed to the introduction of Abhaile, the Mortgage Arrears Resolution Service.
This scheme was put in place by the Fine Gael-led government, specifically Fine Gael ministers Frances Fitzgerald and Leo Varadkar.
It is linked to MABS (the Money Advice and Budgeting Service) and is aimed at providing free expert legal advice to people in arrears on their mortgages.
However, it was only launched in July, so it’s actually impossible for it to have had any bearing on the number of mortgage arrears during the period June 2013 to June 2016.
In light of this fact, we’re really not sure why Fine Gael presented it as an example of how the party has helped bring down the numbers during that period.
5. Removing the ‘bank veto’ on insolvency deals
This one is dubious. Originally under the Personal Insolvency Bill, banks had the ability to reject insolvency deals that were reached via the ISI.
This provision was criticised at the time, and in March 2013, Fianna Fáil unsuccessfully introduced legislation to remove it.
But in May 2015, Fine Gael Justice Minister Frances Fitzgerald introduced a successful government bill which included a similar provision.
In January 2016, ISI Director Lorcan O’Connor said the removal of the veto had, along with other factors, contributed to an increase in the number of settlements in the final quarter of 2015.
You can cut this both ways. It was Fine Gael who eventually removed the bank veto, but it was also Fine Gael who included it in the new insolvency regime in the first place, and then resisted attempts to remove it by others.
6. Expansion of mortgage-to-rent
Included in the same May 2015 package announced by Fitzgerald was a change to the mortgage-to-rent scheme, which allows mortgage-holders in arrears to sell their property to housing authorities, then rent it back from them.
In May 2015, the government increased the valuation ceiling for the scheme from a maximum of €180,000-220,000 to €250,000-350,000, which essentially made it available to a greater number of mortgage-holders.
It stands to reason that this measure would have helped reduce the number of mortgages in arrears, although we were unable to find specific data on this.
7. Strengthening of MABS
Also in May 2015, the government announced it would expand the role of MABS – the Money Advice and Budgeting Service, which provides free expert advice to anyone in debt.
This entailed, for example, providing ‘court mentors’ for mortgage-holders addressing insolvency in court, and the provision of Personal Insolvency Practitioners (PIP).
Some of these measures were only introduced after June 2016, but some were introduced before that.
Again, it stands to reason that the increased availability of expert advice and legal help would be conducive to more mortgage restructuring and insolvency arrangements, but we have no hard data to establish a direct causal link there.
What the ISI has said
Reflecting on a 70% increase in the number of insolvency settlements in 2015, ISI Director Lorcan O’Connor attributed this rise to:
This is a significant component of the tweet and it is, frankly, grossly misleading.
“Nearly 61,000″ comes from the figure of 60,800, which is the size of the decline in mortgages in arrears between June 2013 (142,892) and June 2016 (82,092).
But the causes of that decline, as this article has shown, were complicated and multifaceted.
To simply claim that the 42.6% decline was “because of Fine Gael” is to ignore that and vastly, even ridiculously, oversimplify the reality.
As the Central Bank stated in April 2015, the targets it set had brought about a scenario where the six major banks had found “sustainable solutions” for the majority of mortgages in arrears on their books.
Therefore this measure alone constitutes a far more significant contribution to that 42.6% decline, than the comparatively very small impact of insolvency arrangements reached by the Insolvency Service of Ireland, which was created by Fine Gael’s Personal Insolvency Bill.
Fine Gael policies did make a small contribution to that figure of 61,000, but to claim that it is simply “because of Fine Gael”, is demonstrably false.
And this is quite apart from the spurious claims of credit for measures like Abhaile (which wasn’t even launched until after the period in question), and the ISI’s removal of its fees (which Fine Gael had no part in).
Furthermore, lowering the number of mortgages in arrears often does not leave people “safer and more secure”. Far from it.
Some of those 60,800 mortgage-holders are no longer counted as being in arrears because they were evicted, declared bankrupt, had their homes repossessed, or because their debts were taken over by a third party.
Indeed, as the chart above shows, primary home repossessions have increased by 68% since June 2013 – from 1,001 to 1,683 in June 2016.
These people, who are among that 60,800, are hardly “safer and more secure” now.
Fine Gael undoubtedly have the figures right. Between June 2013 and June 2016, there was a 42.55% fall in the number of primary home mortgages in arrears. This part of the claim is accurate.
And it appears that the new insolvency arrangements introduced by Alan Shatter in 2012 and 2013, in particular the Insolvency Service of Ireland, have facilitated an increase in insolvency settlements and bankruptcies, and therefore made a contribution to the decline in mortgages in arrears.
But that contribution appears, based on the evidence available, to have been very modest indeed.
And the third component of the tweet, the claim that nearly 61,000 people and families are “safer and more secure because of Fine Gael” is grossly misleading and very much false, as we have shown.
Taken as a whole, we rate the claims in this tweet Mostly FALSE.
As our Reader’s Guide explains, this means: “There is an element of truth in the claim, but it is missing critical details or context”.
TheJournal.ie’s FactCheck is a signatory to the International Fact-Checking Network’s Code of Principles. You can read it here.
For information on how FactCheck works, what the verdicts mean, and how you can take part, check out our Reader’s Guide here.
Should also take the credit for the increase in the amount of people including children who are homeless too
The blueshirt’s commitment to family home evictions is unquestionable.
