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.
There is no doubt that it is a little cynical of Fianna Fáil to table this motion and wax lyrical about the further closure of Army barracks when the party stood over the destruction of 11 barracks in the last decade of its reign. However, that is not an excuse to allow this Government to deflect attention from or escape responsibility for this serious attack. I oppose the closure of more Army barracks throughout the country.
I am from an Army background. I was reared beside the Curragh Camp and there is no question about the stimulus the Army provided to the local economy. It was absolutely vital and essential. It would be total lunacy on the part of this Government to ignore the role of the State in achieving balanced regional economic development, especially at a time of austerity and job losses. When many rural communities are being decimated in that regard, the role of the State is even more important. The towns involved are the towns where people bought homes for record prices during the boom. They are now in serious negative equity but they are shackled there through 30 and 40 year mortgages.
Another reason I consider this issue very serious is based on my experience of living beside areas where the closure of an Army barracks was handled poorly, particularly Magee Barracks in Kildare. It was closed over a decade ago but it has been an utter disaster. Closed without a plan, the barracks are lying derelict after being scavenged and looted. It is an eyesore for residents and a haven for anti-social behaviour. We must consider the current decision to close more barracks against the backdrop of our experience to date.
While it might have been possible to secure alternative viable uses for the barracks during the boom, those days are gone. These are potentially valuable State resources and nothing should be done to jeopardise them. There is no basis for an alternative use and no logic has been put forward to support that argument. Those facilities must be protected and the best way to do that is by maintaining them in use. The Government has not explained the purpose of its decision or the advantage in further closures. No evidence has been submitted.
The Government says this is not about reducing numbers in the Army, but one must seriously question that. It clearly will not improve morale or soldiers’ conditions. Instead, the 200 soldiers from Mullingar and the 140 from Cavan will be fighting with the ones who have already been transferred from Longford for accommodation in Athlone, even though the taxpayer has paid to upgrade the facilities, accommodation, roads, gymnasium and so forth in the facility from which they are moving. It is absolute lunacy. In addition, they will be forced to travel to Athlone each day when there is no viable bus service and against the backdrop of decimated pay and conditions on foot of the austerity that has been unleashed on public service workers.
Clearly, families will have to move out of the areas and towns in which they live. That will have a major impact on schools, local businesses and so forth. No viable reason been put forward, nor is there any identifiable alternative use. The only figure I have seen is a net saving of €200,000 in the case of Mullingar. That is a pittance; it would not even cover a banker’s bonus or offset the cost of securing the barracks. It is ludicrous. In fact, it will cost money. It will certainly cost the towns money and result in more jobs losses because personnel do not have the money to spend in the local economies. This lunacy must stop. The Government must see sense.
Our armed forces personnel need trade union rights. I salute the efforts of the Army wives who have highlighted this. I voted for an Army wife in the first election in which I voted. However, PDFORRA and the Army personnel should not have to rely on their spouses to articulate their cause. They deserve trade union rights so they can defend their jobs and conditions like every other worker. Full debate.
Clare Daly TD alongside Socialist Party colleagues have been working with the Pyrite Action Group to fight for justice for the thousands of householders in North and West Dublin, Meath, Kildare, Offaly and elsewhere whose homes are crumbling about them.
This has arisen because of neglect on the part of building firms, quarries and inadequate building regulations. The Socialist Party
The transcript of the full exchange was as follows:
Question 3: To ask the Minister for the Environment; Community and Local Government further to Parliamentary Question No. 222 of 20 July 2011, the reason the revised NSAI Standard recommendation, which amended the Building Regulations Technical Guidance Document TGD C, is deemed inadequate by the main non-homebond insurer of houses affected by heave-inducing pyrite, and that this insurer demands in addition to the requirements in the NSAI Amendment that replacement fill comply with TRL 447 (2005) Sulphate Specification for Structural Backfills, to ensure that there will be no further heave; and if he will immediately rectify this deficient specification in order to protect householders results. [24393/11]
Phil Hogan: The building regulations set out the legal requirements for the construction of new buildings, including houses. Part D, materials and workmanship, of the building regulations requires that materials used as infill in construction must be “proper materials which are fit for the use for which they are intended and for the conditions in which they are to be used”. The presence of pyrite in building materials represents a failure to satisfy this requirement. Responsibility for compliance with the building regulations is a matter for the owner or builder of a building and enforcement of the owner’s contractual entitlements is a civil matter irrespective of whether a building is in private or public ownership.
