On the 20th of June, the Oireachtas Finance Committee held a meeting on the National Co-Op Housing Bill. One of the proponents of the Bill is Edmund Honohan, the Master of the High Court. A report on the meeting is available here.
Let’s just consider one extract:
Mr Honohan also said his “overwhelming impression anecdotally” was that individuals before the courts in relation to these matters were sub-prime borrowers “who should probably never have been given mortgages in the first place”.
Anything that is based on someone’s “overwhelming impression anecdotally” probably doesn’t have much going for it to begin with. The piece later says:
Mr Honohan said the “flattish level” of repossessions at 150 per quarter until the beginning of 2014 “doubled overnight” to in excess of 300. “I can think of no significant factor which might account for this sudden change other than the sudden arrival of vulture funds into our distressed mortgage mess,” he said.
“If that is so, you must presume that if the banks are now proposing to finally sell off their huge numbers of deeply indebted loans to the private sector, perhaps increasing the non-bank proportion of non-performing housing loans fivefold from less than 10 per cent to over 50 per cent, we can expect a further significant jump in possession cases.”
We’ll come back to this one. But let’s start with the “overwhelming impression anecdotally” that it is borrowers from sub-prime lenders who are before the courts.
We can check the plaintiffs in civil possession cases in the legal diary notices published on the Courts Service website. Most mortgage repossession cases are listed on the civil lists of the County Registrars in the Circuit Courts.
As of today (21/06/2017) there are 45 County Registrar lists that contain cases involving mortgage repossession. These are for various dates in May, June and July and cover all eight circuit court districts and almost all counties within each circuit. In total, it was possible to identify almost 1,900 repossession cases on the legal diary for County Registrars. This is not all repossession cases before the courts as cases not listed for a sitting around this time will not be on the legal diary. There are probably 10,000 to 12,000 mortgage repossession cases ongoing. So we have maybe one-fifth of them in the sample extracted today.
Here are two pieces of information on these 1,900 cases. The year represents the year the proceedings were submitted to the court and the plaintiff is the entity taking the case and seeking the possession order.
The 1,874 cases are split into lenders and those who have acquired loans, i.e. vulture funds. These funds make up 15 per cent of the cases in the lists extracted and the year in which these cases were initiated can also be seen.
Let’s consider another group taking repossession cases. Let’s include AIB, BOI, EBS, PTSB, KBS and Ulster Bank and make a bit of a leap that we can exclude them from the class of subprime lenders that the under the “overwhelming impression anecdotally” are bringing repossession matters before the courts.
Well, between them these six lenders have 76 per cent of the cases on the list. I don’t know what an “overwhelming impression anecdotally” is but in this case it does not appear to be based on evidence. It seems to be just a wild claim aimed to gather attention. That it should be coming from the Master of the High Court is alarming.
Where did I go to find the evidence to refute this wild claim? The Courts Service website. Is the Master of the High Court familiar with the Legal Diary? It only took a short while to gather the figures in the above table. Surely it would be better to rely on evidence rather than an “overwhelming impression anecdotally”? But the role of evidence in the ongoing mortgage arrears crisis was sidelined a long, long time ago.
Maybe vulture funds will lead to a big jump in mortgage repossessions. If they want to execute repossessions they will have to get a court order first but so far there hasn’t been a surge of cases from vulture funds on the court lists. If anything, they seem underrepresented given the proportion of long-term arrears mortgages they hold. Where are the vulture funds?
At the end of Q1 2017 unregulated loan owners held 5,085 mortgage accounts that were more than two years in arrears. The average balance on these accounts was €256,300 with average arrears of missed payments of €121,100.
We have been told that a tsunami of repossessions has been on the way since at least 2010. To date, there has been no evidence of its appearance and repeatedly warning of its impending arrival does not appear to be costly.
These warnings have surely added unnecessary stress and worry to already stressed borrowers. These warnings have been proved wrong time and time again. Banks may have a issued thousands of proceedings seeking orders for possession but the Irish courts are not bent to granting them. This is a fact borne out from observation of the process. But hey, who needs evidence, let’s propose a multi-billion scheme on the basis of one’s “overwhelming impression anecdotally”.
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