Threshold has welcomed the Keane Report on Mortgage Arrears, which was published today (12.10.11), hailing it as a first step in providing sustainable solutions for people experiencing mortgage difficulties.
“The Keane Report indicates that, finally, the Government has stopped kicking the can down the road and, instead, has started coming up with sustainable solutions for those in mortgage arrears,” said Aideen Hayden, Chairperson of Threshold. “The moratorium on repossessions and other measures adopted in recent years really only postponed people’s problems. They didn’t tackle the root causes of mortgage arrears, and they provided no form of permanent relief for beleaguered mortgage-holders.
“The Keane Report is recognition at last that people need to have permanent resolution for their mortgage difficulties. Many of its recommendations are measures for which Threshold has previously called. So we are broadly welcoming it, although we need more detail on how some of its recommendations will actually be rolled out.”
One of the recommendations contained in the Keane Report is that mortgage lenders should fund the recruitment of financial advisors, who would offer a debt support service to those at risk of losing their homes. While Threshold welcomed the establishment of such a service, it said the independence of financial advisors would be crucial.
“It was the failings of lending institutions in the first place that resulted in people finding themselves in the awful situations they’re now in,” said Aideen Hayden. “This new cohort of financial advisors must be free to work independently of mortgage lenders – even if the lenders are paying their wage. They must also have the necessary legal and financial expertise and must operate in the best interests of the borrower. What we don’t want to see is out-of-work estate agents filling these roles.”
Threshold also called for greater detail on how the ‘mortgage-to-rent’ measure recommended in the Keane Report would be implemented in practice. This is a recommendation that local authorities and housing associations buy the homes of those in mortgage arrears and then rent back the properties to those who were forced to give up ownership of their homes.
“The great advantage of ‘mortgage-to-rent’ is it allows people to remain in their own homes – to stay in the communities in which they live and work,” said Aideen Hayden. “So young children are not uprooted from local schools, and family life is not hugely disrupted.
“However, any mortgage-to-rent scheme must be operated by local authorities and voluntary housing associations. It would be entirely inappropriate for it to be operated by the lending institutions themselves.”
Ms. Hayden also called for greater detail on how the new split mortgage schemes will be rolled out:
“One of the recommendations in the report is to allow borrowers pay a reduced mortgage, based on a reduced equity stake in their property. The remaining equity would be owned by the relevant local authority, and borrowers could buy back that equity over time. This would allow people to pay an affordable mortgage for a period of time, until their income and circumstances improved. The detail of how exactly this would work is critical.
“Overall, Threshold is pleased that the recommendations in the Keane Report mirror many of the measures we have proposed in recent years. We look forward to receiving greater detail on the recommendations and how they will be implemented in the coming weeks,” added Ms. Hayden.
Threshold was founded in 1978 and is a not-for-profit organisation whose aim is to secure a right to housing, particularly for households experiencing the problems of poverty and exclusion. Its main concentration of work is within the rented sector. The organisation operates a national office, based in Dublin, and three regional offices. It provides advice and representation to over 20,000 people each year. Further information is available at www.threshold.ie.