SIX HUNDRED new cases for repossession of homes have come into the High Court master’s list since early last month and most of those involve outright default of loans over a year or more, it emerged yesterday.
Master of the High Court Edmund Honohan, who prepares cases for hearing, said he was conducting a survey on the 600 cases and would be publishing the results later this year. A pattern was emerging of arrears averaging about 10 per cent of the original loan, he noted.
Mr Honohan also said borrowers in difficulties should prepare for the new system being implemented under the Code of Conduct of Mortgage Arrears and he outlined some guidelines to assist them in doing so.
In court yesterday, he noted that while there were 70 repossession cases in his list for the day, most such cases in the courts’ lists are being adjourned to allow borrowers to make payments as agreed with lenders following discussions.
While borrowers probably realise missing every payment over a year will result in a court summons, what they don’t appreciate is that arrears do not have to be paid off prior to their resuming monthly repayments on loans, said Mr Honohan.
Arrears could then be spread thinly over the period of the loan or added afterwards, but such measures could be arranged only after negotiation with the lenders, he added. Noting the Government’s recent announcement of the Code of Conduct on Mortgage Arrears, he said the code was being strengthened to improve the borrower’s position. The code was to be given clearer legal status with a new structure for case by case renegotiation to replace the current “ad hoc procedure”, he said. Mortgage repayment terms will be rewritten and would be fair to both borrower and lender, he said.
The borrower would have the right to have their case referred to a dedicated unit within the lender’s organisation if they felt the proposed new monthly repayment was too high, said Mr Honohan.
If still unhappy after that review, the borrower could appeal to the Financial Services Ombudsman. The master proposed a four step guide to the new system for borrowers facing difficulties.
The first step was that borrowers who can pay mortgages should pay them as the code will only benefit those with genuine difficulties, he said.
Secondly, borrowers should forget about arrears for the moment and, even if they could not pay the full amount, start making regular payments again of as much as they could reasonably afford.
The third step was to negotiate with the lender but not to agree to new repayment terms which borrowers knew they could not meet. “Be prepared to argue and to take the matter further but continue making regular payments until the process is concluded.”
Fourth, the minimum monthly payment to be made for the time being should not be less than 0.5 per cent of a borrower’s total debt, including current arrears, Mr Honohan said. That amounted to some 6 per cent per year. At the conclusion of the process, borrowers would, of course, be required to pay more, he stressed.
