Mortgage arrears figures show alarming rise

22 December 2009

Legal rights organisation FLAC today warned that figures from the Financial Regulator on mortgage arrears to the end of September 2009 display a worrying upward trend in serious mortgage arrears.

According to the last previous figures available on arrears, from June 2008, some 13,931 or 1.4% of number residential accounts were in arrears. This figure has now almost doubled to 26,271 or 3.3% of all mortgages. Paul Joyce, FLAC Senior Policy Researcher, commented: "There are over 8,000 cases where a formal demand for the property or legal proceedings have been issued. This is very worrying at a time when interest rates are at an all-time low. These figures relate only to principal private residences or, to put it another way, to people's family homes."

Some 117 of the 218 court cases which were concluded during the period of July to September 2009 ended with the borrower losing their family home to the lender. This included a large number of cases where the property was 'voluntarily surrendered' or handed back by the borrower to the lending institution. FLAC continues to have grave concerns about this practice. Many people contact FLAC's services suggesting this as a way out of their difficulties. However, FLAC's Director General Noeline Blackwell emphasised that handing back the house keys does not solve the borrower's problem: "The borrower still faces huge uncertainty around how much is still owed and what the future liability will be."

"Further, borrowers who take this desperate step also risk being excluded from social welfare benefit and local authority housing because they have rendered themselves homeless."

FLAC maintained that the difficulties highlighted by the latest figures show once again the pressing need for a co-ordinated and high-level national strategy that will address the critical problem of inadequate debt management structures in the Irish system. To this end the organisation welcomed the Financial Regulator's data as providing at least some solid information on the scale of the arrears crisis in Ireland. "Consistent, detailed information is an important basic step to identifying the problem," stated Noeline Blackwell.

/ENDS

Editors' notes:

FLAC (Free Legal Advice Centres) is an independent human rights organisation dedicated to the realisation of equal access to justice for all. It campaigns through advocacy, strategic litigation and authoritative analysis to contribute to the eradication of social and economic exclusion.
FLAC issued this press release in response to new statistics issued by the Financial Regulator on Residential Mortgage Arrears and Repossessions on 22 December 2009.
You can read more about FLAC's work on debt law reform online.
The Law Reform Commission published its consultation paper on Personal Debt Management and Debt Enforcement in September (see also FLAC's comment).
FLAC recommended a complete overhaul of debt enforcement procedures in Ireland and the introduction of debt settlement legislation in a major report in 2003. That was followed in July 2009 by a second in-depth report which explored the debtor's perspective on the enforcement process. The organisation called for a greater range of remedies to assist those who are over-indebted.
You can read about FLAC's open letter to politicians calling for action on mortgage arrears from October 2009.