# Report  Published: Inter-Departmental Working Group on Mortgage Arrears



## Brendan Burgess (12 Oct 2011)

http://www.finance.gov.ie/viewdoc.asp?DocID=7006

*[FONT=&quot]G[/FONT]**[FONT=&quot]uiding principles[/FONT]*[FONT=&quot][/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]T[/FONT][FONT=&quot]hos[/FONT][FONT=&quot]e who can discharge their mortgage obligations must do so[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]T[/FONT][FONT=&quot]here is no entitlement to a particular solution and solutions have consequences[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]T[/FONT][FONT=&quot]he[/FONT][FONT=&quot]re are unsustainable situations and unfortunately it is inevitable that people will   lose their homes;   this needs to be   minimised[/FONT][FONT=&quot][/FONT]
*[FONT=&quot]Develop a range of   practical solutions[/FONT]*[FONT=&quot][/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]A blanket debt forgiveness scheme   is not recommended[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]A range of solutions are recommended. These and others need to be further developed, over   time, by the banks.[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Case by case approach required[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Decision tree approach to facilitate assessment[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]An active housing market will be required for certain solutions to work effectively[/FONT][FONT=&quot][/FONT]
*[FONT=&quot]Curtail mortgage   interest supplement[/FONT]*[FONT=&quot][/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]M[/FONT][FONT=&quot]IS is not an appropriate long term support[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Replace with more   sustainable solution[/FONT][FONT=&quot][/FONT]
*[FONT=&quot]Two State sponsored   mortgage to rent   schemes[/FONT]*[FONT=&quot][/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]–   [/FONT][FONT=&quot]Approved Housing[/FONT]
   [FONT=&quot]Bodies; and[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]–   [/FONT][FONT=&quot]M[/FONT][FONT=&quot]o[/FONT][FONT=&quot]rtgage lender[/FONT]
   [FONT=&quot]l[/FONT][FONT=&quot]easing[/FONT][FONT=&quot][/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]T[/FONT][FONT=&quot]o protect the most distressed mortgage holders with social   housing needs[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]O[/FONT][FONT=&quot]w[/FONT][FONT=&quot]ne[/FONT][FONT=&quot]rship of the house passed   to an Approved Housing Body or the mortgage lender[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Existing owner will   become a social housing tenant and the State, where necessary, will subsidise the rental[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Avoids an unnecessary extension of the social housing list[/FONT][FONT=&quot][/FONT]
*[FONT=&quot]Reform Bankruptcy[/FONT]*[FONT=&quot][/FONT]
*[FONT=&quot]Legislation[/FONT]*[FONT=&quot][/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Central catalyst to the resolution of the mortgage arrears problem[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Early introduction of reformed bankruptcy law and new non-judicial debt settlement   arrangements is vital[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]Implementation of new complex   insolvency provisions   may take time and will require   resources[/FONT][FONT=&quot][/FONT]
*[FONT=&quot]Independent mortgage advice function[/FONT]*[FONT=&quot][/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]T[/FONT][FONT=&quot]o advise and support mortgage holders   in assessing their options[/FONT]
   [FONT=&quot] [/FONT]
[FONT=&quot]■   [/FONT][FONT=&quot]T[/FONT][FONT=&quot]o build trust in the debt resolution process[/FONT][FONT=&quot][/FONT]


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## csirl (12 Oct 2011)

Scanned over the report. Contains a load of references to "avoids unecessary market transactions which impact on prices".

Who decided and what is the basis for classifying something as an "unecessary market transaction"? They have given no rationale as to why selling/buying houses at current market value is bad.


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## ClubMan (12 Oct 2011)

csirl said:


> Contains a load of references to "avoids unecessary market transactions which impact on prices".


Is three "a load"?


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## roystonvasey (12 Oct 2011)

Brendan,

Can I ask about the Keane Report "MIS" points.

Curtail mortgage interest supplement
■ MIS is not an appropriate long term support

■ Replace with more sustainable solution
Two State sponsored mortgage to rent schemes

Does this in effect mean, that they want to phase out the MIS which pays a small amount to assist the homeowner cover their interest payments and they want to to offer the homeowner stay in their home and pay rent - with large rent supplements? 

I don't understand how this will be "better" for the taxpayer when rent supplements can be run over €1000 per month?


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## ajapale (12 Oct 2011)

csirl said:


> Contains a load of references to "avoids unecessary market transactions which impact on prices".
> 
> Who decided and what is the basis for classifying something as an "unecessary market transaction"? They have given no rationale as to why selling/buying houses at current market value is bad.



If this phrase is repeated a number of times one must assume that it was done for some sort of emphasis.

csirl's question is very important Ill repeat it here for emphasis!:

Who decided and what is the basis for classifying something as an  "unecessary market transaction"? 
They have given no rationale as to why  selling/buying houses at current market value is bad.


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## ClubMan (12 Oct 2011)

Document currently unavailable from the _DoF _website:



> *ERROR 404: The file you requested cannot be found.*
> 
> Our site has been redesigned and many documents have new locations.
> 
> Please use the "Search" box above to assist you.


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## Brendan Burgess (12 Oct 2011)

It's working for me?

Try going back a step to

http://www.finance.gov.ie/ViewDoc.asp?fn=/home.asp&m=0


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## ClubMan (12 Oct 2011)

Nope - still not working for me although it worked earlier. Are you sure your copy isn't cached? Anyway - if/when it comes back delete these posts if they are off topic.


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## ClubMan (12 Oct 2011)

Oh - the link from this page doesn't work:

http://www.finance.gov.ie/viewdoc.asp?DocID=7006

but the one from this page does:

http://www.finance.gov.ie/viewdoc.asp?DocID=7008

The _URL_/filename in each case is different so they may have changed the name since the original publication because the link from the _Irish Times _article on this was also working earlier but then broke.


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## Sunny (12 Oct 2011)

I have only scanned it but there doesn't seem to anything controversial in there. Seems a pretty safe document but couldn't find anything that I didn't already know. One interesting thing is that 50% of the arrears to date are in the non-covered institutions despite these banks only making up a third of the mortgage market. 

By the way, why is the group made up of all civil servants and two bankers. Strange mix.


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## csirl (12 Oct 2011)

There is another glaring shortcoming in the report:

In the "Scale of the Problem" section, they say that the rationale for this is that there has been a dramatic rise in arrears over the past 2 years and they have given some data.

There is no data on what the normal level of arrears is in Ireland (based on historic data) or the norm in a developed economy. We have no way of determining whether or not the rate of arrears is actually high or low. A rise over a short term does not mean that it is high - it could have been low to begin with (which would be logical since prior to the crash were were in an era of high employment/salaries).


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## Bronte (14 Oct 2011)

Sunny said:


> Seems a pretty safe document but couldn't find anything that I didn't already know.
> By the way, why is the group made up of all civil servants and two bankers. Strange mix.


 
Why don't they just reform the bankruptcy laws as a starting point.  This report along with others will just lead to more dithering by politicians as each point is endlessly debated.  

Pity the report didn't involve people from Mabs, credit unions, all main banks (or those who have the most percentage problem cases) and credit card companies. 

Personal debt is linked into the reasons why people cannot repay their mortgages.  There was someone on the radio the other day who was paying his mortgage with his credit card.  How mad is that.


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