A court ruling allowing a 68-year-old man stay in his home on reduced mortgage payments for 30 years has been hailed as a solution for others struggling with Celtic Tiger-era debts.
In an order finalised on Tuesday, the Circuit Court overruled the objection of Ulster Bank by allowing Waterford handyman Paddy O’Regan remain in his home and pay a mortgage of just €93 a month for life in a personal insolvency arrangement – a financial rescue for borrowers – that could help thousands of others.
The case is seen as providing a potential solution for many in long-term mortgages arrears who are over the age of 60 and do not have sufficient income to repay mortgages in full.
Mr O’Regan had only five years remaining on his mortgage when he sought financial help but could not afford the contracted €1,621 mortgage repayments.
The court was told he would not be able to rent at market rates and did not meet eligibility for the mortgage-to-rent scheme, while his chance of securing social housing would be remote.
He retired in February 2020 and has been relying on the State pension for income. Mr O’Regan’s house was valued at €210,000 and there was €97,000 remaining on his mortgage.
Under the arrangement approved by Judge Mary Enright, Mr O’Regan will be allowed to remain in the house for his lifetime on the reduced mortgage repayments until he is 98.
His new monthly repayments will be set on a tracker mortgage for his lifetime.
The arrangement, argued in court by Keith Farry, proposed that the bank recoup the mortgage debt in full from the sale of the property if he dies before then.
Mitchell O’Brien, the Co Waterford-based personal insolvency practitioner who devised the plan, said it was “a significant case for so many older people living in fear of losing their homes”.
He estimated the numbers who could benefit from such an arrangement could be as high as 8,000 people in mortgage arrears in the southeast and more than 28,000 nationally.
“There are multiple people living in most of these houses with mortgage arrears. This could affect more than 100,000 people living in such homes,” he said.
The alternative to Mr O’Regan’s plan was that he would become homeless, said Mr O’Brien, whereas this solution came at zero cost to the State as there was no requirement for social housing.
“The problem with being over the age of 60 is that you just don’t have enough working life left to pay down the mortgage in full on a capital and interest basis,” he said.
Previously, such a mechanism could only have been agreed where it had the support of the mortgage lender, but the court ruling meant the objection of the lender could be overruled.
The number of people in long-term mortgage arrears has remained high ever since the property crash, despite the introduction of legislation by the Government almost a decade ago to resolve personal borrowings from the boom era that are unlikely ever to be repaid.
In July, the Central Bank called on lenders to be more “extensive or ambitious” in finding solutions for more than 29,000 people in long-term mortgages arrears. The bank said that a quarter of borrowers in this category were aged over 60.