Mortgage rights campaigner slams legal move

The Government’s removal of legal barriers to home repossessions has been strongly criticised by a leading mortgage rights campaigner.

Justice Minister Alan Shatter has closed a legal loophole, known as the Dunne judgment, which made it very difficult for banks to repossess homes.

“What this bill will do is to restore the law that has existed over the centuries which enables a lending institution to rely on its security in relation to a mortgage,” he said.

It does nothing other than restore the position intended by the Oireachtas when enacting the 2009 Act.”

Home repossessions have been running at very low levels because of the Dunne judgment.

Irish Mortgage Holders Association director David Hall says the Government should not have fixed the loophole because it will enable banks to accelerate the repossession process without offering distressed mortgage-holders solutions that would allow them keep the family home.

On Mar 13 the Central Bank issued a code of conduct for six domestic institutions — AIB, Bank of Ireland, Permanent TSB, Ulster Bank, KBC, and EBS — to deal with mortgage arrears. Under this code, banks are required to offer customers a suite of options to enable them solve their arrears problem.

“But this code does not cover the subprime lenders or the foreign-owned banks exiting the market,” said Mr Hall.

“These account for between 25% to 30% of mortgages and they are not offering any solutions to customers. They just want to go straight to repossessions and the change in the current loophole will allow them do that.”

He said urgent measures needed to be introduced to protect mortgage holders.

Home repossessions are set to become a politically explosive issue over the next few years as the banks tackle the mortgage arrears crisis.

When the Government launched the latest Central Bank initiative, it acknowledged that the level of repossessions would have to increase. However, both Taoiseach Enda Kenny and Finance Minister Michael Noonan urged the banks to ensure all efforts were made to keep distressed mortgage customers in the family home.

Mr Shatter said he had obtained approval from the Government to include in the bill a provision which would allow a court to adjourn repossession proceedings to see whether a Personal Insolvency Arrangement would be a more appropriate course of action.