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Former High Court Master’s Concern for Family Farms

The former Master of the High Court, Edmund Honohan, has drawn up a Bill that would allow more protection for indebted family farms. The Bill was crafted shortly before he stepped down from his position last month.

Honohan,  who has a reputation for caring about ordinary people, stated that, “The new world of banking is not geared for agricultural lending”.

 

‘Put simply, the banks do not ‘get’ agriculture’

Speaking of the need for safeguards for family farms at risk of going into receivership he said:

‘Put simply, the banks do not ‘get’ agriculture – their business model will not allow it’.  The bill he crafted aims to offer safeguards to farming families in their dealings with the financial system and banks.

In 2018, he blasted then Taoiseach Leo Varadkar for his suggestion that people struggling to pay their mortgages should seek help from the Abhaile scheme, calling Varadkar’s words a ‘sick joke’. Speaking to RTE he continued by saying that the scheme was nothing more than a “200 euro voucher for legal advice”.

Although not a judge himself, the Master of the High Court is a Senior Counsel who, in his quasi-judicial role, is tasked with ensuring that court documents are in order, and that proper procedure is adhered to before cases are heard.

Earlier this year Honohan made an appeal to the Central Bank to look into what he described as a ‘blatant attempt’ by a fund called Promonotoria to seize more land that it is entitled to in a dispute over a loan security with Sligo man, John Gethins.

According to Honohan, ordinary borrowers don’t always understand the underlying ways in which banks handle assets and therefore often cannot anticipate the risks involved.

 

“most people weren’t even aware that loans were being securized.”

He said that ordinary people who accepted bank loans were not always aware of issues like fractional lending: a practice where banks lend out sums of money that are far greater than what they actually possess. “most people weren’t even aware that loans were being securized. Nobody really understood what that meant. They had a vague idea that the bank didn’t actually have that type of money in its deposits.”

Loan securitization is the process of transforming non-tradable assets into tradable securities. A package of loans are put together and resold to third party investors. These ‘new’ investments can go bad when borrowers default on their payments.

Speaking to the Independent, he said, “What the banks were doing was saying, ‘we’ll give you a mortgage, you’ll sign over the house to us and we will, in turn, re-mortgage that to a finance source — it could be a hedge fund in New York or pension funding in the UK or in Holland or other salubrious entities.

“The banks basically were flipping it. This was the cause of the huge spiral of price inflation in housing.”

 

“Why shouldn’t the States have the option of first refusal if the land has to be sold by the creditor?”

The former Master expressed concerns about what he referred to as anecdotal accounts of people who had taken their own lives as a result of the pressure placed upon them by financial obligations. The Bill would provide a softer place to fall for those struggling, or unable to make payments in an environment where many cannot see a light at the end of the tunnel.

It contains provisions to allow The State the option of taking over the land to avoid issues like foreign pension funds buying up parts of Ireland.

“Why shouldn’t the States have the option of first refusal if the land has to be sold by the creditor?” he says. “The State should have the option of first refusal as sovereign, and they should say, ‘well, actually, we don’t want this land to be sold to a Dutch pension fund. Coillte would like this, for more afforestation or that this land needs to be protected for biodiversity’.

 

“We have all had occasions where we have tried to help and found the tide too strong”

In an interview with The Farming Independent, TD Mattie McGrath expressed his support for the safeguards that would be provided to people in danger of losing their farms by saying:,

“There are many such families. We all have them in our constituencies. We have all had occasions where we have tried to help and found the tide too strong in favor of the institutions, whether they were banks, vulture funds or whatever.”

He continued, “Much legislation has been introduced, including the hearsay legislation, that has opened the floodgates for the vulture fund carry-on.

“Without substantial local agriculture in local ownership, such as family farms, our towns will be blighted and rural Ireland will continue to decline.”

McGrath along with fellow rural independent TDs, Michael and Danny Healy Rae, Carol Nolan, Richard O’Donoghue, and Michael Collins are supporting the Bill which had its first Dáil reading on Tuesday the 26th of April.

Edmund Honohan was appointed as Master of the High Court in 2001, and enjoyed a reputation of  fairness and adhering to the law, particularly in regard to lay litigants.  In 2019 he strongly criticized  then High Court President, Judge Peter Kelly, who decided that The Master should no longer handle debt cases.

The cases were instead directed to go before a High Court Judge. The controversial decision prompted more than 4,300 people to sign a petition to return debt cases to the Master.

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