Unemployed face 12-month wait for mortgage aid

Newly unemployed people will have to wait at least 12 months before they can claim the mortgage interest supplement from the State.

Under the scheme as it previously operated, unemployed mortgage holders who met the criteria had all or part of their mortgage interest paid by the Department of Social Welfare for a year after they lost their job.

However, under new rules, hard-pressed mortgage holders will first have to approach their banks or building society and negotiate a restructuring of their mortgage. The restructuring plan will have to be in place for 12 months before they can even apply to the Department of Social Welfare for the mortgage interest supplement.

About 18,000 people are in receipt of the mortgage interest supplement, an increase of 340% since 2007. This year, the State will spend over €50m on the payment.

Free Legal Aid Centres (Flac) fear the changes could mean the newly unemployed would be left without any state help for as much as 18 months after they lose their job, as it can take months to negotiate a restructuring with the banks. This restructuring must then be in place for 12 months before the borrower can consider approaching the department for the mortgage interest supplement. It could take months before a department official decides if the person is entitled to mortgage relief.

Flac has warned that the changes have been rushed through and could add to customers’ arrears problems as it will reduce their ability to make repayments to the banks. The organisation also warned it “places great faith in the lender” to reach a fair and equitable restructuring.

Fianna Fáil leader Micheál Martin lambasted the move, describing it as “the phasing out and cutting of mortgage interest supplement, which is the most practical scheme that helps low-income families to avail of state support to keep the banks at bay.”

Social Protection Minister Joan Burton argued earlier this month that the regulation will ensure eligibility for mortgage interest supplement reflects forbearance arrangements set out in the bank’s code of conduct on mortgage arrears.

In response to Mr Martin’s criticisms, Taoiseach Enda Kenny said: “It is an incentive for banks to sit down with their borrowers to work out solutions with people getting into mortgage arrears. It is the banks who get this money. This year it will cost about €50m.”