@Billy Mooney: the ff/fg lust for power puts trump in the shade when it comes to porkies
I’m one of the next in the list for eviction. I tried dealing for four years with the bank and eventually reached an agreement and they took my case off the lists for the court. I have lived by the agreement but they lodged a motion to put my case into the courts again last week. The government have let it’s people down big time. If I lose my home, I’ll be another one less mortgage in arrears .
@jimmy bray..there must be some amount of responsibility on some of those that found themselves homeless. Over borrowing and having children when they can’t afford it, I’d be a lot more worried about hospital waiting lists.
Contact The Hub
@sparky:
There is no spark without a fire. I hope you never lose your job, income, home and family.
Well said it is appalling that in Ireland in 2016 so many people are homeless. It is one of the Government’s biggest failings.
@sparky because the highly paid professional money managers ignored their own internal risk departments to lend 10 times a salary over 35 years as well to the developer. Make no bones about it – the banks are primary reason.
@sparky I hope when you do fall ill and have to visit the hospital you have to take some responsibility for your life choices that put you there
“Verdict: Mostly FALSE” Well colour me surprised….
@Kerry Blake:
False barstadds.
Fine Gael and lies, well i never
Christ, it’s at the stage now where we just have to see ‘factcheck’ and ‘fine gael’ in the same headline and we can pretty much always know the verdict before we click.
Or Noonan and Fact Hunt
@For Connolly: it also got to the stage where most stories re ff/fg government are permanently skewed to make the reader think they are two separate parties, and get this one of them is in opposition, which one, is at best a guess
@For Connolly:
They don’t even bother fact-checking the Shinners because they and we already know the answer.
@Fred Johnson: Are you still up Fred? Go on up now, you need your rest
@Fred Johnson:
Blame anybody but yourselves. SF have never been in government. You have no shame. You deserve the ire of the voter.
Will FG also claim credit for the number of homeless children trebling over the past 2 years?
@Andrew Corcoran: An equal share between Alan Kelly and Phil Hogan
who the hell is friends with or follows fg’s twitter account? or demands a fact check on anything they say at this stage?? hugh?
do some fact check on vulture funds cashing in their chips after todays central bank news
The banks rule government, not the other way around!
It’s actually the frontline staff in the banks on the ground who have reduced mortgage arrears. Incredibly arrogant claim by Fine Gael.
Most people that got into arrears are hard working who got caught in boom house prices and lost their jobs in the crash. They are willing to pay their way so are engaging with the banks if they fall behind and as employment is on the up they are paying back what they owe.
The Tory spin continues unabated.
See what happens when you mix politics and facts?
That 42% better sell them quick before this new bubble bursts again.
Herself cooked a fine stew tonight..if FG could claim credit for that they would….and find some roundabout way of justifying it ” aaaa…? we provided the economic atmosphere to produce the goods that made that fine stew…mmmmmm…????.If it was a FF stew, they would have dropped the plate and if SF were in power you would have no stew…..they would eat it on you ! ” so thank FG for all you have (snore zzzzzzzzz)….. I wouldn’t credit FG or FF with very much over the past 10 years, only the fact that they both BAN-JACKED the country and left all us poor buggers in the s*** !
They helped by giving banks power to repossessions , family’s thrown out.
Is the ‘Journal’ feeling ok???
Oh, right Ted…
No sign of journal reporting of #pedoFiles #pizzagate the biggest news story that has broke this year involving the elite and pedo rings…unbelievable but I’m not suprised given the journals liberal agenda
@Patrick: Could it be The Journal and other media outlets are not reporting on #PizzaGate, for the same reasons they’re not reporting on the nuclear explosion in Glendalough, or Switzerland invading Iran yesterday? Or maybe Donald Trump being tipped as the successor to Gerry Adams and leading Sinn Féin into the next General Election? Do you think, maybe, the same reasons apply?
I can’t believe I have to do this, sigh, anyway, Reddit (which is not part of the liberal agenda or mainstream media Alt-Right Freaks like to harp on about) have deleted the thread on this made up conspiracy theory. And Snopes.com have 100% discredited it, with proof and evidence, here http://www.snopes.com/pizzagate-conspiracy/
Now Patrick, you were saying you’re willing to buy some used toilet roll from me for €500,000 a sheet.
@Joey Westland:
You must have run out of bog roll to want to charge so much. Try the washable or the reversible brands. Will help reduce your overheads and result in a reduction of your bullshoite.
Very misleading it’s down if there’s any down turn to the work of mabs .helping them restructuring and helping them action plans to keep a roof over there heads.fg want to create another property bubble .90percent mortgages no social housing 35percent in people sleeping ruff .increase on this time last yr.crazy .people Need to wake up to the lies the are beginning fed by this government
FG is wrong and false and intentionally and cynically so.
There’s only 1 answer to these types of questions! The question at this stage should be, “how much are they bulls#/ting?
The fact check doesn’t take account of the fact that FG have presided over two governments that have seen a massive reduction in unemployment and a gradual raising of average income. The amount of money people earn is the primary thing that effects their ability to repay any loan not policies and task forces which are designed to work with the toughest of cases only.
I thought they said the central. And was independent
The arrears support units of banks and MABs are to thank. They’re the ones that worked their butts off to close the gap.
Yes of course they should , they back the banks in evicting people from their homes , thus not alone cutting arrears but getting shut of the arrears altogether !
have your say