There tends to be two views on repossessing family homes, the first is that it is wrong, that doing this is committing an act which is immoral and putting a family who are often victims of circumstance into an even worse position than that which they currently hold.
The other is that it is reality, not one to be ignored, and that avoiding it doesn’t change outcomes. The recent news that the Secretary General of Finance himself believes that ‘home owners cannot expect to stay in houses where they have no prospect of paying the mortgage’ is telling, we are at a stage we have been saying is going to come for several years; where repossessions start to kick-in in earnest.
The Justice Dunne ruling and CCMA have all had a role to play, as have our zombie banks attitude towards forbearance which is not out of altruism but out of a view that the longer they wait the better they are equipped to deal with the problem.
Thus far the debate is insincere, many of the reasons there is a build up in arrears that don’t see any solution come from the officials who complain about it. Firstly is the Government, who despite the protestations that they want an answer have delayed the vital ingredient they control, because the state, and not the banks, are responsible for implementing insolvency legislation that has been delayed time and again.
The Central Bank are also culpable, they created the delay making ‘Code of Conduct on Mortgage Arrears’, and then there is the judicial process (this part is without blame attached because judgement is contingent on existing law not on policy choice) weighed in with a ruling that meant you couldn’t repossess a house unless the person was handing it back to the bank.
As for ‘good’ or ‘evil’, housing policy needs to be, or perhaps ‘should aim to be’ about sustainability and affordability, not about maximising tenure in a property that a person cannot afford to pay for.
Negative social views are a problem, not unlike the negative views people had about children born out of wedlock in the past. Having relatives who were single mothers in the 60’s and mid 80’s I know that it was hugely frowned upon and that the stigma had a lasting affect on these mothers.
I mention this because the psychological toll it took on them and that mortgage problems cause with people now. The pervasive general view is that it’s a tragedy, but that doesn’t tell the full individual story, it can be a tragedy, it can also be lots of other things. We also tend to default into a belief that the affected people are victims and the banks are the bad guys.
Nothing is that black and white, and in our firm we have met swathes of borrowers who would love to ‘get out’ of their unsuitable properties that they overpaid for. We need to start viewing this as basically moving house with some extra headache thrown in.
Obvious caveats are where people might lose homes that have been in a family for generations, but in the main it’s about moving on after something doesn’t work out. Until we see this for what it is (a financial decision that didn’t work out) instead of the current view more in line with making people homeless, we can’t hope for a sincere debate.
When people are 2yrs behind it’s time for them to understand that their tenure has to change, they can’t keep the title of ‘owner’, they may keep the title of ‘occupant’ depending on the resolution used, but again, one is not superior to the other and owning a debt is not morally greater than renting a house.
It’s almost impossible to discuss this in a measured way in Ireland, for my part I tried to do this and failed on many occasions. There is something about having to move house when you can’t pay that is deeply offensive to people in this country.
We skirt over the other deeply offensive aspects such as young up and coming families not having a better selection of choice on where to live because properties that are not being paid for (and where losses are often going to be absorbed through bailouts ultimately funded by taxes) are not coming onto the market meaning the full market selection is denied them.
We don’t seem to have an issue with young couples paying over the odds for a new home on a street where the price isn’t lower because two or three sales that should have occurred at lower prices didn’t happen due to long term inaction by lenders.
Moving home is stressful, but it isn’t a failure, it’s a change, and in many cases nobody will have to move anywhere because some solutions won’t require it, but to think that any homes being taken back by banks is a one sided event where only wrongdoing is occurring is denial of fact, denial of reality, and it isn’t even fair to many of the people affected.
They are the ones who will then believe they are victims rather than responsible adults making new futures for themselves. When people come to me for help with the banks I see both sides, some who want out, others who want to stay, and everything in between.
Almost all of them are depressed in some way, some tell me about it, about getting medication or not wanting to take it, and others are enraged and carrying lots of anger with them, and I think that the saying ‘you won’t be punished for your anger, you will be punished by your anger’ holds true.
Somehow we need to figure out how to have conversations minus genetic predispositions for outrage at the thought of moving home. It will be better for everybody, in particular those who can then start to stop viewing themselves as failures and instead as people who are in control of their futures even though they may not have full financial control every step of the way.