Westmeath County Council has unveiled a new process for council mortgage holders in financial difficulty.
The council’s loan book of €34m covers 800 mortgage-holders and a quarter of those are already availing of alternative payment arrangements.
The five-step Mortgage Arrears Resolution Process (MARP ) is a national programme, but it leaves local authorities three years behind other financial institutions, who negotiated guidelines with the Central Bank in 2009.
The steps include early communication, completion of a standardised financial statement, assessment, agreement of a suitable resolution, and then an appeals process if the mortgage holder is not satisfied.
Long-term measures, such as extending the time of the loan, or short-term measures such as no-interest repayments are among the options.
“The key challenge for local authorities is to balance and protect their financial position and to keep people in their homes,” director of finance, Jimmy Dalton said.
However, the MARP, which officially comes into place at the beginning of next month, may not be of use for those who have unsustainable mortgages and in those cases, other measures will have to come into play.
These include including voluntary sale, mortgage to rent, and other alternatives.
“At the end of the day we don’t want to be leaving mortgage owners in a position that is not viable from their point of view,” he said, adding that the council has pursued a sympathetic procedure in dealing with distressed mortgages.
“If someone is not in arrears and sees a difficulty and can present themselves to us, we can work something out,” he said.
He also pointed out that the council has a vested interest in ensuring mortgage holders can pay their bills, because the council has six-monthly payments to make to the Housing Finance Agency to repay the money it borrowed to make those loans possible.
“Local authorities cannot suffer the burden of debts that could otherwise arise,” he said, pointing out that losses couldn’t be covered through the revenue budget.
He declined to answer Cllr Aidan Davitt’s question about the current level of bad debt provision and made no response to the estate agent’s suggestion that there is a shortage of rental properties in Mullingar.
The MARP was welcomed by councillors, with Frank McDermott saying that those in difficulty with mortgages should engage fully with the process to help themselves.
“This is a helping hand reaching out to those who want it,” he said.
Cllr Kevin Moran congratulated the council on the way they had treated distressed mortgage holders with understanding and respect, but expressed concern that people who bought affordable houses have high repayments, while they live next door to council tenants paying tiny rents.
Mr Dalton said the council will work with mortgage holders, but pointed out that those who bought homes have an asset that tenants don’t have, and house values could increase in the long term.