Home repossessions are, unfortunately, a reality in Ireland. Home-owners are faced with the double dilemma of having a mortgage that is not affordable and homes which are in negative equity.
The resounding message to homeowners is to contact your lender at an early stage before your mortgage arrears become an irreversible problem leading you down the road of repossession. Banks and building societies may offer a variety of possible solutions such as an extension of the term, a switch to interest-only repayments; or a moratorium, or a or a reduction in repayments. It is in your and your family’s best interest to be fully aware of your options.
There are two codes of conduct which govern how mortgage lenders should deal with borrowers that find themselves in mortgage arrears. The Financial Regulator’s Code of Conduct on Mortgage Arrears is now compulsory for all mortgage lenders including sub-prime lenders.
In 2009 AIB and Bank of Ireland agreed to a twelve month moratorium on repossessions, when the six month rule was imposed by the Financial Regulator. In February 2010, the Financial Regulator imposed a new rule which means that mortgage lenders have to wait at least twelve months from the date arrears first appear before they can look to repossess a borrower’s primary residence. More recently struggling homeowners can breathe a sigh of relief for a longer period as, under the new Fine Gael / Labour programme, banks and building societies will have to wait two years before they start legal action to repossess a home.
In the U.S. the “Making Home Affordable Program” offers two potential solutions including refinancing mortgage loans and modifying mortgage loans. In England the Mortgage Rescue Scheme and Mortage Support Scheme offer options such as an equity loan enabling mortgage repayments to be reduced or the debt is cleared completely and the applicant pays rent at a level they can afford. Similar schemes in Ireland need to be established so that homeowners who are in difficulty know the possible outcomes available to them in advance of court proceedings.
In February 2010 an “Expert Group on Mortgage Arrears and Personal Debt” was set-up to assist homeowners who are struggling to pay their mortgages. The expert group published an interim report on 5th July 2010, which recommends extensive changes in the area of mortgage arrears and repossessions. It remains to be seen how many of those recommendations will work their way in to the banking and legal system.
As the number of repossessions continues to rise, Lynch and Partners are advising homeowners who are experiencing mortgage difficulties and faced with the devastating possibility of losing their homes.