Mar C looks over the housing crisis and the implications for struggling home owners.
Ten years ago life in Ireland changed forever. We found out that our banks were in great financial trouble and needed to be bailed out by the taxpayers of Ireland. A €46 billion bailout and let us not forget that every bank in Ireland was in trouble, be it Irish or foreign run and owned. Yes, we the tax payers of Ireland were held liable for the cost of this bail out.
Let us now look at what has happened to the ordinary Irish citizen, the people that, like it or no, saved the banks of Ireland with a knock on effect to the banks of the EU and the world. Because, be in no doubt that if our government had not guaranteed the banks then the banking crash would have echoed around the world. The financial pain would have been more equally divided between those that caused the problem in the first place rather than all of the pain being suffered by ordinary working class people and small businesses.
How have the banks and the government repaid this debt to the people - have they assisted them in their time of need - have they shown remorse for the financial burden placed on their shoulders - is there a payback clause to recoup the public losses?
In a nut shell the answer is no. When people lost jobs due to businesses going bust and found themselves in mortgage difficulty they looked to the banks to see what arrangement could be put in place to bring mortgages down to an amount they could afford. They looked to the government for help but all they were met with was silence or derision but no compassion. At this point you entered the M.A.R.P. process (Mortgage Arrears Process) Then of course there was the Personal Insolvency, Practitioner the person who would look at your finances and work out what you could afford to pay. This would be put to the bank. Unfortunately, there was no compulsion placed on the bank to accept this resolution and for the most part this was turned down. Interest only payments were considered the sole option. At first it was a case of every six months having to fill in a financial statement and it took so long for a decision to be made that letters and phone calls demanding full mortgage payment came while the people were waiting for an arrangement to be put in place, causing huge stress and adding to mounting arrears. Various (help) was said to be on offer such as split mortgage, this was only of use if you had a job and could afford to pay the amount required but if you had no job or your income was cut due to the recession (nurses, fire officers, middle to low income workers or those made redundant to name but a few) then this was not an option, again the banks were not obliged to accept this arrangement even if it was put forward through the Personal Insolvency Practitioner.
Next came the letter stating that your mortgage was unsustainable and letting you know that there may be three options open to you:
➤ Voluntary surrender: In a nutshell the banks agent will sell your house for the best price they can get, you may get enough to cover your outstanding mortgage but if not you will still owe the outstanding amount. When this was first put forward you were not in a position to go on a housing list for social housing because you would have effectively made yourself homeless. It is my understanding that this situation has changed and you would be accepted onto a housing list if you have a letter from your bank stating that your mortgage is unsustainable, provided that you fit the financial criteria of the housing body. No guarantee that you would find accommodation while you waited for a home to become available.
➤ Voluntary Sale: you would agree to sell your property and any money from the sale would be used to clear your mortgage and costs, if there was money left over you would be entitled to receive this but in the event of the house selling for less than was owing then you would be responsible for the remainder due.
➤ Mortgage to Rent: (principle private residence only) this is a State Assisted Scheme where you agree to sell your home to an approved housing body which in turn would then rent the house back to you at an affordable rent. This is a an option that would appeal to most people in mortgage distress. They would sacrifice the time and financial investment that they had put into their homes in order to sleep at night, to be able to rest assured that they could stay in a home that they loved, a home that is not just a financial investment but a place full of memories, a place that when first mortgaged was full of hope for the future but became a waking nightmare as you fended off repossession and homelessness.
But here is the catch, you have to get an agreement from your bank to allow you to apply for mortgage to rent then you must go to the local County Council and apply to go on the local housing list and H.A.P. (it is worth mentioning that it is only in recent times that you would be allowed to go on the housing list if you had a house in your name). To be accepted on the housing list you must fall within the correct income bracket. When this is done your home is valued. If it is valued at enough to sell and clear the mortgage then your application will fail. If you have too many bedrooms then your application will fail. Remember, if you purchased a four bed house for you and your children and one or two have left home then you have too many bedrooms. It does not matter that other families may qualify because their children are still at home but may leave after the house has been accepted for Mortgage to Rent; this to me is not fair as it is still a home to those still residing in it.
But, should you get the thumbs up what happens next? Well, your house is put out there on a list for housing bodies to view. If the housing body is interested in your house then they have to contact the government appointed housing body with an offer and they have to agree to that offer. Next, that offer has to be accepted by the bank in order to continue to the final transaction: being the sale of the house to the housing association or council. I made contact with one housing association to ask what their policy was regarding engaging with this process and they said that they no longer engaged with it due to the fact that when they did it was very difficult, usually ending in failure, leaving them with a costly legal bill and nothing more.
If the County Council or Housing Association do not want to engage with this process they do not have to. They may not have the finances available or your house may not be in a location that they wish to have a house in. If this happens then you are back to square one. In other words, walk away from your home or agree to an assisted sale. Oh by the way if you are speaking with a bank staff member they do not call it an assisted sale, they call it a forced sale. Of course you can do nothing and wait to go to court, wait for your home to be repossessed, wait for the bailiffs.............
There is one ray of hope: there is a new housing group called iCareHousing. It is a regulated not-for-profit Housing Body set up specifically to offer those in mortgage arrears an opportunity to resolve the financial and distressing challenges they face.
Something to keep in mind.
There came a time when the banks wanted done with all this fuss. They were ready to move on, they were not happy that they had a banking stress test to face and all these distressed mortgages were a thorn in their side. So up comes the cavalry to the rescue, the government again gave money to the banks, this time to cover distressed mortgages. Did they ask the banks to transfer ownership of these mortgages to them?
Did they ask that the mortgages be put in the hands of a government body?
They simply gave the money to the banks and the banks continued to pursue the mortgage holders for more money. Remember we are all tax payers, be it your income tax, car tax, VAT, we pay tax on everything in this country. Well most of us do. We do have our share of tax dodgers. No. not the little man or woman who don’t declare an extra few bob here and there. I am talking about the multi millionaire tax dodger, the big business tax dodger and last but by no means least, the banks, the entity that we saved: not a sign of remorse not a sign of contrition just a large knife in the backs of the Irish people.
Now the fun part: having got the money for distressed mortgages from the government (tax payers) the banks wanted to get rid of the non performing mortgages and those that were on tracker rates. These mortgages looked bad on their books and they had just about got all they could out of them so time to move on. We have heard the term vulture funds. Well, I think that’s a bit insulting to vultures. Vultures clean up dead and rotting corpses but the likes of the Start Mortgage Designated Activity Company and its friends feed off the living, they feed off the defenceless, the sick and infirm. They feed off the poor and those who barely survive by the time they pay their bills. This company will simply pay a pittance for the mortgages and then move to have the homes sold for as much as they can get in order to get a quick return on their investments. Our courts will be overrun with those seeking repossession orders and our hospitals will be even more over worked due to people becoming more distressed and more ill from this housing nightmare. We are looking at a potential further twenty thousand families seeking accommodation.
Surely it makes more sense to keep people in their own homes and communities. No one should have a home for free but making the mortgage to rent scheme easier will save the country a huge amount of money, money that would end up in the pockets of already wealthy landlords or shelters. If we can leave people in their own homes, homes that they have put vast amounts of money into with no chance of a return on their investment, they will also pay rent. Put money into social housing for those who are paying exorbitant rents or are homeless, and then we will show that we are a true Republic a country for the people not for profiteers.