Taxpayers will have to spend millions in the coming years to fund a fivefold increase in the number of repossessions as banks increasingly sell off distressed mortgages to vulture funds, the master of the High Court has said.
Figures from the Central Bank show the courts granted repossession or sale orders for 278 “principal dwelling houses” – which are effectively family homes – during the first quarter of 2017.
Edmund Honohan, addressing the Oireachtas finance committee on Tuesday, delivered a stark warning to policymakers grappling with the housing crisis when he forecast the "wholesale eviction" of "many thousands" over the next five years.
“Evicting one occupier costs money,” he said. “The wholesale eviction of many thousands over the next four or five years is going to cost millions, and it is the taxpayer who will foot the bill.
“I predict that sometime soon, after the banks have sold on their junk mortgages to the private market, county registrars will be presented with court execution orders, to be executed, not a couple of times a month, but 10 or 12 times a week.
‘Public purse’
“Who is going to pay for this expensive procedure? The public purse. Taxpayers will spend millions on evictions.”
Mr Honohan said the “flattish level” of repossessions at 150 per quarter until the beginning of 2014 “doubled overnight” to in excess of 300. “I can think of no significant factor which might account for this sudden change other than the sudden arrival of vulture funds into our distressed mortgage mess,” he said.
“If that is so, you must presume that if the banks are now proposing to finally sell off their huge numbers of deeply indebted loans to the private sector, perhaps increasing the non-bank proportion of non-performing housing loans fivefold from less than 10 per cent to over 50 per cent, we can expect a further significant jump in possession cases.”
He said there were 41 cases before the High Court last Thursday, but that in two years time the average list “might be 200 per sitting”.
“On any cost benefit analysis, this is taxpayers’ money down the drain,” he said. “And it is only a first payment of the many additional bills which must be paid for when the homeless are being provided for.
“It is a complete waste of money if there is some way – any way – of keeping these squatters in their homes as tenants.”
Sub-prime borrowers
Mr Honohan also said his “overwhelming impression anecdotally” was that individuals before the courts in relation to these matters were sub-prime borrowers “who should probably never have been given mortgages in the first place”.
“It is not their fault that public housing was unavailable back then,” he said. “The crisis is not that these people are heavily in debt. It is that when they are eventually evicted – and they will be unless you act promptly – there will still be no public housing for them.”
The finance committee was discussing the National Housing Co-Op Bill, which proposes the establishment of a “benevolent entity” to buy up distressed mortgages from banks and let the homes back to the occupiers.
The scheme, which is supported by Fianna Fáil and Sinn Féin, would involve buying mortgages at a write-down. It would be “off balance sheet” and would therefore not cost the exchequer anything.
The Bill has been submitted to the office of the Ceann Comhairle by Fianna Fáil’s John McGuinness and Independent TD Mattie McGrath. It also has the backing of Fr Peter McVerry and the Right2Homes organisation.
Separately, Competition and Consumer Protection Commission (CCPC) chairwoman Isolde Goggin told the committee "root and branch" reform was needed in terms of how the State prosecutes white collar crime.
She said there was “huge expense” incurred in the recent prosecution of Aston Carpets and Flooring following a cartel investigation by the CCPC into bid rigging on major building projects. The company was convicted, but fined just €10,000.
