Mortgage arrears - This time social needs must prevail

It is hard to think of a point where our social ambitions and economic obligations are in greater conflict with our idea of what a decent society should be than the escalating difficulties around unpaid mortgages held on family homes.

Unfortunately, social aspirations and banking imperatives are too often diametrically opposed and struggling families who want to do no more than keep a roof over their heads are the meat in the sandwich.

Yesterday morning, Central Bank governor Patrick Honohan returned, for the second time this week, to this theme and publicly criticised banks for being “behind the curve” on the issue. He also said that the Central Bank will be “ramping up” its contact with those institutions. He recognised that some repossessions are unavoidable for many investment properties but he also suggested that some leeway will have to be found for those doing their best to maintain repayments.

Mr Honohan, or indeed the troika, cannot be accused of not letting the banks know what is required, so a more forceful intervention may be imminent. Everyone involved, especially those who might wish to be re-elected in a year or two, must be worried that any relief scheme will open a Pandora’s box.

This issue does not always show us at our best and sometimes, regrettably, hard positions are taken, not least by those lucky enough to be in a position to clear debt and feel able to decry the “recklessness” of those obliged to find a family home at the very apex of our property madness.

The suggestion that a resolution can be found only by case-by-case analysis seems a recipe for stasis posing as action. It may be that mortgage holders will have to be divided into fairly broad categories and be dealt with in a standard way depending on which one they find themselves in. This, however, would require a degree of honesty not always apparent in our dealings with the State. A simple way to outflank this regrettable tendency would be to make it obligatory for anyone hoping to benefit from a relief scheme to accept that misrepresentation would lead to immediate, uncontestable foreclosure on the property in question.

Central Bank figures last December showed that more than one in 10 mortgage holders were in arrears of three months. Some 26,770 — 17.9% — of buy-to-let mortgages were in arrears of more than 90 days at the end of September. This growing problem, exacerbated by unsustainable personal debt, will have to be dealt with sooner or later.

However, one overriding principle must inform any proposals made to resolve the crisis: Families who cannot pay mortgages that were once manageable but are now impossible have to be secure in the knowledge that they will not be made destitute. There must also be a hard-nosed definition of impossible. Investment properties, except in the most exceptional circumstances, may be treated differently.

At nearly every point along the road since our 2008 collapse the needs of banks and those who invest in them have been given priority. On the issue of family homes that must change and social obligations must prevail. If we are to earn the right to call ourselves a society then this line in the sand cannot be crossed.