Budget 2013 Dealing with mortgage distress
Dealing with mortgage distress
The mortgage crisis is getting worse. Since the Central Bank started to collect statistics on Mortgage Distress in 2009, the number of distressed mortgages has risen every single quarter. In August the Bank said that households in distress, counting those in arrears and those who’ve had restructures, amounted to 160,000. More troubling is that the rate of increase is also accelerating. Despite clear commitments to tackle this issue in the Programme for Government there is no evidence that the government is doing anything meaningful to address the growing number of unsustainable mortgages. It is now a year since the government published the Keane Report into the mortgage crisis. The report’s recommendations were limited and very few of them have been implemented.
The impact of the mortgage crisis on families and on the domestic economy is substantial. Failure to tackle the crisis will make matters worse, not only for mortgage holders and the economy, but also for the banks.
The long-delayed Personal Insolvency legislation gives a veto to the banks and will do nothing for the vast majority of homeowners in mortgage distress. Left to their own devices banks will not do what is required to assist mortgage holders to make their mortgages sustainable and remain in the family home. Only an independent body with the power to enforce legally binding mortgage resolution agreements will be able to do this.
Banks cannot be allowed to hold a veto over the mortgage resolution process. The government and the Central Bank must take a more proactive role. Forbearance on the scale currently being practiced will only make matters worse and end up costing society more in the long run.
Sinn Féin proposals:
- Introduce legislation that gives the Central Bank Governor the power to cap interest rates in stateowned banks and ensure they pass on interest rate reductions from the ECB
- Ensure all Budget-related decisions regarding mortgages are passed on immediately by banks
- Explore further options of assisting those in mortgage distress, including increased financial assistance through mortgage relief/supplement
- Establish an independent statutory distressed mortgage resolution process that can reach a legally binding resolution of mortgage distress on a case-by-case basis. This would protect the family home through a variety of measures including write-downs, shared equity and transferring tenure type to social renting. It would also enable those unable to remain in the family home to downsize or transfer to more sustainable mortgage arrangements via short sales or property/mortgage swaps. The measure would protect the taxpayer by ensuring that mortgage lenders and inter-bank commercial lenders share a portion of the burden involved in the problem of mortgage distress