The new free financial advice service for mortgage-holders in financial distress, unveiled today by Minister for Social Protection, Joan Burton, has been widely criticised as too little, too vague and tokenistic.
The new Mortgage Arrears Information and Advice Service offers mortgage holders in serious difficulty advice from an accountant, which their lender will pay for.
The borrower must have already been through a process with their bank and have come to the point where the bank is making long-term proposals about how they may continue with the mortgage.
“When a lender is proposing longer-term mortgage resolutions [it] will advise the borrower to obtain independent financial advice on the proposed arrangement and, if the borrower wishes to avail of this option, that the lender will pay €250 to an accountant of the borrower’s choosing for the provision of this advice,” Ms Burton said.
Serious concerns, however, have been expressed by such groups as the legal rights group FLAC (Free Legal Advice Centres), New Beginning and Opposition TDs.
Noeline Blackwell, FLAC director, said distressed borrowers needed advice and support while they were coming to a resolution with their lender, not after when the bank has made its proposals.
“There is no element of legal advice to people whose position is substantially changing throughout this process,” she said. “People are being left effectively to take on the might of a commercial institution that is the lender, by themselves.”
Ms Blackwell was concerned that the supports being provided were “piecemeal”.
New Beginning, which represents distressed homeowners, said it too was “most concerned that the accountant is not permitted to inform the distressed borrower of other resolution options available to them but only on offers presented by the bank.”
Fianna Fáil spokesman on finance Michael McGrath described the scheme as a “major disappointment” saying it would be available only “to a fraction of those in mortgage distress” as it was only open to those who had been offered long-term resolution proposals by their lenders.
People Before Profit Alliance spokesman on finance Richard Boyd Barrett described the scheme as “window dressing”.
“It will be of little help to distressed mortgage holders unless the government inserts specific protections for the family home into the new personal insolvency legislation,” he said.
“Crucially, the Government must remove the veto they are planning to give the banks on debt settlement arrangements otherwise all the other measures are meaningless.”
Ms Burton said she was “fully aware there [were] no quick-fixes or a one-size-fits-all solution to the mortgage debt problem”. The key message was the need to engage with lenders, she said.
A mortgage arrears information helpline is open to anyone on 0761 074 050, Monday to Friday 9.30am to 5 pm.
The website www.keepingyourhome.ie has been enhanced and offers detailed information.
