Irish foreclosure crisis looms
BY STEPHEN CASTLE, The New York Times
DUBLIN -- Ben Gilroy, one of tens of thousands who over-borrowed in the giddy property boom that preceded Ireland's economic collapse, has made no mortgage payments for two years. But he says he does not worry that he will lose his home anytime soon.
"I still deal with my lender, and they threaten with legal action now and again," said Gilroy, whose electrical business failed in the crisis. With no income since, he has no hope of paying off the 310,000 euro, or $398,000, loan on the four-bedroom house in Navan, north of Dublin, that he shares with his wife and three children.
His lender is "only threatening by letter at the minute," said Gilroy, who is betting that the odds are in his favor, for the time being at least. Although there are more than 143,000 home mortgages in arrears in Ireland, forced repossessions have been so politically and legally difficult that, in the last three months of last year, they numbered 38.
That is about to change.
Under pressure from the international lenders who agreed to a 85 billion euro, or about $109 billion, bailout of the Irish economy in 2010, the law is being amended to overturn a legal ruling that has been restricting banks' right to repossess property. As Ireland's fellow eurozone member Cyprus may be about to learn, bailouts come with strings that can bind for years to come.
Besides pushing for changes to property-repossession law, Ireland's creditors, collectively known as the troika -- the European Commission, the European Central Bank and the International Monetary Fund -- have also prompted the government to introduce the country's first property tax in more than 15 years, a measure intended to raise 500 million euros a year.
Unlike Cyprus, where wealthier depositors are being forced to help pay for ruined banks, the Irish government picked up the tab for its broken lenders before it, too, had to seek help.
More than two years later, officials say that the dead weight of debt, mostly in bad property loans, is still hanging over the economy, stifling confidence and suffocating recovery. But critics fear that the latest tightening could not only kill Ireland's tentative signs of growth after a five-year slump, but also cause thousands of Irish households to lose their homes.
If people cannot make their mortgage payments, it is unlikely that many will suddenly be able to pay property tax bills. Gilroy has refused to open his assessment but thinks it would demand an additional 300 euros a year.
No one anywhere likes to lose their home, of course, but repossessions strike an especially resonant chord in Ireland, which has an acute memory of forced evictions under British rule.
"Being a country with a long history of colonial oppression, people being evicted touches a bit of a raw nerve with a lot of people," said Paul Joyce, a senior policy analyst at Free Legal Advice Centers, a rights organization that campaigns on debt and other issues. "The notion of people being put out of their homes is not one that sits too easily in Ireland."
Gilroy, who represented a new party, Direct Democracy Ireland, in a parliamentary election Thursday -- finishing fourth -- came to prominence in part through YouTube clips of verbal confrontations with officials trying to seize properties.
He blames his plight on "criminal activity by the bankers" and "stupid" policies by the government that bailed out the banks at the taxpayers' expense. Many other Irish share his anger, Gilroy contends.