Judge warns over home loans

A HIGH COURT judge has warned mortgage holders that the courts have no role to interfere in contracts entered into between consenting parties after one homeowner raised objections about being given a 32-year loan at the age of 48.

Ms Justice Elizabeth Dunne said the courts could not get involved in such cases although she acknowledged that there may be an issue of “unfairness”.

“There may be careless lenders, but there are equally careless borrowers,” the judge remarked.

Ms Justice Dunne made her comments after lawyers for a Dundalk, Co Louth, man had objected to a repossession order being made on his home. They argued that Stepstone Mortgage Funding had given their client a €320,000 loan to be repaid over a 32-year period in April 2008 at an interest rate of 10.5% APR. The court heard the man was 48 years old at the time, which meant he would have just 17 years to go to retirement.

Lawyers for the man pointed out the duration of the loan meant he would be expected to make monthly mortgage repayments of €3,049 for 15 years when his only income would be the state pension.

They also claimed Stepstone had failed to provide their client with a copy of his mortgage file as requested. However, lawyers for Stepstone said the man had failed to honour various arrangements for payments over the past two years and had fallen almost €87,000 into arrears.

Ms Justice Dunne adjourned the case but expressed concern that the arrears were continuing to rise and the total amount owing to Stepstone was likely to exceed the value of the property.

A total of 12 orders for repossession of property on which mortgage-holders had defaulted on repayments and fallen into substantial arrears were granted by the High court yesterday.

In one case, a publican said his trade had suffered dramatically because a nearby access road had been closed for over three years by the council which had resulted in his inability to repay a loan used to buy the pub. He also complained that an issue surrounding a compulsory purchase order had also prevented him from opening the business during the height of the Celtic Tiger.

The man claimed he was unable to obtain any compensation as he could produce no track record for his business.

The court heard the man and his brother now owed Ulster Bank €436,000, despite having repaid €500,000 to date, including a sum of €218,000 in 2007.

The man admitted they were operating the pub without a licence and not paying any tax to the Revenue. Ms Justice Dunne was told there was an offer of €150,000 to buy the premises last year, although he believed its true value was €200,000.

“It will break our hearts to have to sell it,” said the man, who claimed his family had been vintners for three generations. He also stated his only remaining assets were a car and €1,000 in the credit union.

Ms Justice Dunne granted a possession order to Ulster Bank but placed a stay of six months on its execution.

In another case, the judge adjourned an application for repossession of a home where a couple had fallen almost €63,000 into arrears. The court heard the family was paying €650 per month, though the monthly repayment due was €1,762.

However, they believed they would receive €300 per month if successful in their applications for mortgage interest supplement from the HSE. Ms Justice Dunne adjourned the case after being told a decision on such a payment could take five months.