Paul Joyce: Mortgage arrears have been ignored but not solved
Housing, homelessness, and healthcare have justifiably dominated the election so far. But one aspect of the housing crisis, however, that has received little attention is the persistent problem of mortgage arrears on family homes and the threat of an increase in the level of repossession it poses.
The Central Bank last week released the latest quarterly set of mortgage arrears figures, for last year’s third quarter.
The figures show the number of mortgage accounts on family homes in arrears for over two years remains stubbornly high at almost 28,000, unchanged from a year earlier even though the overall number of accounts in arrears has been generally falling.
Around half of the long-term loans in arrears are now owned by the so-called non-bank entities, as the loans have been offloaded by the banks to credit-servicing firms operating on behalf of vulture funds.
There are now even instances where loans already sold have been sold on a second time, with the only right for mortgage borrowers is to be informed of the sale.
But who are the borrowers and what is their situation?
Regrettably, the Central Bank provides little further information, although it is clear that it could, since it regulates the banks and credit servicing firms in the first place. No data is published, for example, on how long the accounts have been in arrears beyond the two-year threshold.
My view is that a substantial number are credit-boom mortgages taken out to buy overpriced properties. These loans became unaffordable after the bust and have been in arrears for the guts of a decade.
There are some who still believe that lack of desire to pay is the principal problem, but even the Central Bank does not endorse this view, as a research paper published in 2018 suggests.
It is likely that engagement levels by households in arrears with banks have increased, helped by advisers Mabs and the Abhaile scheme. However, this does not seem to have impacted on the numbers.
A clue may lie in the research that people in long-term arrears were significantly more likely to receive short-term restructure arrangements compared with people in earlier stages of arrears.
Most observers of the courts agree that many cases that have been in the system for a substantial time are being adjourned regularly without a final resolution. On an optimistic note, the number of new repossession cases in the courts seems to be declining. This supports the view that this is largely a legacy problem.
Significant amendments to the land and conveyancing law reform legislation in August 2019 oblige the Circuit Court to consider six specific factors before deciding whether or not to grant a Possession Order on a family home.
These factors include the circumstances of the borrower, the engagement on arrears, the offers made and the conduct of the parties. The changes provide a potential way of avoiding an increase in evictions.
However, two things are currently lacking: Clear procedures on how the rules will operate, as well as access to full legal representation for all borrowers facing hearings before a judge.
On this subject, the Free Legal Advice Centres is also asking all candidates in the election to sign a pledge to commit to a root and branch review of civil legal aid.
When you meet the candidates in your constituency, please ask how they intend to solve the problem of persistent mortgage arrears.
Someone in their home near you may be depending on it.
