A SHERIFF has called for the setting up of a national debt collection agency as new figures show the soaring numbers of court orders being issued over unpaid debts.
A new breed of debt-ridden borrowers has emerged. These people are facing financial ruin with bailiffs seizing luxury cars and boats rather than just TV sets or small amounts of cash.
Dublin County Sheriff John Fitzpatrick has described high-flying borrowers struggling with housing debt who have threatened to commit suicide when bailiffs come knocking at the door.
Court orders for seizures of property or items lodged against individuals in debt rose by a third last year, according to the sheriff’s office, which was asked to execute the orders.
Orders lodged for the recouping of debt through the office last year were double the level of 2006, during the boom.
The number of debt court orders lodged in recent years notified to the county sheriff’s office was 1,035 (06), 1,388 (07), 1,545 (08) and 2055 (09).
While trucks rarely left the sheriff’s yard during the boom, bailiffs now work flat-out. “This recession is a lot worse than the 1980s. I’ve never seen hardship like it,” said sheriff John Fitzpatrick.
But Mr Fitzpatrick, who has been county sheriff for 31 years, said that while there was nearly one house eviction a day in the last recession, there had only been one in the last two years.
Instead, his office has been trying to arrange deals with debtors rather than kicking them out of their homes and seizing their possessions.
“They [lenders] say if you come up with some sort of a deal, they’ll do it. This makes sense because if they had a load of houses they couldn’t sell, they’d have to spend money on security for the properties,” he explained.
The sheriff’s office plays two leading roles when it comes to the retrieval of debt. It executes court orders seizing, where possible, items of property to pay off loans. Secondly, bailiffs also enforce warrants issued by the Revenue Commissioners for the payment of unpaid tax.
In one recent case in a Dublin pub, sheriff’s staff on foot of a court order arrived and asked the customers to leave as they closed down the bar over a €140,000 debt. The bar owner watched in shock as bailiffs packed up supplies, furniture and equipment into trucks outside. The owner eventually came to a deal and had the property returned.
During the boom, debtors were being chased for a few thousand euro. But the sheriff’s office is now trying to recoup debts for much bigger amounts and, in some cases, tens of millions of euro, explained Mr Fitzpatrick.
“The type of people we’re dealing with has changed. It used to be maybe you were taking a Nissan Micra, or something small. Now what we’ve been taking all the time are Range Rovers. We’ve taken an Aston Martin, a Jaguar, a BMW. So it’s a different ball game.”
One seizure saw staff arrive outside a large Dallas-style estate in north Dublin. Despite attempts to contact the developer who owed €23 million to banks, bailiffs were forced to cut the hinges off his giant garden gates to gain entry to the estate.
Staff seized a Range Rover and a Jaguar, which were then sold at auction.
And while some debtors can offer up their wealthy possessions to keep lenders from taking their home, others are at a loss on how to pay off their debts when the sheriff arrives at their door.
The sheriff added: “The bailiffs have been telling me people are telling them ‘to hell with this, I’m going to throw myself in the canal’. And they’re saying that to the Revenue as well. It’s a big thing. People are under horrendous pressure, you wouldn’t believe it.”
At the sheriff’s auctions in his Finglas warehouse, furniture, computers, cars and farming machinery are some of the seized items sold to recoup money for lenders.
One item seized in 2008 was a luxurious cruiser boat – called Black Magic –valued at €120,000 and belonging to rogue solicitor Thomas Byrne. The boat was seized at its berth in Dún Laoghaire in an effort to repay a debt owed to a foreign bank. It was sold for €70,000. Also seized was a 50-inch Bang & Olufsen plasma screen television valued at over €10,000, which also belonged to the disgraced solicitor.
In recent years Mr Fitzpatrick has also seized racehorses and other animals from other debtors. But the mounting cases of debt, coupled with the logistics of doing deals with debtors, has led to calls for a national debt agency to co-ordinate their work.
Following on from a Law Reform Commission report on debt collection, Mr Fitzpatrick believes it is time such an agency was started.
“They would encourage people to deal with debt. Instead of the sheriff going in and grabbing all your stuff, the agency might say ‘no, let’s arrange payments with these people’.”
Meanwhile, Dublin City Sheriff Brendan Walsh says evictions are also down in his areas and instead of seizing items to recoup debt, his staff are trying to arrange deals with debtors.
All types of groups were trying to recoup costs through his office, including banks seeking their funds, insurance companies and even garages wanting to get paid.
