LABOUR ENVIRONMENT spokesman Ciarán Lynch called for the setting up of a statutory agency to assist homeowners experiencing mortgage difficulties.

He said a national home mortgage service (NHMS) should act as an advocate for such people.

“Our proposed NHMS would, by means of a legislative framework, set out the criteria and rules as to how mortgage difficulties would be addressed and managed, and would identify the obligations of government, lending institutions and borrowers.”

Introducing a Private Member’s motion, he said the agency would be a temporary measure, operating for no more than five years.

“Some amount of rigour would have to be attached to the operation of the process and, in fairness, under no circumstances is it envisaged that a borrower who makes no effort whatever to meet repayments would be granted security of occupation indefinitely and on an open-ended basis.”

Mr Lynch said under the proposed agency, the mortgage variation would have to be fair to both borrower and lender. An independent assessment of the borrower’s true circumstances would have to be prepared and vouched.

The borrower would have to demonstrate a minimum capacity to pay a sum equivalent to the social rental differential towards their total monthly mortgage interest repayment.

Minister of State for Finance Dr Martin Mansergh said it was the Government’s priority to ensure as far as possible that difficulties relating to mortgage arrears did not result in legal proceedings for home repossession. “Home repossession should be, and generally has been, the last resort for the lender.”

Dr Mansergh said a new code of conduct on mortgage arrears, which was published by the financial regulator last February, applied to all regulated lenders on a statutory basis and replaced an earlier voluntary code operated by the mainstream lenders.

Lenders must distinguish between borrowers who were genuinely unable to pay and those who could pay some or all of the arrears but would not. “All genuine cases must be handled sympathetically and positively by the lender, who must explore with the borrower a number of alternate repayment measures.”

Dr Mansergh said comprehensive statistics on mortgage repossessions had not been kept, but the department had obtained reports from lenders covered by the State guarantee. The total of legal repossessions of owner-occupier homes this year to the end of September was 20. In all cases, mortgages were in arrears for over 24 months at the time of repossession.

He said he found it disturbing that certain commentators seemed to take delight in producing horror stories about a great wave of repossessions that was always just over the horizon.

“We heard these stories . . . and yet the number of actual repossessions remains very small.”