If you go into arrears on your mortgage or you talk to your lender because you believe you are a ‘pre-arrears’ candidate then you will be asked to fill in a ‘Standard Financial Statement‘ or SFS which is part of the Mortgage Arrears Resolution Process (MARP) which started last year.

Engaging with the lender is a key tenet of this and filling in the SFS and liaising with the lender on aspects of it. The information in this is what will be used to negotiate the repayment that you will pay in cases where lifestyle adjustment does not allow you to make the full payment.

Paul Colgan from RTE covered this story about the proposed Personal Insolvency Bill which will update Ireland’s dated debt legislation. This is a more humane approach to dealing with debt issues and we are pleased to see it coming to fruition. Any legislation will have teething issues and will not be perfect, but this is definitely a step in the right direction.

Our foremost concern (as echoed in the clip) is about the regulation and oversight of any plan.

Karl was asked to appear on RTE’s ‘The Frontline’ because of his support of property tax. This is ‘the wrong step in the right direction’ in his opinion. Less income tax with local authorities supported by a ‘Site Value Tax’ is the way to go in his opinion. It was not a popular opinion.

We were talking about health insurance, car insurance and credit unions this month on TV3’s personal finance slot. On health insurance in particular we highlighted that you don’t have to go from ‘having cover’ to having zero cover, instead you could opt for the likes of the Hospital Saturday Fund which is a cash plan (pays out on health related spending but isn’t like regular insurance).

Car insurance was also a topic - the new EU ruling will make it illegal to rate men and women differently based on their sex alone from 21st December this year.

Credit Unions were (and are) in the news because of problems they are having. We’ll be back with TV3 next month for more!

That is why I see two articles in the Irish time that seem to contradict the likelihood of the each other.

Article 1: Council flat purchase scheme to start in 2012
Article 2: Tenants owe city council €21m in rent arrears

In the first one we are told that Dublin City Council (in particular) are close to bringing out a ‘tenant purchase scheme’ via the 2009 Housing Act for people who live in flats. The scheme has a few things that may hamper it…

For a start 65% of the tenants need to agree to having the flats put up for sale and 30% must then follow through and purchase, if this doesn’t happen within 3 years the scheme lapses for that complex and everybody remains as local authorities.

The only incentive might be to almost give the properties away. In one respect (for long term tenants) this is justified because they were locked out of being able to buy their properties in the past, in another respect it’s just a large wealth transfer for which nothing was received.

Local authority loans are on average 33% in arrears - and that figure has likely gotten worse. Does it make sense to bring more people into a market that is already a slaughterhouse? Athlone town council for instance has an arrears rate of 65%.

Dublin City Council social housing tenants (as opposed to Shared Ownership & Affordable Housing) have arrears in 25% of their tenancies and are owed more than €21,000,000 in unpaid rent. The average time in arrears is almost one year (50 weeks). With 40% of those in long term arrears unwilling to co-operate with new repayment agreements, there is a near zero rate of outright evictions.

So why on earth would anybody want to buy their own flat? The people I know that live in flats by and large don’t want to live there forever, and in one respect many council owned flats occupy some of the best real estate in the city - so prices may well be unaffordable unless there is a give away.

If people can afford to buy a house then why are they not moving on from social housing to make room for the 100,000 people who are on the waiting list? This is also unfair because it bestows a benefit on those who are occupants based upon the year they were born in rather than upon current need.

This at the same time as we see property taxes coming in, where waivers are already in place for local authority tenants, purchasing means you’ll end up paying more even if only by virtue of not getting your property tax waiver any more.

Personally, I think it would be great to see higher levels of ownership in social housing, flats in particular. Having spent the last decade in the inner city I believe that one ongoing aspect of policy that dis-empowers city dwellers in flats is that they don’t have a sense of ownership on their homes because they can’t buy them even if they want to.

However, in the current vista there is no reason to believe that this scheme aimed at the 12,000 flats in DCC ownership will see a sizeable uptake unless there is a large financial incentive to do so and that means giving up a large portion of state wealth in many prime real estate areas.

Paul Colgan of RTE did a story about banking & rates charged by different lenders. He also asked whether future ECB rate cuts would be passed on to borrowers.

“At the starting line of the Berlin Marathon, I chain-smoked five cigarettes while rubbing Tiger Balm into my legs.”

“I used to joke that only two things would survive a nuclear winter: cockroaches and me.”

“The smart thing would have been to take my spare cash and move to my mortgage-free place in Dubai with its private beach.”

“I would do things other people were not prepared to do, just to prove a point.”

In between those legendary quotes there is the story of taking a dive into the downturn that so many in this industry have faced, I can tell you from experience it is a painful learning experience, but learn you will whether you want to or not.

John has a book out called ‘Sorted! How to survive and thrive when money is tight’, published by penguin, link here.

For our part we wish him every success in the future, we’ll stay punching it out in mortgage no-mans land and hope that 2012 is a better year than 2011!

Some of the main points thus far are:

1. That mortgage lending bottomed out in 2011.
2. That IBRC may take on some tracker loan portfolios to de-risk state owned banks (as the state already owns these loans entirely anyway).
3. That rates for existing AIB borrowers will have to go up but that for new borrowers rates may come down with changes to how prices are charged depending on risk of the proposed loan.
4. That deposit rates will start to drop.
5. That up to 25,000 mortgages will be deemed ‘unsustainable’ and that the ‘won’t pay’ contingent of arrears cases may be as high as 1 in 5.

We hope you enjoy this report, we in turn hope that we get some of the calls right!

Many thanks,

Irish Mortgage Brokers

RTE interviewed Karl Deeter in this clip about the recent CSO report, it was on the 20th of December 2011.

Inside Job, Narrated by Matt Damon (Full Length HD) from jwrock on Vimeo.