KEANE REPORT DOES NOT GO SUFFICIENTLY FAR TO SAVE THOSE DROWNING IN DEBT17th October 2011
I believe that the recently published Keane Report as akin to putting a sticking plaster on a gunshot wound. While I welcome some of the recommendations put forward by the Inter-Departmental Group of financial experts and Government advisors, I believe that the overall effect of the report is disappointing and would not go sufficiently far to help distressed mortgage holders.
The Keane Report was published on Wednesday of this week and was tasked with providing innovative solutions to the growing issue of mortgage arrears. It is estimated that between 7% and 10% of all mortgage holders have some level of difficulty with repaying their mortgage, whist more that 46,000 mortgage holders are in arrears of more than 90 days.
These figures go some way toward highlighting the enormity of the problem that we as a society are facing. Behind each one of these 46,000 distressed mortgages there is a personal story and a family that are devastated. Many of these families are literally desperate for some support or relief. Having explored every avenue and looked everywhere for help they now find themselves in an impossible situation, locked into their mortgage and locked out of society.
I have met with countless people across the constituency facing this problem. Without exception they are all striving to uphold their commitment and repay their mortgage. Many have diverted all their money and all their resources to the upkeep of their mortgage at the expense of all other needs, energy bills go unpaid, other loans and credit card bills are ignored, school books and uniforms cannot be bought. They cannot afford to repay their debts and even if they surrender their home they must still carry a burden as the house is no longer worth the amount paid for it. Instead of their home being a castle it is a huge weight around their necks yet they fight and fight to pay their mortgage as the alternative is to have no roof over the heads of their families.
The Keane report fails to reflect the absolute urgency of this issue. To offer hope to such families what was needed was an innovative, decisive solution which balanced responsibility between the lender and the borrower. Ultimately I believe that the Keane report has failed to deliver such hope. While many of its proposals are welcome these are ultimately undermined by the lack of clear timelines for implementation. Additionally there is a high level of concern that these proposals alone are grossly insufficient to tackle this mammoth and still growing problem. A complete and comprehensive overhaul of insolvency procedures in this jurisdiction is required.
For example many of the proposals would have a clear beneficial effect but how these schemes will be executed has been vague and unclear, or in some cases unrealistic. The Keane report puts forward a number of ideas which would be of huge benefit to those who can no longer afford to pay their mortgage. For example mortgage to rent schemes are proposed as well as the option to trade down to a smaller property and carry some of the debt. Additionally a split mortgage plan is proposed whereby a householder could park some debt and pay of the rest of the loan. The creation of a MABS 2 style scheme which would offer specialized mortgage advice is also advised. However a weakness comes to light in how these schemes will be implemented, in many cases the onus is placed on already stretched agencies such as local authorities. Additionally no timeline for the implementation of these schemes are proposed.
As I see it the major failure of the report is it failure to deal with the issue of personal insolvency. Without the introduction of such a mechanism this issue will never be fully resolved. By tying people irreversibly into debt we are preventing them from contributing to society. Other jurisdictions allow a person who is declared personally insolvent to get their affairs in order and return to society burden free after a set number of years.
While the report recognizes the lack of legislation in this field and accepts the need for change it does not call for the creation of an agency or group to oversee the introduction of such legislation. This to me is illogical and undermines the report as a whole. To highlight the key flaw in the system and in the same breath to fail to address it would be laughable if it weren’t such a serious issue. This is just one of the many areas of the report that would have benefit from the input of consumer representatives and organizations that deal with mortgage arrears. To overlook such expertise was a major flaw by the working group.
I believe that we need to question the role of the banks in this issue and examine their culpability. To what extent will lenders be willing to co-operate given that there is no onus on them to do so? This cannot be left to the discretion of the lender, rather they must be forced to accept some responsibility for this issue. Many people point the finger at the borrower for getting themselves into this situation but an examination must be made of the banks role in this. This report, as a whole, is designed to wring every possible penny out of the mortgage holder for the benefit of the banks. A sharing of the burden and an acceptance that the banks too are culpable is required.
I am calling on the government to urgently examine the proposals put forward. We must retain their merits while identifying and improving the flaws that have been identified.