Item Number One for the political agenda when the Dail resumes on 18th September, 2012 should be the Personal Insolvency Bill which, as presently drafted, does NOT provide for a modern bankruptcy regime because it allows banks to stop your bid for bankruptcy. Whilst the pace of increase has relented slightly in the past two quarters, the number of mortgage accounts that are in arrears over 90 days is now at a record level of 83,251. And when you add in all accounts in arrears and those accounts that have been restructured which might not be paying a cent presently, there are over 168,000 accounts out of 760,000 which show some form of distress. The main way forward has to be reform of our bankruptcy laws.
So when Minister for Social Protection Joan Burton (pictured above) this morning announced a scheme to give homeowners being offered a restructuring deal by their bank, access to a free consultation with an accountant up to a value of €250, the response on here was that the initiative is little more than a sticking plaster on a gushing wound. But in the absence of proper bankruptcy, it seems like an honest attempt to provide homeowners with independent professional advice in relation to any restructuring scheme put forward by the banks. The announcement says the cost of the service which is borne wholly by the banks “could be in the region of €10m” which would equate to 40,000 * €250. It has been a long held concern on here that banks would take advantage of financially distressed homeowners to kick them off tracker mortgages in return for any restructuring, a move which could cost homeowners hundreds of thousands of euro over the life of the mortgage. So independent professional advice is to be welcomed, if only to stop banks taking advantage of a bad situation.
It is the banks that are paying for the consultation. In the case of PTSB, AIB/EBS, IBRC and to an extent Bank of Ireland, that means the State paying for the advice because we own these banks. However it seems that all banks, including Ulster, KBC, National Irish and Bank of Scotland/Halifax are included in the scheme.
How do you access the new service? Take a look at the government-run KeepingYourHome.ie website and contact the Mortgage Arrears Information helpline on 0761 07 4050. Your bank should make you aware of the new service launched today.
What a load of. S. Minister looking after her fellow accountants. None qualified. All self regulated. Financial advisors trained in this field and regulated by Central Bank. Bank paying for the advice. How can that be independent. Government again confusing movement with action. Mortgages and rates will soon become irrelevant as people will not be able to pay their utility bills. Stop this circus now or we will all follow Ivan Yates and no come back. This crisis is worse than T B in the 50s and we have no Noel Brown.
Is the advice: “pay your mortgage”, Wouldn’t surprise me
I was wondering about confidentiality (of advisers’ dealings with borrowers) and disclosure (by advisers to the banks). Will there be chinese walls and how high will they be?
More legalised theft, and of course no “free” lunch. I agree with Michael above the crisis is turning into a farce of historical proportions. We go bankrupt slowly being bled dry by the people who are most responsible who were the accountants that are stuck everywhere they are submitting bills for paper clips, copies of the Irish Times, you know the routine and 700 euro and hour for valuing stuff that needs to be sold off for buttons because the last time the valued it they got their sums 300% wrong.
Jayus only the Irish could find something to complain about in free advice for financially stressed homeowners,its non binding,but “free” may also result in getting what you pay for.
to mis-quote Turkish & Micky in snatch…
T: I reckon the debtor gets F’ed…
M: whaaa Professionally F’ed…
@NWL
I fully endorse your view suggesting that the current PIB is a pile of nonsense with the banks having the final say in allowing someone avail of such a scheme. However suggesting that a better PIB is what’s required as you have done is in my view equally as flawed.
Personal Insolvency schemes were designed for individual hardship cases to allow people the opportunity to start afresh, slate wiping and all that. This is not the situation we find ourselves in Ireland today. We don’t have isolated individual sad cases we actually have a structural countywide problem. No country that I can see ever designed personal insolvency legislation to cater for a structural debt problem. They are not two sides of the same coin as is often suggested because we now know the debt problems are no longer personal in nature as they now effect the very basic countrywide economic model and therefore ongoing calls for more sophisticated personal solvency legislation is laudable and necessary, however the predicament the country now finds itself demands structural solutions not individually based ones.
