No repossessions – No Evictions – bail out Home Owners

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Defend Our Homes League
No repossessions – No Evictions – bail out Home OwnersPress statement 12/10/2011

Expert Group report on mortgage crisis could have been drawn up by the banks.

We note that the banks have welcomed the Keane Report on the mortgage crisis and it is no wonder. There is no criticism of their role in creating the crisis, and no criticism of how they are

responding now to the problems of distressed home owners.

There is no mention of the role of sub-prime lenders or proposals to regulate their activities, or indeed of the ‘financial advise agencies’ who are moving in like sharks to profit from the problems people face in managing their debts. It is our view that such companies and sub-prime lenders should be barred from operating in Ireland.

The whole tone and direction of this report very firmly comes down on the side of the banks and the status quo. To quote from the report, ” there is no entitlement to a particular solution and solutions have consequences – there are unsustainable situations and unfortunately it is inevitable that people will lose their homes…”

The idea that these very limited proposals will simply be ‘guidelines’ for the banks is a joke. There is widespread anecdotal evidence that the banks regard following such guidelines, such as the existing guidelines from the Central Bank as a formality. There is little real engagement with home owners in difficulty.

If the government accepts this report as the basis of its response to a crisis affecting

thousands of families, its commitment to keep people in their homes is merely an empty phrase, yet another broken promise.

The Defend Our Homes League will continue to campaign for real solutions to this crisis. We will use peaceful protest to prevent evictions. Please see below our submission to the expert group for details of our proposals.

Contact – Joan Collins TD 086 3888151- David Hall-087 7775577 – Caroline Lennon – 087 9931201.

Submission to the inter-departmental group on mortgage arrears from the Defend our Homes League. 11-09-09

The Defend our Homes League came from an initial meeting at the Red Cow Hotel in Dublin this July. The meeting was organised by United Left Alliance TDs. Joan Collins, Joe Higgins, Seamus Healy, Clare Daly, and Richard Boyd Barrett; and supported by Catherine Murphy TD, Mick Wallace TD,
Luke Flanagan TD, Maureen O’SullivanTD, Thomas Pringle TD, Finian McGrath TD, and John Halligan TD. The meeting was also supported by legal group New Beginning, and Irish Home Owners Unite.

Our aim is to organise home owners on a national basis to keep people in their homes, to stop repossessions and to prevent evictions. We believe that this has to be the priority of government policy.

We reject any notion that there is a so called ‘moral hazard’ in assisting home owners who were forced into buying family homes at hugely inflated prices as a result of a property bubble brought about by the greed of bankers and developers with the assistance of previous governments. There is no moral hazard in assisting those who have lost their jobs or businesses or otherwise are experiencing a sharp drop in income as a result of the economic crisis whose severity is in large part due to the collapse of the property bubble.

A recent Central Bank report shows the scale of the crisis that is developing for many home owners. There are 777,321 mortgages on private residential properties in the Republic, with a total value of 115 billion euro. Of these 55,763 are over 90 days in arrears or 7.2% of the total.
In addition 69,837 mortgages have been restructured, of which 39,395 are not in arrears. This means that around 100,000 mortgages( including restructured and now back in arrears) are in trouble to some degree and the trend is upwards.

The state owned banks, AIB, TSB, EBS and nationwide hold about 70billion of the overall mortgage market of 143 billion. BOI has a further 28 billion, Ulster Bank 22billion and Bank of Scotland 10billion.

We believe that there are essentially four groups who need urgent action on their behalf by the government. Those who are in arrears and need short to medium term assistance until their financial circumstances improve, those who wish to surrender their mortgages and become tenants, those in negative equity, and those who have had their homes repossessed but still have substantial and unpayable debts.

In terms of the first group we support the idea of a state agency -maybe MABS or something similar-acting as an independent assessor of peoples’ ability to pay. We are absolutely opposed to any ‘solution’ based on the banks making these decisions. This agency should have the power to recommend either interest only payments, reduced payments with an extension of the mortgage, or regular payment below interest only if necessary.

Secondly there must be an option for those who no longer wish to be saddled with huge debt to surrender their mortgage and have any negative equity written off. They should also have the option of remaining in their home as tenants with the rent set at ability to pay. Alternatively they may seek social housing elsewhere and should be entitled to do so.
This option may involve 5 to 10% of those in difficulties, about 5,000 to 10,000 people, and the cost of the debt write off would be within the default calculations already factored into the recapitalisation of the banks.

Those who have already lost their homes should also have any outstanding balance of debt written off.

Finally there is the problem of negative equity. The ESRI report by D. Duffy in October 2009 suggested that in a worst case scenario there could be around 175,000 first time buyers in negative equity, amounting to an estimated 13 billion euros. If the banks had been nationalised at the start of this crisis, and reorganised and recapitalised at a fraction of the 100 billion thrown at them so far, a write down of mortgages to relate to actual house values today, or a write down to 120% or so of the market value, would have been entirely feasible. This would help those in negative equity and also provide a stimulus for the domestic economy as people would have more to spend. We believe that the government should ensure work is undertaken to determine the cost of such a write down over the course of the next months.

We also believe Subprime lenders should be taken out of housing market.
Their loan books should be taken over by state. The high Interest rates they have been charging should be reduced to lowest current level. In addition there should be a state clampdown on loan shark money lenders such as Moneyvillage.
We also are for a general interest rate freeze. free legal aid for home owners before the courts and for suitable NAMA properties to be made available to dramatically increase social housing stock.

Joan Collins TD and Clare Daly TD on behalf of the Defend Our Homes League.