February 17, 2020

Irish Legacy of Leniency on Mortgages Nears an End

“I still deal with my lender, and they threaten with legal action now and again,” said Mr. Gilroy, whose electrical business failed in the crisis. With no income since, he has no hope of paying off the €310,000, or $398,000, loan on the four-bedroom house in Navan, north of Dublin, that he shares with his wife and three children.

The lender is “only threatening by letter at the minute,” said Mr. Gilroy, who is betting the odds are in his favor, for the time being at least. Although there are more than 143,000 delinquent home mortgages in Ireland, foreclosures have been so politically and legally difficult that, in the last three months of last year, they numbered 38.

That could change.

Under pressure from the international lenders who agreed to a €85 billion, or about $109 billion, bailout of the Irish economy in 2010, the law is being amended to overturn a legal ruling that has been restricting banks’ right to repossess property. As Ireland’s fellow euro zone member Cyprus may be about to learn, bailouts come with strings that can bind for years to come.

Besides pushing for changes to property-repossession law, Ireland’s creditors, collectively known as the troika — the European Commission, the European Central Bank and the International Monetary Fund — has also prompted the government to introduce the country’s first property tax in more than 15 years, a measure intended to raise €500 million a year.

Unlike Cyprus, where wealthier depositors are being forced to help pay for ruined banks, the Irish government picked up the tab for its broken lenders before it, too, had to seek help.

More than two years after the bailout, officials say that the dead weight of debt, mostly in bad property loans, is still hanging over the economy, stifling confidence and suffocating recovery. New rules that take affect later this year are designed to help troubled borrowers and cut their debt loads. But critics fear that the latest tightening could nonetheless cause thousands of Irish households to lose their homes and hamper the broader recovery efforts.

If people cannot make their mortgage payments, it is unlikely that many will suddenly be able to pay property tax bills. Mr. Gilroy has refused to open his assessment but thinks it would demand an additional €300 a year.

No one anywhere likes to lose their home, of course. But repossessions strike an especially resonant chord in Ireland, which has an acute memory of forced evictions under British rule.

“Being a country with a long history of colonial oppression, people being evicted touches a bit of a raw nerve with a lot of people,” said Paul Joyce, senior policy analyst at Free Legal Advice Centers, a rights organization that campaigns on debt and other issues. “The notion of people being put out of their homes is not one that sits too easily in Ireland.”

Mr. Gilroy, who represented a new party, Direct Democracy Ireland, in a parliamentary election Thursday — finishing fourth — came to prominence in part through You Tube clips of verbal confrontations with officials trying to seize properties.

He admits he was naïve in not checking the repayment terms on his mortgage, which he sought in a hurry to buy the house he coveted in 2008, a time when newly listed homes were often being snapped up within days. But his borrowing was not reckless, he said, adding that he had accepted a loan with high repayments on the basis that he could switch after six months, something he discovered too late was impossible.

“After three and a half years of not missing one payment, I was eventually broke, the business was failing, house prices were dropping,” said Mr. Gilroy. He said he and others would need 70 to 80 percent knocked off their mortgages to make them remotely affordable and reflective of current property prices.

He blames his plight on “criminal activity by the bankers” and “stupid” policies by the government which bailed out the banks at the taxpayers’ expense. Many other Irish share his anger, Mr. Gilroy contends.

Bankers see things a bit differently.

Article source: http://www.nytimes.com/2013/03/30/business/global/irish-legacy-of-leniency-on-mortgages-nears-an-end.html?partner=rss&emc=rss

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