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Thursday 30 November 2023 Dublin: 3°C
Sam Boal/Photocall Ireland Noonan and Kelly

Big plan to help mortgage holders 'won't have the banks quaking in their boots'

The government has announced a raft of new measures to help people struggling to pay their mortgages.

Updated 5.48pm 

THE COURTS WILL be given powers to review and, where appropriate, to approve insolvency deals banks have vetoed under reforms announced by the government today.

The coalition has announced a number of measures aimed at improving he insolvency process it introduced two years ago after complaints that it was not working as effectively as it could. Nearly 38,000 people are in arrears of two years or more on their home mortgages.

One of the main planks of the new plan is new legislation that will give the courts the power to review and approve insolvency deals that have been rejected by the bank.

The so-called ‘bank veto’ on insolvency deals has been repeatedly criticised by mortgage campaigners and the coalition was repeatedly warned when the original legislation was being passed that it would be problematic.

The coalition has pledged this change will be implemented before the summer recess with it anticipated that it will result in more cases being process successfully through the Insolvency Service of Ireland.

“This reform will provide a better balance between the interest of banks and those facing unsustainable mortgages. It will ensure that personal insolvency legislation can work as it was intended to,” Justice Minister Frances Fitzgerald said.

We would hope that, in fact, cases wouldn’t have to go to court but that this would serve as a strong motivation for everyone to reach a deal without the court process.

However, Fianna Fáil claimed this proposal would not make the bank’s any more fearful about rejecting proposed insolvency arrangements.

“I don’t think the banks will be quaking in their boots at today’s announcement. There is the headline of the veto being removed but we simply don’t know the detail of that,” finance spokesperson Michael McGrath said.

Separately, Fitzgerald has written to the chair of the Oireachtas finance committee, Liam Twomey, asking the committee to examine Labour TD Willie Penrose’s proposal to reduce the bankruptcy period from three years to one.

Cabinet - Morgages. Pictured (LtoR) Mi Sam Boal / Photocall Ireland Fitzgerald, Noonan and Kelly Sam Boal / Photocall Ireland / Photocall Ireland

Environment Minister Alan Kelly said the move “will certainly change relationships between the banks and those who are in debt”.

I think that’s a very positive thing because t will mean banks will have to engage at a level that maybe some of them haven’t been doing previously.

Kelly said that’s what the government “certainly want to see, and demand to see actually”.

Mortgage-to-rent scheme

Another change announced today is the expansion of the mortgage-to-rent scheme which will see the home valuation thresholds increased. Under the scheme, people who cannot pay their mortgages sell their property to a housing association and then rent it back from them

Currently a homeowner is only eligible for the scheme if the property has a current market value of less than €220,000 in the Dublin area or less than €180,000 in the rest of the State. The new valuation thresholds will be reviewed regularly, the government said today.

Kelly said he believes the new measures will make “dramatic improvements” who make the “very difficult decision” oof entering the mortgage-to-rent schemes.

The Government has also agreed to give the Money Advice and Budgeting Service (MABS) a greater role in offering information, advice and assistance to homeowners in arrears. These include providing assistance to those in arrears to identify there best options and completing financial statements.

Finance Minister Minchael Noonan noted that the government can’t adopt a ‘one size fits all’ approach. He said about 2,500 mortgages are restructured each month, and the new measures will add to this.

Fianna Fáil criticism

While Fianna Fáil welcomed the move on the bank veto, McGrath said the government’s announcement is “belated, timid and lacks ambition” and described today’s announcement as “underwhelming”.

McGrath, who has been a strong campaigner on the mortgage arrears issue for may years, reiterated his party’s call for an independent debt resolution office.

“We are now several years into this crisis and on the question of the bank veto, the government initially denied they had any veto, they then said repeatedly in the Dáil that it would be unconstitutional to remove the veto,” he said.

“Now, we’re on the home straight to the next general election, the government has done a dramatic u-turn.”

Fianna Fáil senator Thomas Byrne said he had written to the courts asking them to adjourn all current repossession and insolvency cases until the proposed legislation is brought forward.

- with reporting by Hugh O’Connell

In mortgage arrears? Here’s how the government plans to help

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