“When we seize property, and we don’t always do, the threat of it is enough for somebody to pull out the cheque book,” he said.
Items seized in his bailiwick to help recoup debts have included cars, televisions and kitchen equipment.
“It’s what you can sell. You’re not going to take a second-hand television set because there’s no warranty with it, and you can’t rip a bath out of a wall. Your job is to get as much money for the person who gives you the warrant.”
Other debt cases overseen by Brendan Walsh and his bailiffs included the seizure of rogue solicitor Michael Lynn’s expensive wine from his Dublin home. Another case saw his staff seize a luxury BMW car from the south Dublin home of developer Paddy Kelly, which was later returned after it emerged it was owned by his wife.
Mr Walsh also believes there is a need for a national debt collection agency as well as a need to reform the bankruptcy laws.
‘At times there was no oil in the house’
THIS Christmas will be painfully difficult for Brendan Collins, his wife and their three young girls. It will be the last one spent in their north Dublin home where the two youngest girls, their twins, were born.
Faced with mounting arrears on their mortgage, the family had their three-bed home repossessed recently and now have just a matter of months to find a new roof over their heads.
Despite both working flat out as taxi drivers, he and his wife Sandra were unable to keep up with their mortgage payments on their €210,000 loan with a sub-prime lender.
Their fight for what was their dream home came to an end last month in the High Court, when lender Stepstone Mortgages was granted repossession of their terraced house in Portrane, north Dublin.
After a collapse in earnings for drivers in the taxi industry in recent years, their bills and mortgage arrears had begun rising, explained Mr Collins.
“It was falling apart. There were times when there was no oil in the house. Three kids and no heating. There was nowhere to get the money. The kids were well looked after but there was no roast beef dinners on a Sunday. That was gone. I started to get stressed about the mortgage and then it got to a stage where I couldn’t deal with them [the lender] anymore.” Mr Collins said the family began receiving constant calls from the lender demanding payments.
The Dublin couple originally secured a mortgage of IR£145,000 (€184,000) from a main street bank for their home in 2001.
But they moved the loan onto Stepstone Mortgages in 2007, managing to borrow extra funds on the back of an increased value of the home.
“We got rid of some extra bills with the extra cash,” explained Mr Collins.
Both working as taxi drivers, the couple began to struggle to meet their €1,500 monthly repayments.
“There was a downturn in the industry. Too many licences were issued. PAYE workers, people who already had jobs, were becoming drivers – taking away business,” the 35-year-old said.
The parents, who have twin daughters aged nine and another aged 13, told the High Court last month they were facing arrears of €12,000 on their mortgage.
The court granted a repossession of their home with a stay of six months. The Dublin family have until April to find a new home.
Mr Collins said their best option now was going to be qualifying for local authority housing with Fingal County Council.
‘We sold it earlier this year and gave it all to the lender. We’re broke’
A WATERFORD couple with a special needs teenager who had their home repossessed have described the trauma and hardship of having to give up their property and move into rented housing.
The family were forced to sell their house – which was adapted for their special needs son – for €132,000 less than they paid for it in order to pay off their lender who was threatening to enforce the granted repossession order.
The unemployed couple say they are now struggling to make ends meet after getting no money at all from the forced sale of their home.
The family gained national sympathy last year when the High Court granted lender Stepstone Mortgages repossession of their house.
The mother, Mary (not her real name), said at the time she had been to “hell and back” trying to cope with negotiations with the lender and the mortgage repayments.
Speaking yesterday, the mother of the special needs teenager revealed that the family – under the threat of repossession – had sold their Waterford house for €208,000.
The couple had originally paid €340,000 for the home in 2008, using their own savings as well as a €277,000 mortgage agreed on a near 11% annual interest rate with lender Stepstone Mortgages.
“We sold it earlier this year and gave it all to the lender. We’re renting now through the council in local authority housing. It’s grand. We can’t complain, we have a roof over our heads. It’s still not the same though as living in our own home. It’s the unpredictability of living in rented accommodation. You lose your stability and you lose your home and then you go into rented [accommodation] and a new set of emotions come with that,” Mary said.
The family’s plight was raised in the Dáil last year after the High Court ordered the repossession, despite the couple offering to repay €800 a month from their welfare payments to Stepstone.
The couple were let go at Waterford Crystal in 2008 but struggled to meet their mortgage repayments of €1,900 a month for their home. Arrears of nearly €40,000 had also mounted up, the court heard.
The parents have, with the help of councillors, secured a three-bed local authority house a short distance from their original home.
