Mortgage arrears report lacks the urgency felt by over-indebted people

12 October 2011

Legal rights group FLAC said today that it was disappointed that a government-appointed group had failed to specifically acknowledge the range of problems besetting people in mortgage arrears. Equally, there was no urgent timeline for the implementation of proposals set out in the Keane report on strategies to assist distressed mortgage holders.

"In its guiding principles, the Report declares that 'there is no entitlement to a particular solution and solutions have consequences.' This is cold comfort to over-indebted families, many of whom find themselves in trouble due to circumstances beyond their control," said FLAC Senior Policy Researcher Paul Joyce.

In general, the report suggests that he range of solutions recommended need to be further developed over time by the banks. According to Mr Joyce, " this is more evidence of a reluctance by the State to 'impose' obligations on the institutions."

On the critical question of personal insolvency legislation, the report acknowledges the inadequacy of the current legislative framework and the urgent need for reform. It admits that the State has no infrastructure to run a non-judicial debt settlement process. It also recognises that without personal insolvency legislation there can be no resolution to the mortgage arrears crisis.

Despite all this, the group does not call for a formal agency either to oversee any new personal insolvency legislation or the implementation of mechanisms outlined in its report, and merely mentions that the publication of such legislation is planned for next year.

" In its final report on personal debt issued in December 2010, the Law Reform published a draft 'Personal Insolvency Bill'. Surely there has been ample time over several reports to make a start on what is by now beyond urgently needed," said Mr Joyce.
In focusing only on time-limiting Mortgage Interest Supplement, the group ignores recommendations made by the Cooney Group to reform and relax conditions of access to MIS. These were intended to improve the situation for over-indebted consumers in mortgage arrears but appear to have been shelved.

FLAC welcomed the proposed introduction of mortgage-to-rent schemes, but would question to what extent the banks would participate in such mechanisms in the absence of an obligation to do so.

"We also welcome the proposal to have 100 extra advisors for a 'MABS 2', but question how this would knit into the current MABS structure," said Mr Joyce. "We note the Group's view that the Central Bank should continue to monitor compliance by mortgage lenders with the Mortgage Arrears Resolution Process. However we see that this does not seem to include consultation with consumers in arrears. This is mirrored by the general failure of the Keane group to include or to even consult with consumer representatives before delivering its recommendations.

"Ultimately, people who are over-indebted and in severe trouble need solutions that are less bank-driven and more consumer-focused."


Editors' notes:
1. 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.
2. The Keane report was compiled by the Interdepartmental Mortgage Arrears Working Group and is available at:
3. The Central Bank released its latest figures on mortgage arrears on 29 August 2011. These are available online at:
4. FLAC has analysed the figures from the CB available at:
Some of the highlights of this release include:
- At the end of 2010, one in ten mortgages was in trouble. By March 2011, it was one in nine. Now we see almost one in every eight mortgages is struggling - 12.24% of mortgages.
- 95,158 mortgages are in arrears or are being rescheduled out of a total of residential mortgage loan accounts of 777,321.
- Over 70% of mortgages in arrears are in arrears for more than six months.
- The average amount of arrears for households in this category is over E21,000.
- Despite the relatively low level of repossession cases, mortgage lenders now hold 809 repossessed properties, up from 692 in March 2011.
- These figures refer only to mortgages on principal private residences, that is, where the mortgage holder is living in the property in question.