The Government has handed the banks a charter to repossess family homes and failed to grasp the scale of the mortgage arrears crisis, Fianna Fáil claimed this morning.
The party has published a private members bill on mortgage arrears which is being debated in the Dáil today and tomorrow.
It wants a clear definition of what constitutes a sustainable mortgage to be included in the Central Bank’s code of conduct on mortgage arrears and believes a minimum income level should be protected as part of all negotiations.
It also seeks the reintroduction of a ceiling of unsolicited contacts a bank can have with a borrower in arrears and wants a new clause put into the code which would forbid a bank from moving a borrower off a tracker mortgage unless they were given independent financial advice from a third party.
The bill also wants a 12 month moratorium on home repossessions to be reinstated and a new rule put in place which would force banks to record all calls made to borrowers and given the Central Bank access to those recordings .
Describing the arrears crisis as a “major economic and social issue” which had created a “paralysis” across the wider economy, party leader Micheál Martin accused the Government of repeatedly failing to deal with the issue and described the banks’ engagement with distressed borrowers as “pitiful”.
He said he was “very fearful repossessions will be ramped up” over the next six months.
Finance spokesman Michael McGrath said the Government had given increased powers to the banks through changes to the Code of Conduct on Mortgage Arrears which was published late last month and he said the banks had been given a “charter for the repossession of family homes”.
He said repossession was supposed to be used as a last resort but suggested that banks were becoming increasingly aggressive and repossession was becoming the “solution of choice” for many lenders.
“There are now 70,000 family homes where banks have been given carte blanche to repossess,” Mr McGrath said. “It is very difficult to understand the deferential approach to the banks.”
He said the number of real alternatives being offered by the banks to distressed borrowers was inadequate and lacked consistency. He pointed out that the banks had offered fewer than 150 split mortgages to borrowers in arrears and said that while AIB did not charge interest on the warehoused portion of such loans, Bank of Ireland did which meant "they were not a sustainable solution.
Fianna Fáil has already published a number of proposals on mortgage arrears since 2011 which have been ignored by Government and both Mr Martin and Mr McGrath did not indicate that things would be any different on this occasion.
“We have a platform and we will continue to make the case,” Mr Martin said.
"We are being constructive rather than populist and we have been repeatedly told by groups such as New Beginnings, the Irish Mortgage Holders Association and the Free Legal Advice C entre not to underestimate the power of the pressure we are applying."
