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Column: The family home needs to be protected in a debt crisis

The banks are not looking at the long-term resolutions strategies for homeowners in debt; the only available strategies are limited to those that that suit bank recovery, writes Julie Sadlier.

Julie Sadlier

AT PHOENIX PROJECT Ireland we see lots of people who are really worried about their family home. They are people who up to now have paid their bills and ran their own financial affairs, businesses, and lives very well and have been totally compliant with lenders and Revenue.

They have been gutted by the unexpected and unregulated financial crash. They have been working for the last five years to try and sort things out using savings and everything they can to try and get themselves back on track. They are having difficulty getting any engagement with banks. Nobody is getting a meaningful resolution – even now with the Central Bank targets there are still no long term or meaningful resolutions out there for people.

All bank offers we see pursuant to Central Bank Mortgage Arrears Targets Mar 2013 are short-term only. All people we see say they cannot get on with their personal or economic lives without more permanent resolution so this ongoing approach cannot be good for the economy generally.

Unsustainable mortgages

The biggest problem that Phoenix sees is that most people are in serious difficulty with the mortgages they have on their family homes; their current mortgages are unsustainable by the pattern of non-transparent banking standards we see being applied. The banks are not looking at their individual cases or looking at long-term resolutions strategies for these homeowner, as banks’ available strategies are limited to those that that suit bank recovery.

From what we see from our many clients’ experiences across all banks and varied personal circumstances, the ongoing narrative is that these cases can only be resolved on a case-by-case basis is being operated within confines suitable to complex bank reporting processes – with little or no concern for the families involved.

A lot of people we see are in the 45 plus age bracket and some of these have lost what were previously very good jobs or businesses. As a result of this they cannot make the repayments they were making before as everything has changed. They are pessimistic about re-employment or ever being able to generate pre crash incomes again.

However, if they lose their family home they lose stability in their lives. They are terrified of this as many of them have dependant families. It is well known that family home stability is a key ingredient of stability in society; history has shown this many times.

No plans or system for what’s next for these people

There is no system in place in the country to deal with the number of people that we believe will be rendered homeless (and without livelihoods) by this situation because there is no survey done on the numbers. We know that this is a very high number. At this point we believe at least one in every five family homeowners are in severe unsustainable difficulty with their home mortgage and it could be more. We understand that in the US there are many cases of banks selling big job lots of repossessed homes to investors at rock bottom prices and the investors then rent them back to repossessed homeowners, (still carrying huge shortfall debt) or housing agencies.

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At present banks are telling “unsustainable” customers to contact their local housing authority but most of them do not qualify for social housing at the time of repossession or surrender. The much heralded Mortgage to Rent scheme is not working for the vast majority as it is ill-defined and its criteria for operation are far too narrow to deal with the real problem.

There is no central point for these people to seek comfort, advice or just acknowledge their devastating predicament and deal with the shame and embarrassment they feel.

Julie Sadlier is a solicitor with the Phoenix Project. The Phoenix Project provide free advice and assistance to people who are encountering legal, financial and emotional difficulties arising from debt. Helpline: 1850 20 30 40, email: support@phoenixproject.ie

TheJournal.ie is interested to hear if you have had dealings with debt. If you’d like to share, tell us about your experiences and what supports you have encountered in the comments section below

About the author:

Julie Sadlier

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