An organisation that helps people in mortgage arrears is to seek rapid home repossessions in the courts to help keep single parents and children in their homes.
The Irish Mortgage Holders Organisation has spent the past decade trying to slow down and discourage courts granting repossession orders to banks and vulture funds.
Now it is to seek to fast-track repossessions in cases where women and children have been abandoned by ‘deadbeat dads’ who refuse to sign off on debt deals with the banks for their abandoned partners and children.
Banks and other lenders need the consent of both parties even in cases where couples are separated.
David Hall of the Irish Mortgage Holders Organisation said hundreds of mothers were stranded in mortgage arrears after husbands left them, stopped paying the mortgage, and then refused to engage with the lender.
He said the only solution for these distressed borrowers was to encourage the courts and the banks to fast-track the repossession of the property and then put in place a mortgage-to-rent deal.
Courts do not need the consent of either party to a joint mortgage if they decide to grant a repossession order.
Mr Hall will use his iCare Housing organisation, a not-for-profit body, to buy the homes.
“We are doing this because the reality is we see no other way to do it,” he said.
“Normally the husband has to fill out a standard financial statement and sign a surrender form to put in place a mortgage-to-rent deal. He won’t do this if he has abandoned the wife and kids, so we will be seeking to have the house repossessed to take him out of the picture.”
Mr Hall has a number of cases lined up, and is now seeking agreement from the banks that own the mortgages to ensure they do not object or delay the granting of the repossession orders in court.
His clients will be legally represented in court, and the need for a quick repossession order to be granted will be explained to the judge or county registrar.
It can sometimes take two years or more for a lender to get possession of a property when the mortgage is in default.
“Husbands, and it is nearly always men, who abandon their partners is the biggest challenge we face trying to deal with those in mortgage arrears,” Mr Hall said.
“We are now going to be saying to the banks and to the courts, ‘speed up the repossession’. We will buy the home through iCare and rent it back to the mother, and the children can stay in their home,” he explained.
If a person is eligible for a mortgage-to-rent deal, then ownership of the home transfers to iCare Housing. Banks sell the property at a discount to iCare. The customer becomes a long-term tenant of iCare Housing, and any remaining residual mortgage debt, following property sale, is fully written off.
The person benefiting from the mortgage-to-rent deal has to qualify for social welfare payments, and the scheme is limited to properties under certain values.
How the scheme works
- The parent can no longer meet the mortgage payments because her partner has left and is no longer contributing financially.
- The bank has already threatened repossession, and there may already have been court hearings.
- David Hall’s iCare approaches the bank and gets it to agree to a fast-track repossession, something that sometimes takes years.
- It is explained to the judge a repossession is the only way to remove the obstacle of the non-co-operation by the husband to any debt write-down deal the bank might offer.
- Repossession is granted.
- The house is sold at a discount to iCare.
- If the family qualifies for social welfare, and the property is under a certain valuation, then iCare rents it back to the family. This is known as mortgage-to-rent.
- A local authority may subsidise the rental payment if the family can’t meet the full amount.
- There will be an option for the family to buy the home in the future, at its current value.