Category — Housing Information

Yesterday in the High Court, there were 56 applications for repossession, including 30 by sub-prime lenders, showing that Ireland is on the precipice of a repossession crisis according to Fine Gael Housing Spokesman, Terence Flanagan TD.

Deputy Flanagan said today (Tuesday) that there has never been a greater need for homeowners to be safeguarded from repossession and once again called on Fianna Fáil to adopt Fine Gael’s Homeowner Support Scheme.

“Fianna Fáil and the Greens inaction on the issue of families facing repossession is unforgivable.

“There are over 6,400 homes facing repossession and, in just a matter of days, the one year moratorium for these householders is about to expire. Despite repeated calls for action from the Government, nothing has been done.

“Once again I call on them to adopt the Fine Gael Homeowner Support Scheme. Fine Gael is the only Party that has a plan to help those in dire need and protect the thousands of Irish families facing repossession of the family home.

“Our Homeowner Support Scheme would allow NAMA to take an equity share in a property after negotiating a write-down in the outstanding debt with the relevant financial institution. The property owner would then service his or her remaining share of the debt and pay a rental fee to NAMA for the equity share taken by the Agency. The homeowner will have an option to buy back the NAMA equity share and if the property is sold, NAMA will receive its share of the sale.”

The mire in which successive Fianna Fáil Government’s policies, particularly in relying on property, have left us can begin to be remedied by putting in place an €11 billion investment programme that will deliver 100,000 jobs over four years, Fine Gael Environment Spokesman, Phil Hogan TD said.

The Fine Gael Environment Spokesman made his comments in Killarney while addressing the AGM of the Institute of Professional Auctioneers and Valuers.

“What happened in the last five years to the property market will, I believe, in time come to be seen of a textbook case of how not to manage an economy. However, the causes go far deeper with the failure of banking systems and the absolute disaster of overall Government policies leaving Ireland at our most perilous state since the 1930’s.

“The banking industry needs to be restructured with the issue of toxic assets reviewed. However, NAMA is not the way forward. I believe that the current NAMA model will lead to a bonanza for accountants and lawyers, maybe even for some auctioneers as they battle to maximise for their clients the value of assets being bought by NAMA. Fine Gael would rather see a system where the good performing loans are taken out into new banks and the existing banks have the responsibility of cleaning up their own mess.

“The fundamental requirement for the economy is to free up bank balance sheets to get lending flowing again. The Fine Gael plan will do that and will get credit flowing again.

“However, this is nowhere near enough to turn around our economy. We need to regain that spirit of innovation, build competitiveness and renew our infrastructure. And we need a jobs package. Fine Gael has spelled out how to do this in our Rebuilding Ireland document.

“In it we outline an investment of €11 billion over the next four years. And as a by-product of this investment there will be 100,000 jobs created in the short-term across the country. The funding of this investment would be done on a commercial basis so there would be no increase in the National Debt. We estimate that €11bn could be invested from a combination of the National Pension Fund, the European Central bank and a Consumer Bond. It beats an investment in bank shares.

“This upgrade of our infrastructure would increase our competitiveness, reduce our dependence on energy imports and create a cleaner environment. We will establish a new State holding Company – NewERA. The ownership of a wide range of existing and new State companies involved in energy, transport and communications will be vested in NewERA. Among the existing state companies that will be moved under NewERA will be the ESB, Eirgrid, An Post, Bord Gais, Bord na Mona, Coillte and the Metropolitan Area Networks (MANS). Some of these may be sold off as they become less essential to our economic well being nationally. So these could be sold off to fund further investment and development.

“In case you are bothered about bureaucracy, NewERA will be a holding Company and will employ less than 100 people. 100,000 new jobs will turn the tide of despair and hopelessness. €11 billion will create real investment and competitiveness.

“It is in everyone’s interest to get the property market moving again. At its peak, the investment market was worth €3 billion this year we will be lucky to reach €300 million. Through reform, dealing with the problem of oversupply and funding from banks we believe this can begin to happen. At the very least a VAT cut on the 13% rate needs to be implemented as this would, on average, reduce the prices of new houses by 10%.”

Statement regarding the establishment by the Financial Regulator of a Code of Conduct on Mortgage Arrears and a Code of Conduct for Business Lending to Small and Medium Enterprise

I  welcome today’s announcement by the Financial Regulator of the establishment of the Code of Conduct for Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises. Both Codes will be statutory codes and banks will be required to demonstrate compliance.

The Code of Conduct on Mortgage Arrears is particularly important in these difficult times when many householders are facing difficulties in making ends meet and have particular concerns about keeping up their mortgage repayments.

This new mandatory Code builds on the existing voluntary Code of Practice issued by the Irish Banking Federation and incorporates a requirement for the lender to wait at least six months from the time arrears arise before taking legal. The Minister for Finance, Mr. Brian Lenihan, TD noted that Allied Irish Bank and Bank of Ireland had also agreed, as part of the recapitalisation announced on 11 February, not commence court proceedings for repossession of a principal private residence until after 12 months of arrears appearing, where the customer continues to cooperate reasonably and honestly with the bank.

The Minister notes that, despite media speculation about large-scale repossessions statistics do not bear this out, and that mainstream mortgage lenders have been at pains to point out that they will go to great lengths to avoid repossession in arrears cases.

The Minister for Finance also notes that the Government has measures in place to assist those who get into difficulties with their mortgages.

The Mortgage Interest Scheme under the Supplementary Welfare Allowance system provides a safety net for those who need financial support with meeting the interest costs on their mortgage.  Funding for the Scheme has been substantially increased and the Scheme will be reviewed in 2009.

In addition, the Money Advice Budgeting Service (MABS) provides valuable help to those in difficulty.
The Code of Conduct for Business Lending to Small and Medium Enterprises will apply to all regulated banks and building societies. The Minister notes that the code will facilitate access to credit, promote fairness and transparency, and ensure that banks will assist borrowers in meeting their obligations, or otherwise deal with an arrears situation in an orderly and appropriate manner.

The business lending code includes a requirement for banks to offer their business customers annual review meetings, to inform customers of the basis for decisions made and to have written procedures for the proper handling of complaints. Where a customer gets into difficulty the banks will give the customer reasonable time and seek to agree an approach to resolve problems and to provide appropriate advice.