We tried to put the main themes behind the 60 pages of the report (minus appendices) into a 1,000 word condensed version.
To begin with the report (here) is just that, a report, it isn’t an automatic initiation of policy change although it may affect policy change in the future.
The Expert Group on Rerpossessions was established in September 2013 at the behest of the Troika and was mentioned in the 9th review of the Memorandum of Economic and Financial Policies (MEFP).
They didn’t understand (nor did our own decision makers) the reasons behind the length, lack of predictability of outcome, cost of proceedings and how it stacked up compared to other jurisdictions.
We have an abnormally low rate of repossessions in Ireland, that is both in absolute terms and most tellingly in relative terms to other countries, and the system for this is also lengthy, complicated and expensive.
There is nothing in the report which calls for wholesale repossessions, and in light of the facts (rather than the spin) it is unlikely that any of the changes, even if implimented straight away, would significantly change outcomes versus where they may eventually go anyway.
Delays and their causes featured heavily in the report, some are legislative in nature, S2 of the 2009 Conveyancing Act sets out an adjournment which gives the borrower the chance to consider a PIA and in general terms the first hearing is automatically adjourned irrespective of what is happening with the loan.
The deplorable state of the market is mentioned in chapter 3, that 141,520 accounts are in aeears with about 60,000 more than one year behind is a cause of concern. Arrears alone don’t tell the full story, you can have a fully performing loan with no risk of repossession and have arrears. Advanced forbearance by lenders, even though it may not all be long term, has played a large role as have legislative delays such as the Dunne Ruling.
On the BTL loans there are 40,426 loans in arrears of which 26,675 are more than 180 days behind and of that sum 20,272 are more than 360 days behind. This shows two things, firstly that with only 2,250 rent receiverships current that it is a solution being used in about 8.5% of serious BTL arrears (taking 180 days as the denominator), secondly is that BTL repossessions are also very rare too so most of the pressure in this sector is probably negotiated solutions because in hard numbers it isn’t showing.
As mentioned before the voluntary surrenders and abandonments are still the most popular form of lender possession.
The report was highly critical of banks on many fronts, this included criticisms of the banks using short term solutions where there was no tangible evidence of a borrowers likelihood of improvement. No clarity on ultimate long term solutions and a lack of information on the borrower as well as not having complete records.
There was also a lack of evidence of follow up in cases classed as legal proceedings. The worry here is (my thoughts) that legal threats are being used as a tool rather than a solution which is inappropriate under the arrears resolution targets.
Another point raised is that according to the County Registrars that a very high proportion of adjournments are lender lead and it isn’t apparent why (my thoughts again) – is this because they’d rather negotiate outside of court and just want to show they are serious?
A worrying jurisdictional comparison was made between here and the UK regarding re-engagement after legal threats, in the UK there is a 70% success rate of re-engagement while in Ireland it’s less than 25% this may change as the updated CCMA has stronger definitions of ‘non engagement’ but may also indicate borrowers aenethitised from the fear of banks.
The process of repossession from the initial Civil Bill to Execution Orders follows and with several case studies shows that the timelines are extensive with an average timeline of 780 days from one to the other. This is over two years (roughly 25 months) and doesn’t include the timeline up to the initiation of a civil bill which is normally about 12 months, nor the time after an execution order which can also be lenthly. All said repossessions will take at least three years in fastests case scenario.
Several other live examinations of courts were carried out in Dundalk, Trim, Mayo, and Galway, in every instance no possession orders were granted. The Galway Registrar also noted that banks were doing a bad job of engaging with borrowers who had tried to engage with them.
The Irish Mortgage Council voiced frustration with what they see as a series of pointless adjournments where one can be obtained even when the proposed solution is not workable. The Expert Group have determined that these decisions are best left to the courts.
And in a rather large ‘f”£k you’ to the Troika have stated twice in their conclusions that they don’t think that the introduction of any thresholds or specific payment amounts being introduced into legislation has any place.
Another evident bank failure was the attendance of lender staff at execution orders.
The ‘speeding up’ concern raised by some lobbyists is ill founded, the two important conclusions that could lead to this are the provision of repossession and execution orders at the same time and the expansion of powers of county and court registrars.
In the first instance double issuing of repo/execution is seen as something that might only have marginal impact on efficiency and that the delay between one and the other is not a court problem rather it’s a lender one. Secondly is that expansion of powers of registrars has not been an impediment to date so there is no need to consider that further.
In chapter 7 the expert group noted that repossessions are important in order to maintain a functional mortgage markete, something often overlooked and that more effective case management would be an important part of process improvement.
In the same way that MARP improved arrears handling within banks, some standardised documentation could do the same for the court process part of it. The remainder of the report is some notes on other jurisdictions and appendices.