When it comes to repossessions a court's hands are often tied, but last-minute negotiations often mean people can avoid losing their homes
ANNA POSTED HER house keys back to the building society on the day before her house was due to be repossessed. "I couldn't face bringing the keys into them," she says. "And the thought of being evicted would have killed me totally."
It is 20 years since the mother of three lost her home during the last recession. But the event has defined her life. "The anxiety and insecurity never leaves you," she says.
It was the postman who first rang the alarm bells when he asked her if she know that she had been getting registered letters.
"Your husband takes them from me when you are gone to school," he said. When Anna asked her husband about it, he denied it but she searched the house and discovered letters from the building society hidden in a tool box in the garden shed.
Within weeks, her husband had left her and their young children and she was faced with arrears of roughly €6,000. She did not work outside the home and had no immediate prospect of clearing the debt but she tried to reach an agreement with the building society. "It wasn't a huge sum. The mortgage could have been extended by five or 10 years but they didn't want to hear about it."
She eventually wound up in court, asking the judge to allow her to keep her home. "I couldn't afford a solicitor and I had never stood in a courtroom in my life," she recalls. "It was overwhelming." Anna does not want her full name published as she fears her ex-husband.
Not many people in her situation show up in court for the hearing. In the High Court, the Chancery summonses list is heard every Monday afternoon in Dublin. It is an intimidating place for a first-timer in the courts. Dozens of barristers crowd in to represent lending institutions that are seeking to take possession of the property in arrears. A quick run-through of the cases results in the vast majority being adjourned and the judge returns to the remaining few. The court empties at this point and one or two homeowners can be seen at the back of the court waiting for their cases to be heard.
Of the 59 cases on last Monday's list, just two property owners addressed the court. They got a sympathetic hearing from Justice Elizabeth Dunne but, as she and her fellow judges regularly explain, the judge's hands are tied if the banks have complied with the necessary procedures.
The hearings are peppered with references to the various misfortunes that befall families. Job losses, marriage breakdown, illnesses and failed enterprises have all featured in recent weeks. Earlier this year Justice Dunne was addressed by one woman who was facing cancer surgery, had a seriously sick child and her husband's business had failed.
There has been a noticeable increase in the number of orders for possession sought by banks and other lending institutions in recent years. In 2007, 465 orders for possession were sought at the High Court - an increase of almost 50 per cent on 2006 figures. The granting of such orders by the High Court has also increased steadily, going from 116 for all of 2003, to 126 for the first six months of this year. Another 81 orders were granted in the circuit courts, mainly in Dublin, Meath, Cavan, Kildare and Cork.
The Free Legal Advice Centre (Flac) believes that there must be a better way to resolve debt problems other than repossessions. Paul Joyce, Flac's senior policy researcher, points to the recent State guarantee provided to the banks and asks why vulnerable borrowers are not being given a similar safety net. He says many financial problems have arisen because of issues outside the borrowers' control. "Others were lent money in dubious circumstances where their ability to repay was at best cursory and at worst non-existent, so that regardless of economic circumstances, problems were always likely to occur."
The Government should give the courts more power in hearing cases involving possession orders, he says: "If a court can see that a borrower cannot repay because of a change in financial circumstances beyond his or her control, the court should have a right to put a moratorium on any right of the lender to enforce its security. But if it can see that a loan was reckless in the first place, the court should have the power to re-schedule it. This could be made a condition of bailing out the banks."
Firm data on mortgage arrears and repossessions is difficult to access so the true extent of the problem is not known, according to Joyce. He believes the Financial Regulator, the courts, and the lending institutions should work more closely to provide more detailed information.
ANNA SAYS THAT in her case, "the judge was very sympathetic but his hands were tied and he gave me six months to find somewhere else". She sold her furniture "stick by stick" and spent her last days in her home eating her dinner on a deck chair. She rented a house with the support of St Vincent de Paul. "I only got it because Vincent de Paul said they would guarantee the rent if I couldn't make it."
The charity has seen a 40 per cent increase in calls for assistance in the first eight months of this year, with 25 per cent coming from people who have never previously sought help from the charity. Its president, John Monaghan, says his colleagues in rural areas have come across cases where enormous debts have been accumulated in the construction of one-off houses. "We could be talking about several hundred thousand euro," he says. "The level of indebtedness is so high it scares us."
He has heard of cases where people with mortgage difficulties are handing their keys to the lending institution and walking away. "They probably believe it is better to throw in the towel than have a court judgement against them, but if they default, their credit rating is upset greatly."
He strongly discourages people from defaulting and urges them to seek help. While St Vincent de Paul cannot repay the arrears, it can help with day-to-day expenses, such as utility bills and school expenses. He believes many people currently experiencing trouble with their mortgages do not approach the charity because their arrears are so high that they feel they will never clear them.
But even when orders of possession are granted by the courts, most people do not lose their homes. Judges frequently place stays of three to six months on the orders to encourage a last-minute resolution.
START MORTGAGES LTD OFTEN accounts for the greatest number of cases on the High Court list. It provides loans to people who have difficulty getting mortgages elsewhere. Its spokesman Paul Murphy says the company has given 11,000 mortgages since it began operations in 2004 but has only had 20 repossessions.
It has won orders of possession in many more cases but the problems are resolved. "The majority of cases that do come to court end up with some other solution," he says. "Repossession is very much a last resort."
The experience of the Dublin County Sheriff backs this up. John Fitzpatrick says he and his colleagues around the country have been bracing themselves for the expected increase in repossessions but it hasn't happened yet. He is called in to enforce evictions but has not had to evict a family on foot of an order of possession this year.
"It seems there's always a deal done at the last minute," he says. "In the 1980s, we would have to do at least one a day. It was awful, dreadful. But no, we're not getting any great flood of them."
He said there was some evidence in Britain that lenders who had received orders for possession were letting the house to the homeowner, rather than trying to sell in a depressed market.
Losing her home had a profound effect on Anna. She overheard her daughter talking about the "bold people" who took their house, and has hesitated to visit an old neighbour because she would pass by her repossessed home. "You know how you have a security blanket when you are a child? My home was my security blanket. It killed me to let it go. But who did it benefit? It took them three years to sell the house and I was paying the same rent as the mortgage would have cost."
Six years after the repossession she bought her own house. Now she wants to tell others that there is life after repossession. "Your life won't ever be the same again. You won't get back to where you were but you can get through it."
