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Dublin: 18 °C Friday 1 August, 2014

Column: Four years of crisis, and still no clear deal on mortgage debt

The failings of Government to take simple steps to help mortgage holders has caused further damage – and the Insolvency Bill is by no means our saviour, writes David Hall.

David Hall

MAYBE THE LOW turnout in the children’s referendum is not that surprising. There comes a time when people – having been respectful, patient and tolerant – have to say enough. We as citizens are taking a significant amount of pain for the wrongdoing of banks, bankers and regulators. When a government cannot mobilise its people to vote for child protection , maybe – just maybe – the biggest alarm should go off.

Mortgage holders within the state have been let down by a lack of leadership from both government parties. This was held over us at the last election, but many feel – the electorate having done what was asked of them and given a clear mandate to Fine Gael and Labour – they have let mortgage holders down. When this Government took office and when they promised to assist the thousands of people in mortgage difficulty, the percentage of those in arrears was five per cent. The current percentage is 10.9 per cent. This has been a predictable sum and one which could and should have been dealt with much better. The effect would be to assist both those in difficulty and the economy in general.

Many mortgage holders have not only the challenge of their mortgage debt, but also unsecured debt that is weighing them down and preventing any chance of them dealing effectively with their mortgage debt. Many of the decisions currently being taken by banks are influenced by the number of unsecured creditors one has. A clear and understandable process is needed, to give clarity to mortgage holders as to what real options and solutions exist.

Every so often the Government will announce a new product or initiative aimed at helping mortgage holders. The truth is that they are rubbish. They are laden in bureaucracy, with no clear, coherent plan or application process to achieve the benefit.

Failings

They failed in taking a simple step to help mortgage holders by not beefing up Money Advice and Budgeting Service (MABS). Four years have now passed and still MABS remains attached to the Citizens Information Board. It should be a standalone beacon for those in debt with its own board, with its own CEO and strategic plan, adaptable to the current needs of those in debt. Lets not forget this crisis began four years ago. MABS’ cost to the tax payer is €18 million per year. It’s amazing how such a large question of value for money stares Minister Burton in the face daily.

Those in mortgage difficulty have a dysfunctional system available to assist them. One can call a helpline which is run by the parent company of MABS, call into a MABS office run by one of 52 voluntary boards – of 52 individual limited companies – or go to an accountant after you have poured your financial heart out to your bank. The accountant, for a fee, will translate what the bank is offering you – no advice, just translation. MABS provides an excellent service but that’s because their staff are dedicated and trusted by the public, not because of the leadership shown by the minister or the Citizens Information Board. Only creditors including banks have benefited from this inaction.

Insolvency Bill

Now we are given the Insolvency Bill, which is being promoted as our saviour. Vested interests both politically and professionally will welcome the Bill, but its extremely difficult for debtors to achieve any real protection within the Bill. The banks have a veto and there is no independent oversight of the decisions a bank might make. As a senior figure in the Central Bank has suggested, banks are like teenagers. I say it might not be advisable to leave teenagers in a free house unsupervised.

This Bill will also promote the tiering of debtors, where professional insolvency practitioners will naturally select those who can pay for insolvency services and leave those who cannot to fend for themselves. As currently presented, in order to apply for bankruptcy you will have to jump over more hurdles than there are in an Olympic race track.

There is a need for expert assistance to be available to mortgage holders to ensure their interests are protected in relation to dealing with banks and other creditors. The failure of Government and banks to deal with this crisis has made a difficult situation becoming close to unmanageable. With figures for the third quarter due out soon showing those in arrears the time has come for action.

I with others who feel equally strongly are working through a new organisation the Irish Mortgage Holders Organisation to advocate on behalf of debtors, to work to bring long term solutions and systems  to over indebtedness and to allow this great country move forward.

David Hall was one of the co-founders of New Beginning in 2010. In July 2012, David and other concerned citizens established the Irish Mortgage Holders Organisation (IMHO) to help consumers tackle the increasing burden of personal debt. In addition to IMHO, David owns and runs Lifeline Ambulance Service. David also founded the Make-A-Wish Foundation in 1992.

Read more articles by David Hall here>

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