Following the emergence of the pyrite problem in 2007, the National Standards Authority of Ireland, at the behest of my Department, reconvened the aggregates panel, an NSAI industry committee. The NSAI, in consultation with this committee, published a revised standard recommendation on the use of aggregates as infill for civil engineering and road construction work. The new standard recommendation came into effect on 7 December 2007 and provides guidance on reducing the risk of reactive forms of pyrite being present in material fill for use under concrete floors in dwellings and buildings.
The relevant technical guidance document of the building regulations dealing with site preparation was amended to incorporate the revised NSAI standard recommendation. The outcome of a recent high court case vindicates the position taken by my Department and demonstrates that the building regulations are appropriate and enforceable. The imposition of any additional requirement by a third party, for example, an insurance company, is a matter between that party and the builder or developer.
In response to the difficult and distressing problems faced by home owners and tenants affected by pyrite, I am setting up a panel with suitable expertise to prepare a report, which I will publish, on the way forward in relation topyrite contamination in private housing stock. My Department will provide technical and administrative support to the panel in carrying out its work.
Clare Daly: I thank the Minister for his reply but it does not deal with the content of the question. Clearly, the pyriteissue is devastating for the tens of thousands of affected householders. The Minister’s response is an attempt to say that the State has no role or responsibility in this regard.
The nub of the question is that the State is responsible for bringing in building regulations and that these regulations are, and were, deficient. When I asked the question in July as to why the building regulations did not require testing for pyrite, even though knowledge existed in the industry, in engineering circles and in regard to the geological strata that this could be a problem, the Minister said the building regulations had been amended by the NSAI implying that the problem had been solved but that is not the case.
Householders have found that Premier Insurance, the second largest insurer, is not satisfied with that new requirement. It is not deemed good enough for it. Is the reason this standard, required by Premier Insurance, has not been included because it would cost the quarries and the aggregates more money? Does the Minister not think it is somewhat strange that the NSAI standard took direction from the concrete consultative committee, which is dominated by the industry? Will he comment on the fact that some of the lead agents on that committee, which was responsible for the new standard, were two of the largest quarry owners whose quarries have been found to have heave inducing pyrite, namely, Roadstone in Huntstown and Kilsaran in Rathcore, County Westmeath and if this might be the reason the standard is inadequate?
Phil Hogan: Deputy Daly would have to see a lot of things around corners. I have answered the question she asked which was a highly technical one and I answered it in a technical fashion. If there was any aspect of the question I did not answer, she certainly did not ask a supplementary in regard to it.
The Building Control Acts clearly place responsibility for compliance with building regulations on the owner of a building. That has been tested in the courts and the Department of the Environment, Community and Local Government is not liable. Compliance with technical guidance documents, which were amended after 2007, has stood the test of time.
I appreciate that homeowners find themselves in a difficult situation through no fault of their own because of the inadequacy of the materials and aggregates provided. The material for these dwellings and foundations have been found to be deficient and so on. That is why I decided to act as an honest broker in this matter between homeowners and the people responsible to see if we can get solutions and I have set up a panel. I did not have to do that but we are here, as politicians, to try to help people. I did not go around apportioning blame. I am facilitating a dialogue, or an opportunity for people, through a panel of experts, to help them, if at all possible.
Clare Daly: With respect, the question was not answered. The question was twofold. Why is the standard in the building regulations deemed to be inadequate vis-À-vis the standard put forward by Premier Insurance? The Minister’s answer was that it has a different standard from us. It has a higher standard and surely we, as the guardians of householders, should stand by the highest standards.
The second part of the question was what will the Minister do about it. Will he rectify the building regulations to take account of this? I assume the answer to that is “No”. The Department and previous Governments have a responsibility in this regard.
