All mortgages contain remedies that may be exercised by lending institutions in cases of mortgage default. Repossession in the event of such default is, therefore, an existing contractual right.
In a well-known 2011 case (Start Mortgages), the High Court found that enactment of reforming legislation in 2009 may have had the unintended consequence in certain cases of restricting lending institutions from asserting their repossession rights. The judgment in this case is under appeal to the Supreme Court.
High Court judgments in later similar cases, however, appear to have limited the potential impact of that judgement. One way or another, there is now an uncertainty in our law which can only be addressed by a Supreme Court decision and, possibly, amending legislation.
Speaking today, the Minister for Justice, Equality and Defence, Alan Shatter TD, said “The issue of framing an appropriate legislative response is the subject of ongoing consultation between the Department of Justice and Equality and the Office of the Attorney General.
“I want to stress that this issue is not about facilitating wide-scale repossessions by banks and other lending institutions. It is, if it becomes necessary, about correcting an unintended consequence of reforming legislation enacted in 2009.
“As regards the Insolvency Legislation, the position is that under section 100 of the Personal Insolvency Bill, a Personal Insolvency Arrangement proposal shall insofar as is reasonably practicable, be formulated in such a way that will not require the debtor to dispose of an interest in or cease to occupy his or her principal private residence. However, this significant protection is necessarily tempered to take into account that the debtor may not wish to continue to occupy the house or the costs of the debtor continuing to reside therein are disproportionately large."
“This provision is of particular importance as it can assist those with unsustainable debt and their creditors to conclude realistic and common sense arrangements that can facilitate the debtor continuing to reside in his or her family home.”
The Government is aware of the real and significant difficulties some mortgage holders are facing and is committed to advancing appropriate measures to assist those mortgage holders who are experiencing real and genuine difficulty. Apart from insolvency reform, which is a key to addressing the problem, the Government is also implementing the other measures as recommended in the 2011 ‘Keane Report’ (Inter-Departmental Working Group on Mortgage Arrears). These include the implementation of mortgage arrears resolution strategies by lenders as overseen by the Central Bank, the launch of the “mortgage to rent” initiative on a nationwide basis and the provision of an independent mortgage advice framework including an enhanced website www.keepingyourhome.ie.
In addition, the Central Bank’s Code of Conduct on Mortgage Arrears remains a key protection and provides that each mortgage lender regulated by the Central Bank must put in place a formal Mortgage Arrears Resolution Process to deal with its mortgage customers who are in arrears (or pre-arrears) and in particular it also provides that such lenders must adopt at least a twelve month moratorium in respect of cooperating mortgage holders before applying to the Courts to commence legal action for repossession of a borrower’s primary residence. This protection remains in place.