Lenders under fire as mother cries in court

MORTGAGE lenders were criticised for failing to adequately stress-test borrowers by a High Court judge, as a mother-of-two broke down in tears as she fought to retain possession of her Limerick home.

There was a pattern of cases where borrowers had defaulted almost immediately after being granted loans that raised questions about lenders sufficiently assessing borrowers, said Mr Justice Brian McGovern.

A total of 12 home repossessions were granted yesterday out of 65 cases listed for hearing.

In the case of the mother-of-two, she insisted she would take any work but had been frightened to tell lender Stepstone Mortgages about being unemployed. “I was afraid of my life to tell these people what’s after happening to me,” the qualified secondary school teacher said.

The court heard how the woman and her husband, an unemployed tiler, were facing monthly repayments of €2,300. The couple had refinanced their mortgage with the subprime lender, taking up a loan of €216,000 in 2007.

After working as a beautician and then with a mobile phone company, she had remained unemployed after giving birth to their second child.

But lawyers for Stepstone Mortgages said arrears of over €45,000 were due on the loan and numerous promises of repayment had not been met. The woman, in her mid-30s, said she was scared to update the lender about the couple’s financial situation, especially over concern for her two young children.

The lender also contacted her on New Year’s Eve last demanding money that day or the home in Annacotty, Limerick, would be seized in days, she claimed.

The case was adjourned until February 21 with the woman given one last chance to keep the family home, pending the payment of weekly amounts of €260 as well as one single payment of €1,600 to the lender.

In another case, the judge granted repossession of a couple’s home in Castlefinn, Co Donegal, after documents given to lender Start Mortgages showed the parents were spending €1,000 a month on cigarettes as well as €90 a month on cable television channel fees.

The couple failed to turn up in court and were facing arrears of €32,000 on their €116,000 mortgage.

But the judge was also critical of lenders after a number of cases revealed borrowers defaulting almost immediately after taking on loans. Commenting on one case, Mr Justice McGovern said: “This is another case in which mortgage application offers are made to somebody without any reasonable inquiry being made as to their capacity to repay and that’s why so many of these cases are before the courts.”

One case involving Stepstone had seen a single man who was a painter and decorator taking out a 40-year mortgage of €256,000 and defaulting within just three months.