The floodgates will open for the repossession of family homes because of increased powers given to banks, Fianna Fáil warned as it predicted 23,000 properties will be seized.
New rules setting out targets for banks to engage with distressed mortgage holders will “exacerbate” the imbalance in their relationship with borrowers, the party leader, according to Micheál Martin.
“The momentum now is towards repossession,” he said, referring to a new code of conduct for banks to engage with customers, and planned legislation allowing banks to begin repossessions.
Mr Martin said 23,500 mortgages were in arrears of over two years and “it seems that is very similar to the kind of targets the banks have been given”.
He said: “That 23,500 are clearly in the firing line for repossessions.”
However, Finance Minister Michael Noonan said repossession would only take place “in extremis” and the Government does not consider that there will be a “significant number” of homes taken from families.
During Dáil leaders’ questions, he said that, since 2009, there have been no compulsory repossessions and “the statistics you see are of people handing back the keys or agreeing by arrangement to surrender homes”.
The minister said that if the current level of repossessions was zero then “if there is only one repossession in the next year that is a big increase on the current position”.
Mr Noonan said the Central Bank would provide independent oversight of the agreements, but Mr Martin responded that it would “tip the balance” in favour of banks, and not mortgage holders.
Sinn Féin’s spokesman on finance, Pearse Doherty, said there were 185,000 families “waiting for an immediate solution not some long-fingering that left it up to the banks to decide how best to resolve their mortgages”.
Mr Noonan said that while “there are people who would like if we announced some kind of discount, that is not going to happen”.
He said: “There is a section of people where writedown is the only solution. However, it will have to be done on a case-by-case basis.”
“There will not be any kind of across-the-board writedown for people who can pay but who are not paying. It will be on a case-by-case basis and this is the way it will be adjudicated.”
Bank representatives admitted there would be an increase in the rate of repossessions but said it was impossible to say by what level until they started engaging with mortgage holders.
Felix O’Regan, of the Irish Banking Federation, said: “Is there going to be uplift in the level of repossessions? The answer is most likely Yes. Is there going to be a huge uplift in the level of repossessions? the most likely answer is no.”
He dismissed fears that banks would be able to “hound” customers under the new code of conduct, which lifts the limits on the number of times they can make contact.
But customers who have been putting the problem on the long finger will no longer be able to do so.
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