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Banks move on homeowners


Banks move on homeowners

Unprecedented number of repossession actions in Mayo

Áine Ryan

Banks moved on over 50 Mayo property-owners who were before last week’s sitting of the County Registrar’s Court about difficulties relating to mortgages and other loans.
An unprecedented 56 cases – the majority of which were in the early stages of litigation involving Civil Bills for repossession – were processed by Mr Fintan Murphy, the County Registrar. This time last year there were only about two such cases before the same court.
One young couple with a small baby told the court that they were served with notice of the proceedings even though they were just tenants of a property. They expressed relief that they would not have to move house before Christmas. Another couple before the court explained that they would not be able to maintain their mortgage because their marriage had broken down.
The sudden upsurge in repossession proceedings relates to the passing of the Land and Conveyancing Law Reform Bill earlier this year, which some experts say effectively gives the banks a government charter to repossess family homes.  
While this is clearly a very stressful experience for homeowners, the President of the Circuit Court has implemented a practise directive, known as Protocol 11, which affords people a reasonable time-span to engage with their banks after the process starts. The majority of cases before Mr Murphy last week were adjourned to afford people more time to address matters or negotiate with the banks.
A legal source told The Mayo News that if people who are in mortgage arrears and before the courts, make contact with their banks at an early stage, satisfactory negotiations will still be possible. However, if they ignore the written warnings, the sheriff could be at their doors within eight to 12 months.
Notwithstanding this, it is widely expected that thousands of writs by banks will swamp the courts in the coming months. Even if 40 percent of the cases are settled by homeowners ‘throwing in the towel’ at an early stage, the entire system will be clogged by such cases, legal sources say.
Speaking to The Mayo News, Mr Michael Joe McGreal, Principal with Barclay and Lloyds, a leading debt-mediation company in the west, confirmed that ‘writs are being written left, right and centre’ since the new legislation (see below) was enacted.
“Of course it is very distressing for people. Many of them are in their 50s and 60s and are now in financial trouble because they refinanced their houses to educate their families or pay a deposit on a new house for their adult children,” Mr McGreal said.
He also said that here in the west, 90 percent of debtors who are now in trouble with repayments are, or were, self-employed.
“These people – shopkeepers, builders, businesspeople – are hit every way, as they cannot get social welfare,” he said.  
McGreal said that ‘short of write-downs’ there was no immediate solution to the looming crisis.
“If you have a mortgage for €180,000, the market value for the house is probably €60,000 now. A person aged 25 could be paying that off for the rest of their lives,” Michael Joe McGreal continued.
He suggested that an obvious alternative resolution was for the banks to write off one-third of the shortfall of the debt (ie the difference between the current value and the debt) over ten years; the Government to pay off another one-third, since it had already extracted a plethora of payments (Stamp Duty, Capital Gains Tax, PAYE, VAT etc) from the debtor; and, finally, for the house-owner to pay one-third.

New Legislation
LEGISLATION to address a gap in the law resulting in the suspension of home repossessions was passed in the Dáil in early July. It addressed a legal loophole in a bill enacted in 2009.
Reportedly, the Troika put pressure on the State to tackle the loophole, which impeded lenders from foreclosing on loans taken out before 2009. Before December 2009 lenders used a 1964 law to repossess homes. This was repealed and replaced in 2009, but due to a drafting oversight, the law applied only to loans taken out after December 1, 2009. More precisely, Ms Justice Elizabeth Dunne ruled that a lending institution could not apply for an order for possession where a mortgage was created before December 1, 2009, but a demand for full payment was not made until after that.

County Registrar’s Court
THE County Registrar’s Court sits in Mayo once a month and is an administrative court managing the process for cases that come before the civil and family law courts.