Banks told to give leeway on arrears

A HIGH Court judge has warned banks not to put those in mortgage arrears in a “Catch 22 position” where they are up front about their financial situation but are not given any leeway in attempting to repay their debts.

The warning from Judge Elizabeth Dunne came at a Dublin High Court session where she reluctantly granted repossession orders on seven properties, among them two family homes.

Adjourning one case involving Bank Of Ireland and a couple who had stated they were in severe financial difficultly but were attempting some repayments, Judge Dunne said: “I don’t like to hear these Catch 22 situations when a person is being up front with the bank and they’re not facilitated.”

In the case of a family home in Taoiseach Brian Cowen’s home town of Clara, Co Offaly, €44,000 arrears had mounted on a mortgage that now had an outstanding balance of €258,000. The couple had stated that the woman had lost her job and her partner had his work hours reduced. This year the couple had only been able to make one €700 payment and were consenting to their home’s repossession by Stepstone Mortgages.

Granting the order with a stay of four months, Judge Dunne said “it unfortunately seems the defendants are victims of the current recession and will be unable to turn the corner”.

In another case involving Stepstone Mortgages, a woman had a repossession ordered granted against her home on which she and her partner had been granted a €100,000 mortgage in February 2008 at a rate that rose to 8.19% APR. By June 2008 the repayments had already gone into arrears. These arrears now stand at €14,000 with the loans balance at €104,000.

Stepstone had started proceedings in April 2009 and were sent a letter by the woman informing them of “personal and marriage problems” which were curtailing her ability to repay the loan. In early 2009 it was agreed that she could pay €200 per week to prevent the mortgage provider seeking a possession order. However, Stepstone’s barrister said that this commitment had not been adhered too.

Judge Dunne said the woman’s “situation was getting worse over time not better”. As the case had been before the court on five occasions she would grant the repossession order with a six-month stay on the proviso that if the woman did begin to make the €200 weekly repayments she was at liberty to extent the period of the stay on the order.

Five other repossession orders were granted on “investment properties” and commercial premises. Two of these cases involved Start Mortgages, and the others KBC mortgages, Bank of Ireland and AIB.