Mortgage support may be too late for thousands at risk of repossession

Ireland’s largest housing charity welcomes the announcement by the Government that assistance will be offered to homeowners but is concerned at the delay in providing support. Respond! Housing Association contends that a similar announcement was made in October as part of the renewed Programme for Government but little action has taken place since that time. The housing charity fears any assistance may come too late for thousands of homeowners as more than 6,400 families have not been able to pay their mortgage in more than 12 months.

According to Respond! Spokesperson Aoife Walsh the establishment of an Expert Group is welcomed but feels immediate action needs to be taken to offer assistance to homeowners.
“Respond! welcomes the formation of the Expert Group by the Government but in other jurisdictions such as Britain and America supports for homeowners have been in place since early 2009. We have been calling for the Government to focus on this area for more than a year but unfortunately it now appears it will be many more months before any definite proposals are in place. Almost a quarter of those in arrears have been unable to pay their mortgage in 12 months and 70% have been unable to pay their mortgage in 6 months. The moratorium on repossessions agreed as part of the bank recapitalisation scheme comes to an end this month and given the high level of mortgage holders in default, it is now very likely that banks will move to seek repossession. The Government proposals may come too late for these families.”

Respond! argues that the 26,000 families currently in mortgage arrears is just the tip of the iceberg with worse to come. In the past 18 months the number of homeowners in arrears has increased by almost 90% and the housing charity predicts this trend will continue through 2010 and 2011.

“With unemployment set to increase by 76,000 this year and interest rate increases expected, tens of thousands more families will experience difficulty on a monthly basis” added Walsh. “Other proposals such as debt forgiveness and short selling need to be considered in order to deal with the massive level of negative equity being faced by families facing the nightmare of repossession. Negative equity for these people is the huge elephant in the room that is not being addressed at present.”

The housing charity also maintains it is critical that any measures introduced also apply to sub-prime lenders. While these lenders account for only 2% of all residential mortgages, between 60% and 70% of all repossession cases coming before the courts on a weekly basis are being instigated by these sub-prime lenders. Respond! argues that these lenders must be better regulated and must form part of any support plan for homeowners.