# FLAC report on mortgages in arrears over 90 days



## Brendan Burgess (16 Jan 2015)

FLAC issued a very long report yesterday on mortgages in arrears over 90 days.

"It assesses the success - or otherwise of state and lender efforts to resolve difficult mortgage arrears cases without resort to repossession. Our overall conclusion is that these efforts are broadly failing and that there is likely to be a substantial spike in repossessions unless far more radical action is taken"
and
" the inevitable conclusion that the more difficult cases are not being resolved."

This is a similar conclusion to a radio interview between David Hall on RTE recently. He was asked whether it was the lenders or the Central Bank who were failing to resolve the arrears crisis. And his answer was, predictably, "Both"

They completely ignore the fact that around 20% of people in arrears have not submitted an SFS. They are refusing to engage with the lender. There is absolutely nothing which the lender can do in these cases except issue legal proceedings.

For those who do engage, the lender is able to offer a fair restructuring to around 80% to 90% of them.  

Around 20% of these mortgages in arrears are simply not sustainable and voluntary surrender/repossession is the only option. These include many people who bought houses way beyond their needs and means who can no longer afford the repayments.  They are often in positive equity. They need to sell the house and live in accommodation which they can afford.  

*The main recommendation of the report: *

"If the government is serious that its core policy objective in this area is to avoid repossessions of family homes, it should step in and set up an independent authority to assess the viability of mortgages in arrears and this authority must have the powers, where required,  to impose solutions on lenders that may involve compulsory write-down"

I wouldn't have a problem with this as long as it worked both ways.  The lender should be able to initiate an approach to this independent authority as well. If the independent authority deems to mortgage to be unsustainable, then it should result in a repossession order effective within 3 months.  This would have a dramatic effect on dealing with the high level of people who are refusing to pay their mortgages.

This independent authority should be able to write down the unsecured debt of credit unions as well.


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## Brendan Burgess (16 Jan 2015)

*So what should be done to speed up the resolution of mortgage arrears cases? *

1) The lenders should reduce the very high interest rate on variable rate mortgages. 
2) The legislation should be changed so that orders for repossession are granted very promptly for people who do not engage with their lender or whose mortgages are unsustainable 
3) This independent authority should have the power to impose solutions on the borrower, the lender and on unsecured creditors - especially the credit unions.


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## Dermot (16 Jan 2015)

I agree with points 1, 2 & 3 in your summation Brendan but not a hope of the legislation to enable No's 2 & 3 to be enforced.  This is Ireland and a general election inside the next 15 months.  
Even if there was legislation proposed to address the matters raised it would become so watered down by the time it was passed it would probably make things worse than they already are.


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