In this week’s blog, Fr. Paddy highlights the issue of mortgage and debt forgiveness.

Recently, I read with great sadness the story of a Waterford couple who appeared before the High Court in a case relating to the repossession of their home. The story is unfortunate and a sad reality that many can empathise with. his couple have a 17-year-old child with profound special needs.  Both parents had lost their jobs and were left with arrears of €40,000 on an original mortgage of €225,000.  The family was paying €1,900 on their mortgage.   They offered to pay €800 a month, including all of their carers’ allowance, but the financial institution refused to accept the offer. The family couldn’t afford legal representation while the financial institution was represented by a highly-paid lawyer.

The family described their experience in court: “There is no legal advice available. You just arrived bewildered at the High Court. You don’t know what the procedure is. I didn’t know whether to stand or sit … All these strangers around you and the whole personal thing about your life, your financial situation and your family members … Everything becomes everybody’s business in the courts. You’re losing your home, you’re struggling, you have very little dignity left at the end of it.”

Within a few minutes, they had lost their home. The family may be rehoused in private rented accommodation in an area in which they don’t want to live, and their child may have to change schools and lose contact with his friends.  Over 556,000 mortgage-holders are more than three months in arrears, and the number is rising. Some will never be able to repay, as they are unlikely to find employment again any time soon. This is not just an economic problem but a human tragedy.

It is estimated that bad mortgage debts could run as high as €9.5 billion between now and 2013.  Some of those in arrears talk of unacceptable pressure being forced upon them by lending institutions – sometimes endless phone calls and knocks on the door throughout the day.  These are the same financial institutions that borrowed hundreds of billions in a mad frenzy and who have had their unpayable bad debts paid off by the Irish taxpayer.  The poor mortgage debtors borrowed money to get on the property ladder, often out of fear that with the price of housing rising year after year (fuelled by the lending policies of the same institutions), owning their own home would quickly become impossible if they didn’t borrow now.

An economy has to be built on justice.

There are many who must share responsibility for the insane economic policies of the past, which were responsible for the absurd increase in house prices – bankers, developers, builders (who pushed prices as high as they could get away with), and politicians who failed to implement the recommendations of the Bacon Report under pressure from vested interests.

But homeowners, who felt pressured into trying to obtain a home while they still could, have little or no responsibility for the situation they now find themselves in. If thousands of Irish citizens are condemned to extreme hardship because the economy demands it, then the economy needs to be fundamentally reformed.

As our new government faces the challenge of budgetary adjustments, I suggest that such vulnerable families must be protected in the interest of justice.