Will 2017 be the 'year of the repossession’?

Most experts agree that more repossessions will take place this year - but the scale is up for debate

Will 2017 be the 'year of the repossession’?

File photo. Image: RollingNews.ie

In recent weeks it was revealed that AIB is planning to purge many of its non performing loans from balance sheets.

In advance of the bank’s planned privatisation, media reports last month suggested that the bank is also pursuing debtors through the courts.

However, AIB is not alone and there are fears that 2017 might well become the ‘year of the repossession’.

Newstalk Breakfast reporter Kieran Cuddihy has been finding out if such fears are justified.

Experts believe that more repossessions will take place this year, but the scale is up for debate.

It is mostly family homes involved, as opposed to 'buy to lets', and it is the 35,000 people who are in arrears for two or more years that the banks are expected to start dealing with more severely.

David Hall from the Irish Mortgage Holders Association said: "I think this year we'll see what was expected two years ago, which is a ramping up of banks of looking for repossession orders on family homes.

"There was a two years pause based on tracker issues around banks not wanting to have people in the tracker controversy having their homes repossessed [...] There's been an introduction of the Insolvency Service and Act.

"Every excuse that any county registrar or judge in the country could avail of, they did avail of. But we've come to Jesus now, and this is the year this will change," he added.

Insolvency arrangements

Paul Joyce, the senior legal analyst with FLAC (Free Legal Advice Centres), says that he sees already this year more and more pressure on county registrars to grant repossession orders.

In terms of the help available for people facing repossession, the Personal Insolvency Act is the most significant legislation. However, according to Paul, it is not working fast enough to deal with long terms arrears and it will not be enough to prevent the rise in repossessions.

He argued: "The numbers are fairly small... the number of arrangements particularly on the mortgage arrears side.

"Right now we have 34,500 accounts in arrears over two years. The average arrears figure on those accounts is over €60,000. On the other hand, the latest Insolvency of Ireland figures would suggest there's been less than 1,000 personal insolvency agreements put in place. So that equation doesn't look very good."

He added that his organisation believes the legislation was 'too conservative' and effectively allows "creditors to decide what they would accept and what they wouldn't".

Ross Maguire of New Beginning, meanwhile, also thinks the numbers will go up - but not to an alarming degree.

He would also defend the various schemes in place to assist distressed borrowers

He suggested part of the reason that there has not been more settlement arrangements with banks is because plenty of borrowers, particularly those in long term arrears, still adopt an 'ostrich approach' – effectively burying the head in the sand and ignoring the problem.

Ross makes the point that, setting aside the emotional argument, there are often very good reasons for repossession orders to be granted - even when it relates to a family home.

"There is a sanctity to the family home in Irish society - both in the law and generally the way people think," he argued. "But to say repossession can never happen is to re-calibrate the entire way we do loans and banking and mortgage and house-owning.

"In effect in Ireland today, if you don't pay your mortgage nothing really happens. That's a funny situation to be in, and it does cause people to be less proactive about problems perhaps. But that then has repercussions for the banking system and repercussions for people who are actually paying their mortgage... and people trying to get into home ownership." he suggested.