THE GOVERNMENT IS working on a range of measures to help those in mortgage distress during Covid-19 as well as assisting them to avoid the repossession of their home if matters escalate, the Department of Housing has said.

Sinn Féin housing spokesperson Eoin Ó Broin, however, has warned that an important measure that could be used to tackle repossessions – a non-judicial court for those in mortgage arrears – hasn’t been included in this programme for government.

It comes as Central Bank figures last month showed that there were 64 homes repossessed in the first three months of this year, and fears have been raised that the number of those in mortgage arrears will rise as a result of Covid-19. 

A department spokesperson told TheJournal.ie that Minister for Housing Darragh O’Brien has previously expressed concerns about home owners falling into arrears as a result of Covid-19. 

The spokesperson said that, among a number of supports, a commitment was made in the programme for government to continue funding Abhaile – a support service for borrowers in home mortgage arrears – and the Mortgage to Rent scheme.

Sinn Féin’s Ó Broin, however, said a non-judicial court was originally included in Fine Gael’s last programme for government in 2016, not acted upon over the last government and doesn’t make an appearance in the new programme for government.

“While Fine Gael never implemented that, we really need to seriously look at the best mechanism at solving these problems now,” he said. 

Repossession figures

The number of homes repossessed in Ireland peaked at a high of 1,693 in 2016 according to figures from the Central Bank. This number referred to what are called “principal dwelling homes”, which are simply homes where the owner or owners live in them.

In 2015, there were 1,535 homes repossessed. Of these 1,299 were repossessed by the banks. Digging into the stats further, just under half of these (603) were repossessed on foot of an order while the rest (696) came from homes being voluntarily surrendered or abandoned.

According to the Central Bank statistics, the proportion of homes voluntarily surrendered or abandoned is usually higher. 

In 2018, 628 of the 878 homes were repossessed voluntarily. In 2019, there were 535 homes repossessed in Ireland. Of these, 144 of them were repossessed on foot of an order with the other 391 properties voluntarily surrendered or abandoned.

In the first three months of 2020, there were 64 homes repossessed in Ireland. Statistics aren’t yet available for April, May and June. 

Under Central Bank guidelines, the code of conduct for borrowers states that legal proceedings to repossess a home can only be initiated “where it has made every reasonable effort to agree an alternative payment arrangement” or where “the borrower has been classified as not co-operating”. 

In answer to a recent parliamentary question, Minister for Finance Paschal Donohoe said that “during the legal process, borrowers have opportunities to re-engage with lenders to find a solution” but “in some circumstances loss of ownership may be unavoidable”. 

Solutions

The Department of Housing said Minister O’Brien is aware that Minister Donohoe is reviewing the code of conduct to ensure that sufficient supports are in place for mortgage holders with repayment difficulties.

A spokesperson also said that the department was looking at a number of measures to help people in danger of losing their homes, including the mortgage to rent scheme (MTR) and the Abhaile service.

“The MTR scheme is targeted at those households in arrears whose mortgage is unsustainable and who are eligible for social housing support,” the spokesperson said. “Under the scheme an eligible household with an unsustainable mortgage goes from being a homeowner to becoming a social housing tenant remaining in the family home and paying an affordable rent based on their income.

From 2012 to the end of June 2020, 691 families comprising 1,182 adults and 1,163 children have remained in their homes under the scheme.

A renewed commitment to the scheme was included in the programme for government. The MTR scheme had been reviewed in 2017 and the department said amendments had been made to improve its operation.

Ó Broin, however, told TheJournal.ie that MTR had been a “peripheral scheme” under previous governments and would continue to be so unless it underwent serious reform, with many banks refusing to engage in such cases. 

He said: “The last programme for government had a commitment to a non-judicial court. The idea for it was to be a fair and balanced process. Now, you’ve to deal directly with the banks and the courts.”

He said the current system puts massive strain on lower-income families engaging with this process. 

One reason for low levels of repossession in recent years has been that many of the mortgage holders were in negative equity, according to Ó Broin. But, as the value of properties has risen sharply, a number will have risen into positive equity meaning there’s a greater profit to be made for vulture funds, in particular, who purchase the distressed loans. 

“A non-judicial mortgage resolution would be effective in keeping families in their homes,” he said.