Flanagan hits out at ‘unconstitutional’ mortgage arrears bill

Mr Flanagan (pictured) said Fianna Fáil politician Michael McGrath’s Mortgage Arrears Resolution (Family Home) Bill 2017 is “very likely to be unconstitutional, and it contains other legal defects”.

According to the Government’s legal advice, the bill would create a quasi-judicial Mortgage Resolution Office and an Appeals Office, with “extremely wide-ranging powers to intervene in and change the vested constitutional legal rights and obligations of private parties”.

These provisions would be unconstitutional because such powers are exclusively reserved to the courts under article 34 of the Constitution.

Mr Flanagan also warned that the Bill was “an over-simplistic solution, in this very complex area, and risks creating a range of serious and unintended negative effects – most importantly, for the distressed mortgage holders themselves”.

He raised concerns over the lack of a definition of “financially distressed”; the lack of a provision to change a Mortgage Resolution Order if the borrower’s circumstances change; and conflicts between the statutory functions of the Insolvency Service and the new bodies.

He also said the bill leaves homes open to further judgments by unsecured creditors; is likely to lead to a high proportion of (expensive) objections, appeals and legal challenges; and deals only with borrowers’ homes, leaving them open to judgements on other debts.

Mr Flanagan told TDs: “I fully appreciate the Deputy’s very genuine intentions, but this Bill is fundamentally flawed, appears incompatible with the Constitution, and risks adding to the problems of those in the worst arrears.”