Tens of thousands in mortgage distress have been ‘abandoned and forgotten’

Tens of thousands of people living under the cloud of severe mortgage distress have been “abandoned and forgotten” by the State and remain burdened by shame and stress, a damning new research project published on Wednesday suggests.

The House Hold project compiled by the social justice NGO Community Action Network (CAN), said people in long-term mortgage arrears had been forced to contend with a lack of legal representation, rejection in court and a failure by State support systems.

It used information collected from distressed borrowers at eight public information sessions held earlier this year as well as a separate a survey.

“People are overwhelmed by the reality they find themselves in,” said CAN’s lead researcher Cecilia Forrestal. “They cannot afford legal advice and do not trust that it will work for them against the strong legal representation of banks and vulture funds. They feel abandoned and forgotten – almost like collateral damage of the past – as the country embraces the move out of economic crisis.”

She pointed out that the people were “raising families, looking after children, caring for loved ones with disabilities, and doing what they can to hold on to their homes” and she warned that if they lost their homes to vulture funds or banks “they have nowhere else to go and are at high risk of adding to our homelessness crisis.”

Julie Sadlier, a solicitor who has worked with distressed borrowers for over 10 years said the research was the first such project to concentrate on the “lived reality of the people behind the statistics and balance sheets” and she accused the Central Bank of consistently highlighting the needs of banks at the expense of families at risk of losing their homes.

“Over the past 10 years, we have completely lost sight of the humanity of the situation, and of the fact that many people, because of a variety of circumstances, have no way of making a deal with a bank and are looking at losing their family home,” she said.

“The State schemes we have in place don’t seem to be working either. Criteria for the mortgage-to-rent scheme are not reflective of the current market reality and supports intended to help people with financial and legal advice are failing to build trust.”

Legal fees

The report finds that over 70 per cent of people who are struggling have never consulted a solicitor while over 80 per cent have not had a solicitor represent them in court. Most said they could not afford the legal fees.

The courts were described as being intimidating, difficult to understand, daunting and largely intolerant of unrepresented plaintiffs and lay litigants and contrary to popular narratives, 72 per cent of people in mortgage distress have attended court hearings in their case.

The research shows that systems put in place to support people in mortgage distress are not working. Nearly 60 per cent said they had not participated in the Money Advice and Budgeting Service (MABS) while more than 90 per cent said they had not requested a consultation with a solicitor through the Abhaile scheme.

The majority of properties at risk of possession are long-standing family homes, according to the research and just under half have one or more children in them while nearly a quarter have one or more persons with a disability.

There are some 66,000 mortgages in arrears in Ireland, of which 28,000 are in arrears for more than two years. There are currently an estimated 20,000 possession cases before the courts. Based on a minimum of four people per mortgage, the CAN researchers estimate that mortgage possession is affecting the lives of approximately 250,000 people.