EVER SINCE RECORDS were first begun by the Central Bank, the numbers of those in mortgage arrears has increased quarter by quarter. While families and individuals were being torn apart by the strain of over indebtedness, Government and the Central Bank stood idly by. Their sole contribution to the issue was stating the obvious: that banks were not doing enough. This has been a constant mantra for the past five ears.
Yesterday white smoke – well, grey smoke – appeared from Government Buildings in the form of new restructuring targets to be met by banks. These targets will be overseen at arm’s length, it would appear, by the Central Bank. But this is only applicable for the six banks: AIB, Bank Of Ireland, PTSB, Ulster Bank, ACC and KBC.
Restructuring
They will have to “restructure” 20 per cent of their mortgage arrears book by July this year, and 30 per cent by end of the third quarter this year, with a total of 50 per cent of mortgages in arrears on their books having to be “restructured” by the end of 2013.
The non-prescriptive nature of this type of restructuring of loans is a massive mistake.
In addition, the banks will be given an assurance that the legal lacuna that exists around repossession will be fixed, and they will have strengthened powers against the borrower in the form of being able to quickly define a borrower as being “uncooperative”. Both tools allow the bank deal aggressively with the borrower and repossess their home. No such powers should have been given to the banks until there had been a proven record of dealing with the mortgage crisis.
The problem is that, having done nothing for the past five years, the banks are still in control of the process. Recent history should have shown us that if you allow the banks be in charge then they will do nothing. It is unclear as to the seriousness of the sanction for non-adherence to these targets.
Also it is important to note that many borrowers were preyed upon by subprime lenders and their agents; those lenders are not covered by these “targets”. Nor are the shared housing schemes owned by local authorities.
Banks need supervision, borrowers need protection
Banks need strict supervision, they have crippled us and can’t be allowed run free. Borrowers need protection; they have been left out in the cold and have been left to fend for themselves. Banks, on the other hand, have funding and power. This imbalance needs to be urgently addressed, especially with the uncharted waters ahead – the insolvency process – which will be full of more sharks.
Today, the Government and Central Bank have the banks’ power to stand on, which they have effectively kicked down the street for so long.
Maybe it’s time that all advocates and organisations providing services and advice to mortgage holders should come together and provide services and representation to over indebted mortgage holders.
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.
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