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Government Forcing Low Income Families to pay more in mortgage protect insurance – Carthy

24 August, 2010

Monaghan County Councillor, Matt Carthy, has accused the government of forcing lower income families to pay more in Mortgage Protection Insurance than others. Families and individuals who avail of local authority house purchase loans for social and affordable housing are compelled to be participate in the ‘Local Authority Mortgage Protection Insurance Scheme’.

However Councillor Carthy has shown that borrowers can easily find alternative cover, providing the same protection, at cheaper rates. The rules laid down by the Department of Environment, Heritage & Local Government will not allow them this option though.

Councillor Carthy says that the government is basically penalising poor people; he said:

“I have been working on this issue for over a year, dealing with a number of constituents who are forced to take out insurance under this scheme. All of them can find alternative cover, providing the same protection, at more competitive rates. As the people who avail of this scheme are generally lower income individuals and families the government is basically penalising poorer people. It is an unfair scheme and needs to be reviewed as a matter of urgency.

“Previously, Monaghan County Council, inadvertently permitted 15 borrowers with Affordable Housing mortgages to opt out of the scheme. All 15 were easily able to secure cheaper insurance that provides the same cover as the compulsory scheme. After much effort and a threat of legal action by me Monaghan County Council has allowed these borrowers to remain outside of the scheme. But, what about their neighbours?”

Councillor Carthy confirmed that he has written to Minister Gormley on this issue asking him to ensure that this scheme is reassessed. “There appears to be no rationale to force borrowers into a more expensive scheme.

“The argument has been presented that the scheme operates on a community rating thereby reducing the payments by older borrowers. The fact, however, is that the vast majority of house purchasers under this scheme are younger individuals and families. Therefore the scheme, as it currently operates, is a failed one which needs to be reformed.” ENDS

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