UL lecturer Dr Stephen Kinsella, has become the lead economist for a groundbreaking initiative which aims to protect people with mortgage arrears.
Along with social entrepreneur David Hall, two barristers, Ross Maguire and Vincent P Martin, they have established New Beginning which will provide free legal representation to mortgage holders in trouble.
Dr Kinsella was contacted by David Hall about finding a solution to what he described as a mammoth problem.
“You just have to look at the figures to see that we have a colossal problem; 36,000 people have failed to make their mortgage payments for the past three months.
“The Department of Social Welfare are also paying 17,000 monthly home supplement payments. These figures are masking huge stresses on society.
“The numbers are staggering… if one in four of these mortgages are defaulted on, that’s 9,000 loans, and if you valued each at €100,000, that’s almost €1 billion,” said the UL academic.
Dr Kinsella said that test cases will be taken with the argument that the lending institutions breached their duty of care required in their 2006 Statutory code of practice.
“2006, 2007 and 2008 were irrational times. In November 2010, the idea of giving someone a 105% mortgage based on 10 times their salary is crazy, but in 2006 it was the accepted norm”.
The website received overwhelming demand on the first day it was launched.
At present the scheme is operating in the Dublin area, but there is a strong possibility it will extend nationwide.
“Twenty barristers have already offered their services pro bona. All offers of help and interest from people around the country can be directed through the website”.
As primary economist for the project, Dr Kinsella will examine the wider economic implications.
“I will research how this would unfold at a macroeconomics level. Will it damage the economy to the extent that we will need another NAMA? Or is it best to keep everybody on the hook?
“It’s not simply a case of writing off the debt and charging it to the taxpayer”.