I welcome the fact the Minister has set up a committee and we will participate in, and work with, it. However, the solution must come from the Minister’s Department as well because otherwise the builders, quarry owners, the local authorities and everybody will be at each other’s throats. There must be a lead from the front and this must be rectified for the future and the building regulations must be changed. If the standards are not good enough for Premier Insurance, they should not be good enough for Irish citizens.
Add your comment
Phil Hogan: We are here as legislators and to make regulations. The people who supplied this material are in breach of those regulations and that has been found by the courts. We do not have to improve any regulations because the courts have found these people to be negligent in regard to compliance. The Department of the Environment, Community and Local Government’s regulations have stood the test of time. We were not found culpable but rather the people who supplied the material were. I know that does not suit the Deputy but I am telling her the outcome of the court case where this was tested. In case the Deputy does not know, it was a High Court case.
Clare Daly: It attributed liability to the quarry owners. It did not say the building regulations were fine.
Phil Hogan: Did it attribute any liability to the State?
Clare Daly: It said the quarry owners were liable.
Phil Hogan: That is correct. The quarry owners are liable. Therefore, we must take that into account when we come forward with solutions. The State is not liable but I am prepared to set up this panel to help homeowners who are unfortunately caught between the quarry owners and solving this problem, and to facilitate whatever I can to help them.
One of the key issues is the extension of the insurance compensation fund to deal with losses of the Quinn family. A large percentage of insurance losses result from speculative gambling on the property market by the family and, in effect, the legislation provides for the transfer of those gambling debts on to the shoulders of hard pressed taxpayers and working people who need to insure cars, homes and so on. As previous speakers pointed out, this is the third time a private company has been bailed out by the State — Equitable Life in the 1960s and PMPA and ICI in the 1980s. The original levy was not discontinued when PMPA’s historical liabilities were run down but, instead, was replaced with a stamp duty to which the Government proposes to add a Quinn Insurance levy. Clearly, that is a disgrace and should be condemned by all.
I would like to concentrate on one aspect of the legislation. It proposes that the insurance compensation fund would cover all insured risk in the State with the exception of a number of excluded risks. It then defines one of those as a risk relating to a building in the State. Will the Minister address the Homebond issue in this regard? He may be aware that householders will take to the streets tomorrow to protest outside Homebond’s offices because it has opted out of its liability under a structural guarantee against major defects and has said it will not honour offers made to residents in that regard. Is this an insurance policy or not, given it was sold to people on that basis? Were people tricked into taking up this policy? Payments come out of the insurance compensation fund for insolvent insurers and, therefore, this issue is relevant.
People bought their houses in the belief that Homebond offered them a structural guarantee against major structural defects for ten years. The homeowner had no choice in that regard as he or she was obligated to go down that route. He or she did not have the option of choosing the insurance route. It was provided to the developer and the Irish Home Builders Association. It is a consequence of the light touch regulation that existed. The banks legitimised Homebond by mandating that people to whom they were giving loans had to have a Homebond guarantee before they were able to avail of the mortgage. Warnings were issued repeatedly from 2000 onwards that the company was significantly underinsured. The Law Society issued a warning in 2000 while Grant Thornton and others produced reports in which they warned the society that this was a potential major liability, yet nothing was done.
I would like the Minister to address this because between 30,000 and 50,000 houses have fallen victim to heave inducing pyrite, a defect that costs between €40,000 and €50,000 per household to repair. A claim would result in a liability of between €1 billion and €1.5 billion. If Homebond is deemed to be insolvent and the pre-2008 insured members are deemed liable for heave inducing pyrite resulting in major structural damage, who will pay the bill? Is the Minister exposing the State by bringing this under the insolvent insurers scheme? If not, why not? He can offer a compensation fund to Sean Quinn and his family to defray their gambling debts but the victims of Homebond who did nothing other than a buy a home in good faith that they thought was fit for purpose have to pay the cost of heave inducing pyrite. There is no compensation fund for them.
This more than anything else exposes the Government’s record and the double standards it is applying. The Minister is rushing this legislation and that is not on. It will be exposed in the eyes of the public for what it is. full debate