Homeowners 'furious' at banks for 'profiteering' from defective blocks scandal  

While struggling to finance rent, her mortgage, storage, and a loan, homeowner Donna McDade  said she has faced lack of support from the banking sector, particularly from her bank, Permanent TSB.Picture: Sasko Lazarov/RollingNews.ie

Angry homeowners slammed banks for "profiteering" from the defective blocks scandal, as they are forced to take high interest rate loans to rebuild their crumbling homes.

Government has also fallen short, with serious flaws in the Enhanced Defective Blocks [redress] Scheme which was published this week, they told the Oireachtas.

“No one should be profiting from this humanitarian disaster,” Sarah Shovlin from the Redress Focus Group told the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and the Taoiseach.

Ms Shovlin was told in 2021 that her home had to be demolished due to defective blocks. She notified her mortgage provider, EBS that day to say that her home was contaminated by mica.

But EBS said that ‘normal lending criteria’ applied, and Ms Shovlin was refused a top-up mortgage.

“I would like assurance that all banks will categorise defective block homeowners as ‘vulnerable’," she said. “Normal lending criteria cannot apply to this situation."

She also claimed that the Central Bank has refused to take any action.

Banks need to acknowledge the complexity and difficulty defective concrete block remediation creates and engage in a collaborative manner offering practical and workable solutions. They — the banks — need to be part of the solution on a scheme that does not offer 100% redress. 

The Enhanced Defective Blocks Scheme covers homeowners in Clare, Donegal, Limerick and Mayo whose homes have been damaged by the use of defective blocks, with an overall grant cap of €420,000.

Ms Shovin said that each homeowner needs €42,000 “in their back pocket” to make this scheme work, as payments will be made 10% short of the value requested.

Government is also adding to devastated homeowners problems by continuing to charge taxes on building materials and services, she said.

Banks offer more debt

Donna McDade, whose home was demolished this year, also addressed the committee.

While struggling to finance the build, pay rent, her mortgage, storage, and a loan, she said she has faced lack of support from the banking sector, particularly from her bank, Permanent TSB.

Despite attempts to negotiate with the bank, she said the only solution offered was forbearance, a mortgage break, or a potential loan.

“The offer of a mortgage break would be an additional cost to me and credit, only subject to normal lending criteria.

I ask the committee here today; do you believe that the banks should continue to profit from families who are having to deal with this horrendous situation that is not the fault of the homeowner?

“As we are all aware, this disaster has occurred due to the lack of enforced regulations by Government and government agencies.

“The State retains a 57.4% shareholding in Permanent TSB.” 

Her tracker mortgage interest rate increased, upping her mortgage by almost €300 per month.

“I am currently paying €1,237.22 on a property that no longer exists. Do you consider this to be fair?

“I contacted the European Central Bank and the Central Bank of Ireland and both confirmed that it is at the 'lender's discretion' as to whether or not they 'pass on' interest rate hikes.” 

This is not about not paying the mortgage, but that banks accept that they have a duty of care to vulnerable customers.

"Every request proposed over the last 18 months has been met with indifference, lack of urgency and empathy. This is profiteering and exploitation by the Banking sector, which highlights a blatant disregard for ethical practices and the well-being of customers, as they continue to prioritise their own financial gains over a vulnerable segment of their customers."

Another impacted homeowner, Sean McCabe, said that the Central Bank needs to do more to help beleaguered families whose lives have been devastated by the defective blocks scandal.

Mr McCabe said that Ireland only has three major banks — not a complex, multi-layered banking system — and these three banks should be able to “get around the table” and engage.

“This is our life’s work. Our homes that we’ve worked hard for and are trying to bring up our family in."

He acknowledged that banks were commercial entities but said that Government does get involved when vulnerable groups, like some pensioners, face mortgage shortfalls, and these people are aided.

Fellow impacted homeowner Pat Sharkey said that interventions from the Central Bank fell under its consumer protection remit.

Banks and homeowners’ interests are aligned in restoring the homes to mortgageable conditions, Mr Sharkey said, with about one quarter of housing stock in the Donegal region impacted.

The Redress Focus Group has called for emergency, short-term interim finance with overdraught or 0% bridging type loan facilities and the need for interim funding up to the cap level of the scheme.

An equity release type facility is also needed beyond the €420,000 cap for vulnerable homeowners, they said.

Each lender must develop a bespoke product that allows each homeowner to cover the shortfall of the scheme due to staged payments to allow homeowners to pay tradespeople and finish their property, they said.