But the couple must still put €87 a week towards the rent from their combined €400 monthly welfare payments.
Stepstone Mortgages have also agreed not to chase the family for the remaining debt, much to the relief of the parents.
After getting nothing from the sale of their home and barely surviving on welfare payments while caring for their special needs son, the family must struggle on.
Mary added: “It certainly makes a difference when you have a bit of support from councillors. I hope now as time goes on that some type of accommodation can come up that we can call our own. It’s great to be in somewhere debt-free with all that put behind you. But then you also get a sense of worry We’re broke and essentially living on fresh air.”
Renting back house option being looked at
DEBT-ridden mortgage holders whose homes are repossessed could be allowed stay in their properties by paying rent to lenders under a state-subsided scheme to be recommended to the Finance Minister.
Instead of handing over the keys to their front door, struggling borrowers would be assisted with social housing support.
The proposal from the Government-appointed expert group on mortgage arrears and personal debt would see local authorities assess repossessed households or those facing repossession.
A report by the group, expected to be published this week, looks at options for troubled mortgage holders through social housing. One option which will be suggested to different government departments is that homeowners whose properties are seized by lenders should be allowed stay on, at least for a temporary period.
Lenders who repossess the property would be paid a supplement, allowing the original homeowner to remain in the property.
The radical proposal, which remains to be fully worked out, would include the repossessed borrower being subsidised.
“This could be better for the state in terms of the long term costs to society. It allows them [a family] stay near a school. But the mechanism of how it would work still needs to be ironed out,” said a finance source familiar with the report.
The Department of Environment is expected to be asked to examine the recommendation, with the possibility that some sort of housing subsidy could be paid to allow the measure.
The expert group is also expected to say that lenders should be more accommodating when homes are repossessed or voluntarily given up and to allow troubled borrowers sufficient time to move out or look for local authority housing.
Both recommendations are expected to be put to the Department of Environment, which coordinates social housing and local authorities.
Figures set to be released by the expert group will also show that the number of borrowers who have renegotiated their mortgage has risen by 50% in recent months.
Up to 45,000 have sought payment holidays; agreed interest only payments for a period; or changed the term of the mortgage.
The expert group includes financial regulator, Matthew Elderfield; banking representatives; economists and department officials.
The group’s report is not expected to suggest that the ‘warehousing’ of mortgage debt or that a large-scale debt forgiveness scheme, similar to that operated in the United States, be considered.
How opposition parties plan to tackle our mounting mortgage crisis
AS the Government awaits answers from their expert group on the mortgage debt crisis, opposition politicians are at odds over what can be done. It’s not just about helping the tens of thousands in arrears but also the potential home buyers, waiting anxiously in the wings to take the plunge into a collapsed property market.
Fine Gael have their sights set on a homeowners’ support scheme that would see a write-down of loans. Labour want a state-funded scheme to guarantee mortgages while Sinn Féin say money being poured into the banks should instead go directly to troubled borrowers.
Economists estimate 100,000 home owners are now in crises. Labour’s proposals to deal with the problem are advanced. The party’s Principle Residence Ownership Plan (PROP), a state-backed mortgage scheme, pledges to stop future excessive lending and offer a lifeline for borrowers in trouble.
Applicants for a PROP mortgage would apply and their credit and employment history would be checked. If accepted, buyers would pick a home within a set price range and do business as normal with a lender. Lenders would be pre-approved, ruling out any risky loans being given out. Approved buyers would then pay insurance premiums, valued by Labour at around €60 a month for an average priced home, which go towards backing some of the state’s guarantee.
The idea seems simple on paper, but some warn of a huge risk faced by the state. Labour’s housing spokesman Ciarán Lynch says if borrowers in the long term did not keep up payments after amounts were temporarily covered, the state could take equity in homes.
Fine Gael says its plans are based on a motion they failed to add to NAMA’s legislation. This would see NAMA taking a large share in the value of a borrower’s home after negotiating a write-down of the outstanding debt with the lender.
The borrower would then continue to pay off a reduced debt and ultimately the owner could buy back the equity from NAMA. But if the property was sold, NAMA would receive its share of the sale.
Terence Flanagan, housing spokesman, said the scheme would allow some social benefit to be seen to flow from NAMA. But he admitted with even more rising negative equity, a more radical scheme may now need to drafted.
For Sinn Féin’s Áengus O Snodaigh, the solution is simple.
Stop pouring billions into the collapsed banks and support borrowers in difficulty. The party also believes the costs of mortgages should be brought more into line with today’s value of a home.
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