Master of the High Court says repossesions will not be automatic

Our man in Havana

http://www.rte.ie/news/2009/0211/repossesion.html

Warning of avalanche of repossessions
Wednesday, 11 February 2009 15:53

The Master of the High Court has warned that an avalanche of home repossession cases is anticipated for the courts in what he described as a recession of 'historic proportions'.

Edmund Honohan SC said many or most borrowers were not to blame for their arrears as we go through this recession.

He warned that banks 'cannot expect to have it all their own way' as the number of possession cases increases weekly.


Mr Honohan said new market conditions required new legal solutions and warned that orders for possession would not be automatically granted.

He said in the current climate, where there were almost no house sales, there was really no good reason to grant an immediate order for possession unless there was credible evidence a sale might be on the cards.

'No one gains from rows of empty, shuttered houses,' he said.

The comments were made in a judgment concerning a bank seeking possession of a Waterford couple's home after they fell behind in mortgage repayments.

The Master, who deals with procedural court matters, said he expects to see an avalanche of applications in the future.

The current cases, although increasing every week, did not yet seem to be related to recent job losses, he said.

He also warned that the banks' lending practices would be considered by the courts and failure to 'stress test' loan applications, failure to require insurance, commission and a bank's published profits would all be taken into account.

He said the courts would not accede to a lender's demand in any one case so as to send a strong message to other borrowers in difficulty, adding that many if not most borrowers were not to blame for their arrears as we go through a recession of historic proportions.

The Master went on to say there may be reasons in equity not to grant an order to a bank.

What would these reasons be? Also if the Master refused an application would the bank not appeal to a higher court?

grumpytrousers

hell, never mind a higher court, AFAIK the Master of the High Court isn't a judge; the Masters Court is the equivalent of the County Registrars Court at Circuit level - it's a 'clearing house' so that the 'real' courts time isn't taken up with applications that would, with the greatest of respect' require rubber stamping. He is, if memory serves, and with the greatest of respect to the chap, a 'clerk'.

I'd think that if the master refused an application, the application would be to have it put into a Judges list at the High Court where the matter could be heard in its entirety. As for the reasons - well it's all gonna be highly speculative at the moment, and i'm not sure how easy the Master thinks it'll be to apply the rules of Equity where a motion is being brought on foot of an agreement freely entered into.

I do think that some less than scrupulous lenders did offer money to people that they knew could not repay - that doesn't excuse the people who borrowed, but if you, as a lender, almost profile people in the sense that you offer them more money than they need, or more than they can repay, or both, then perhaps the belief would be that you acted irresponsibly in the first instance too and should have foreseen the lack of ability to pay.

Either way, this will be interesting.

Fishtits

I think his statement is very interesting, notwithstanding his station in relation to actions brought before the High Court, it seems to send a "policy" message...

People would be well advised to take heed IMHO.

Jo King

grumpytrousers wrote: »

hell, . He is, if memory serves, and with the greatest of respect to the chap, a 'clerk'.



Either way, this will be interesting.

The Master is a Senior Counsel.

grumpytrousers

Jo King wrote: »

The Master is a Senior Counsel.

stand corrected. thanks!

He's not a full-blown member of 'The Judiciary' is what i was trying to get at, in my rather cack-handed way!

Maximilian

Bond-007 wrote: »

http://www.rte.ie/news/2009/0211/repossesion.html


The Master went on to say there may be reasons in equity not to grant an order to a bank.

What would these reasons be? Also if the Master refused an application would the bank not appeal to a higher court?

Interesting. It sounds to me what he is talking about is "clean hands". He won't give equitable relief in circumstances where banks were cavalier in giving loans, as he talks about.

The problem I see though is that with today's mortgages, is they all contain a power of sale in the event of default. Its contractual. I'm not sure a court can refuse a bank on such grounds.

Practically though, repossessing a house does a bank no favours. In large commercial loans, a Bank will try to work with a borrower first for the same reasons. I imagine they should do the same with Joe Punter.

I do like what the Master is trying to do though. I wonder if its his place to do it though. This issue requires some kind of emergency legislation I think.

cat&mouse

This is a general query, maybe I'm not in the right forum but I', sure you'll put me right.
When a Bank repossess a home:
Is it correct they only want the money they are owed on it?
Does it go up for Auction?
If so, Where abouts?
Can the customers/people with accounts with them be considered a priority to buy?
Any help in this area very much appreciated, thank you in advance

Our man in Havana

Wrong forum but I can answer some what you asking.

The bank has a duty of care to get the best price for the house. So if there was €100K owed on a house worth €300K they would be failing in that duty if they allowed the house to sell for €100k.

They are normally auctioned thru estate agents as per normal houses.

If the house is put up for sale anyone can buy there is no priority for customers etc.

cat&mouse

Thanks 007
That's all I wanted to know. Sounds fair also.
Cheers

Maximilian

Bond-007 wrote: »

Wrong forum but I can answer some what you asking.

The bank has a duty of care to get the best price for the house. So if there was €100K owed on a house worth €300K they would be failing in that duty if they allowed the house to sell for €100k.

They are normally auctioned thru estate agents as per normal houses.

If the house is put up for sale anyone can buy there is no priority for customers etc.

Just to clarify - if such a house was currently worth only 100K, a bank would be perfectly entitled to sell it at that price. It doesn't have to wait until the market improves.

Our man in Havana

Of course, I should have said that.