Home owners along the six controversial N6 Galway Transport Project routes are at risk, not only of their homes being demolished, but of being pursued by the banks for unsecured shortfalls in the market value of those homes after demolition.
This is the view of Independent Galway county councillor James Charity, following his being approached by a group of residents along one of the six proposed routes. The residents are concerned that if the route through their homes is chosen it will “open the door for banks to pursue them for unsecured shortfalls”.
According to Cllr Charity these individuals have mortgages, with which they managed to keep up on repayments with through the recession. However as their properties are still in negative equity, should the homes be demolished, only market value compensation would be paid, leaving them “in significant arrears” with the banks.
Cllr Charity says many properties along the route would be in negative equity and the market value compensation which owners would now be entitled will, in some cases, fall short of the redemption value of their mortgages. “This means substantial sums could potentially become unsecured debt for which they could be pursued by banks through the courts,” he said. “This situation is not either desirable or acceptable.”
Cllr Charity has warned that the only options available to homeowners in such circumstances are through arbitration and by seeking additional compensation, but this itself is an expensive route. It is also unclear if such claims would succeed. The situation would also affect those already in arrears with their mortgage repayments, as well as those who would find their compensation payment being used to redeem the value of the mortgage, with no guarantee of a new mortgage for an alternative property.
“It is unclear how the banks will treat these classes of homeowner,” said Cllr Charity. “It is also unclear where homeowners whose properties are in positive equity, but have to use the bulk of their compensation payments to repay bank mortgages, will stand in relation to obtaining new mortgages as same is entirely within the discretion of the banks.”