The structural solutions relate to rectifying the massive pricing error in property pricing over the past decade. In proceeding down the personal insolvency route as suggested, abdicates the banks and lenders from their error and places the burden i.e. the bankruptcy stigma and the long term credit consequences back on the head of the individual, this is wrong, and more importantly misses the structural nature of the pricing error inflicted by the banks on the citizens over the past decade.
As suggested here before we don’t have a toxic asset problem (asides from the Priory Halls of the country) we have a toxic pricing legacy. These are not same thing. Far from it.
Property pricing errors now seen in their finery in the form of ridiculous mortgage related debt is a banking error, not a personal borrower mistake. Banks price property. The interaction of cash based consumers in a ‘normalised’ property market is a tiny fraction of the wider transactions in that marketplace. Banks hold the keys to 95% to 98% of transactions in the property marketplace and without their credit there is no ‘market’. Recent Allsops auctions simply reinforce this basic fact.
Logic seems to have left the thoughts and minds of our political and economic classes when suggesting a call for Govt debt write downs in the case of bank related debt seems fair and reasonable given its odious nature and on the other hand suggesting a scheme for individuals is likely to be ‘contagious’ and somehow dangerous. This is a daft policy stance. We can avoid such a logic conflict by utilising a model based property pricing mortgage write down programme which avoids the stupidity of individually based personal insolvency cases occupying our landscape for years to solve a structural pricing error.
@ Y or B. Congratulations. Great post. So bloody obvious – but so few understand it. We truly have amateurs running the country. I’d support you for Minister of Finance!
@Yields or Bust, thanks for your comment. Two things, firstly mortgage-based transactions are said to be about 70% of the market at present, SF said that they were about 60% in Dublin with 40% in cash. I am hearing from non-Dublin agents that the cash component may be as high as 60%, that is, cash transactions outnumber mortgage-based transactions.
Secondly, if you have a uniform write-down in mortgages based on some model, then you are giving an advantage to a certain cohort, remember that just 583,000 out of 1,684,000 households have a mortgage, and many of those mortgages are not in trouble. Why should 2/3rds of society offer a blank cheque to the other third. And remember of the third of households that have mortgages, less than a quarter have issues with arrears. And when we talk about banks writing a cheque, these are banks that may come back to the 1,684,000 households looking for a further bailout. We don’t need reinvent the wheel in Ireland, we can import a bankruptcy template from an advanced economy, even the German one where you can still control your own fate even if it takes seven years to fully emerge from bankruptcy. But preferably the US or UK template where the bankruptcy is a quicker affair, weighs up assets and liabilities, sells the assets, pays off the liabilities as best they can, garnishes income for a year as a punishment and leaves the bankrupt on basic rations for that time, doesn’t interfere with employment and returns the bankrupt to society and the economy with the ability to get on with their social and economic lives.
Ony really studied it last night.
What it means is you go through the trial by yourself and when you on the Gallows an accountant paid by the Bank then confirms it the right solution. This covers the Banks Arse. Take up on this will not exceed 100 people
Nobody dealing with the Elephant in the Room. Write down the only solution.
well said YorB.
A modern BK law is required regardless, as a knee jerk to the banjaxed tiger will make for bad law.
your clarity regarding the structural nature of the ‘pricing error’ and the consequent and ongoing mortgage crisis is welcomed.
IBF are still calling the shots on this and other key strategic matters, cleverly using the threat of even greater failure to dictate policy in therir favour. Long live the Pillar Banks! (Millstone banks more like.)
Am I correct in thinking that there is a €3 million upper limit on the scope of relief under the new bill? Any views on here as to what such a limit shd be?
PS: watch out for the usual shell game of last minute minute amendments and loophole insertions as the bill goes through the final stages.
PPS: Noises about credit union “reform” make me very nervous – CUs always loathed and envied by banking establishment – especially now with competition for deposits.