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Mortgage arrears problem still acute

May 22nd, 2015 9:45 AM

By Southern Star Team

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Southern Star May 23 2015

NEW measures announced by the government to help people struggling with mortgage arrears are welcome, as this is one issue that had not been getting the priority it should have received. It was felt all along that the banks – which were bailed out with taxpayers’ money – had too much of a power of veto over insolvency deals.

By agreeing to give the courts power to review and – obviously only where deemed appropriate – approve arrangements that had been rejected by banks should level the playing field somewhat. The government has promised to legislate to give effect to this before the end of the summer with a view to seeing more cases brought to mutually fair and sustainable resolutions through the personal insolvency framework.

However, the overall problem of mortgage arrears remains acute and the Insolvency Service of Ireland (ISI) – which incidentally does not charge fees for its services – says that the number of people seeking its help is still growing, with a further increase in the first quarter of this year. This is because the vexed mortgage arrears problem was long-fingered by the government for most of its term of office and it is only now, in its final year, that it is beginning to show some urgency about tackling it after people affected have had to endure several years of extra unnecessary distress.

The greater role now proposed for agencies such as the Money Advice and Budgeting Service (Mabs) in offering information, advice and assistance to borrowers in arrears could have been offered a lot sooner as they were always well-placed to ensure that borrowers have access to information on the range of supports and options available and could advise them on which solution would best suit their circumstances. It is good to note that the Mortgage-to-Rent scheme is to be expanded by increasing the applicable property value thresholds, but it needs to be streamlined more.

Even though Fianna Fáil Finance spokesman Michael McGrath described the new set of measures as ‘timid and lacking ambition following four years of indifference on the subject,’ it is better late than never that something more is done about addressing the mortgage arrears problem. He did, however, make the valid point that the banks have to recognise that, in some cases, the debt is irretrievable and they will have to write off a proportion of it.

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