Legislation to give judges powers to refuse bank applications to repossess family homes in mortgage default has been described as unconstitutional and unworkable in its current format.
Independent Wicklow TD Stephen Donnelly introduced the Family Home Protection (Miscelllaneous Provisions) Bill in the Dáil today.
He believed it could be incorporated into forthcoming Government legislation on personal insolvency and bankruptcy. Under current legislation the courts must enforce repossession orders at the end of the one-year moratorium.
The Bill, however, would allow the courts discretion to take into account other factors such as efforts by families to restructure their debt.
Mr Donnelly cited the case of one couple in his constituency - a public sector worker and a businessman whose family home and business are in negative equity.
He said the bank had raised the variable mortgage interest rate four or five times in the past year, doubling their mortgage and forcing them into arrears.
“In this case, one thing I cannot get out of my mind is that the lady said they are now watching the amount of toothpaste they put on their toothbrushes because they are left with so little money they do not have money for toothpaste.”
He said if the bank decided to repossess their home, it could only be stopped for one year because of the moratorium but ultimately the judge would have to enforce possession.
The judge has no discretion to make the case that the borrowers has made a reasonable offer and that the bank has essentially forced them into arrears through its actions and that it is not reasonable for the bank to take the house, he told the Dáil. “This is at the nub of what the Bill tries to do”.
Minister for Justice Alan Shatter praised Mr Donnelly’s “well intentioned and laudable” efforts to offer elements of protection to homeowners.
But he said the Bill’s provisions “give rise to serious constitutional and legal difficulties and could impose time-consuming and costly procedures both on the court and the parties engaged in repossession proceedings.
He added: “It also gives rise to serious constitutional difficulties. Essentially the Bill as presented is completely unworkable.”
Mr Shatter said he hoped to introduced the Personal Insolvency Bill by the end of April. He described this as “the most radical reform of our insolvency laws since the foundation of the State”, providing for a non-judicial system for settling debt.
This legislation would take into account the recommendations of a number of reports on bankruptcy and mortgage arrears.
Mr Donnelly accepted the Minister’s request to withdraw the legislation for further talks about including elements of the Bill in the insolvency legislation.
