Mortgage supplement changes premature and unsupportive of hard-pressed borrowers
25 April 2012
Legal rights group FLAC (Free Legal Advice Centres) expressed concern today that a proposed change to the Social Welfare Pensions Bill 2012 will remove an essential short-term support to people who need help to pay difficult but sustainable mortgages.
"The Minister's proposal to change how Mortgage Interest Supplement is awarded may actually cancel out what is an explicit and core purpose of the payment, that is, to provide a short-term support to people needing help to pay their mortgage," said FLAC Director General Noeline Blackwell. "The people most likely to be hit by this measure are those who bought at the height of the boom and who have been using up their financial reserves to sustain mortgage payments. They deserve to be supported, not undermined."
Under proposals from the Minister for Social Protection, the onus will be on borrowers to negotiate a repayment arrangement with their bank. They must then adhere to this plan for 12 months before a Department official assesses whether they are eligible for the payment at that point. Potentially, a mortgage that might have been 'reasonable' under the Department's terms at the start of the process - a prerequisite for payment - may well have become 'unreasonable' through increased arrears at the 12-month assessment point and thus ineligible for the supplement. In FLAC's view, this measure may well rule out many people who could and should receive this support under current rules.
"We understand that the Department may only be seeking to restrict how much money is going directly to bank coffers. However, as it stands, the banks have the power as regards mortgage debt and are under no obligation to make reasonable and appropriate deals with borrowers," according to Ms Blackwell.
In conjunction with Northside Community Law Centre, FLAC has made a submission to the Department of Social Protection on proposals to limit the payment of Mortgage Interest Supplement.
"FLAC and NCLC believe that this amendment is premature and should not be proposed at least until a suite of suitable protections for borrowers has been established," concluded Ms Blackwell, adding that FLAC also supported the position of the '7 is too young' campaign, led by OPEN, Barnardos and the National Women's Council, to restore former conditions for the One Parent Family Payment.
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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. Northside Community Law Centre aims to protect socio-economic rights, create a more just society and empower its community through campaign work, research and education programmes.
- Read FLAC's joint submission with NCLC on the draft amendments.
- You can read more about FLAC work on reforming social welfare law on our website.
- FLAC's factsheet on the Code of Conduct on Mortgage Arrears is downloadable as a PDF.
- The Department's draft amendments are available online.