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The bailiffs are coming

Ireland's homeowners look set for stomy times as the spectre of repossessions rears its head under Troika pressure, says Lorcan Tiernan.

Mortgagees beware

The ugly head of house repossessions reared its head once again in Ireland recently when the most senior civil servant in the Department of Finance John Moran (himself a lawyer) expressed his view that there had been an “unnaturally low level of repossessions” of houses in the country so far (which begs the question as to what a “natural” level of repossessions actually is).

He went on to express the not altogether shocking opinion that borrowers could not expect this state of affairs to persist indefinitely. Mr Moran’s thesis is quite simple: the current “softly softly” approach by the banks cannot and will not continue. Homeowners should not expect to remain in houses they cannot afford.These views were expressed against the backdrop of loan arrears figures that make for grim reading with some 12% of all residential mortgages in arrears with this figure jumping to one third for buy-to-let mortgages.

 

Repossessions as a last resort?

 

His political masters meanwhile continue to soft soap the public with soothing messages that repossessions would only be used as a last resort. We are told that house repossessions (or evictions), carry with them a particular historical and social resonance that make them particularly repugnant to the Irish public.

Personally I am not so sure that some 90 years after the country gained independence and some 150 years or so since the dark period of the evictions of peasant farmers, this can be true. This is the country after all where a significant percentage of the population cannot name the current Pope; what are the chances of many knowing who Captain Charles Boycott was? Maybe it’s all subliminal…..


In any event, whichever message you choose to take comfort from, what is certain is that the banks are gradually being let off the very tight leash under which they have been held by the Central Bank. For instance, a bank cannot contact an errant borrower more than a certain number of  times in any one month. Neither can a bank issue proceedings until 12 months have lapsed since a borrower first went into arrears.  All of this has combined to buy destitute borrowers breathing space. One can only speculate that our political masters have gauged that the time has now come to start tightening the screws once again.

 

Clever lawyers

 

A fair share of the blame in the dramatic slowdown in repossessions has been placed at the door of an amending piece of legislation introduced in 2009. This purported to modernise some elements of banking practice found in the Registration of Title Act of 1964.  One would have hoped that having had some 50 years to noodle around with the new legislation our law makers might have got it right.

Unfortunately or not (depending on the level of arrears in your mortgage account) a clever lawyer spotted that part of the amending legislation repealed a particularly useful section of the 1964 Act insofar as seeking to enforce a mortgage is concerned, dashed off to the High Court and, in what is now known as the Start Mortgages decision, managed to throw a big spanner in the works. Bailiffs countrywide were reluctantly forced to mothball their battering rams, lock picks etc.

 

The arrival of ‘New Beginnings’

 

The clever lawyer in question belonged to a group styled “New Beginnings” which is a loose grouping of socially aware lawyers (and others) who have been doing much to rehabilitate the reputation of our noble profession. That is not of course their raison d’etre but the rest of the profession can for once try to bask in a bit of the reflected glory. One of the cornerstones of New Beginning’s beliefs is that indebtedness “will not be solved in the courts” which to many lawyers must seem like a very peculiar concept.

Time moves on though and in the year and a half since the Start Mortgages decision speculation is rife that under pressure from our new masters in the Troika, the government has finally got around to preparing legislation to close the loophole. I doubt that the various members of cabinet are queuing up to introduce this particular piece of legislation to the Dail. 

 

 

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