Every evening around 5pm, Eoin McDonald is debriefed. He sits down with the directors of his company and rakes over the lives he has glimpsed that day. McDonald will have heard accounts of families living on the brink, waiting nervously for a letter or knock on the door which will thrust them into upheaval.
The common theme running through the lives he glimpses is debt. "It can be depressing," McDonald says. "It's also frightening how many people are in these problems."
McDonald works for Crannagh and Co, an international trade services company based in Belturbet, Co Cavan. During the summer, the principals of Crannagh set up another company, Debt Management Mediation. It attempts to mediate between borrowers and financial institutions when debt has spiralled out of control.
"Crannagh is the day job, it pays the bills," says director Michelle Lynch. "We set up DMM when we saw the difficulties people were getting into. But now, it is taking up an increasing amount of our time."
Through their work, Lynch and her co-director and sister-in-law Carol Lynch kept coming across individuals in the SME sector who were having great difficulty in trading out of their debts. Both are practiced in mediation, having accumulated long experience working in international trade. They hit on the idea of a mediation service. In partnership with solicitor Karen Erwin, they set up DMM with input from the Department of Finance and the banks.
"We felt we could bring our skills to the problem, provide a safe place for people to talk and move to a resolution," Michelle Lynch says. "It's a formulated process where they can go down a structured route instead of facing the prospect of litigation.
They didn't know it at the time, but the new venture was about to provide a window into a whole class of people who are living in quiet desperation. "A typical case would be a couple who have a house with a large mortgage," Michelle Lynch says. "They remortgaged the house and invested in three of four properties. Now they have no rental income, they can't pay the loans and the banks are looking for their money.
"Greed is not something that we come across that much," says Carol Lynch. "Most of these people thought they were being prudent, investing in a pension, that type of thing."
Last Tuesday was a typical day at Crannagh House, a large private residence on the outskirts of Belturbet. One phone call is from a woman whom DMM had dealt with the previous week. She had been an emergency case. A relative had phoned DMM seriously concerned that the woman was contemplating suicide.
The woman had two properties in Co Meath and her family home, all of which were subject to loans which were not performing. The woman was paying around €200 a month – all she could afford.
Lynch decided that usual procedures of mediation should be dispensed with, and she sat down with the woman and the bank concerned. A verbal agreement was reached for the bank to hold off on any legal action. A week later, the woman received a letter from the bank, threatening proceedings within 21 days.
Lynch talked the client through it on the phone. She recommended full mediation which, if successful, would be legally binding. Upstairs, in his office, McDonald was receiving a letter from a couple, both teachers. They had bought two properties during the bubble. The loans were now outstanding. One of their three children was suffering hypertension, which the child's mother put down to the stress that was palatable at home. The pension and income levies have greatly restricted their efforts to keep up repayments.
"We hope and pray that you can help us," the mother wrote.
McDonald says the figures sometimes floor him. "People say things like 1.2 here and 1.6 there in a casual manner and they are actually talking in millions. I'm frightened by how many people are dealing in millions."
DMM can't offer guarantees. "People want us to make promises we can't make," Carol Lynch says. "All we can do is bring our skill set to the problem and attempt to work something out. The borrower has to be realistic and so does the financial institution."
The success rate is, however, high considering the circumstances. Michelle reckons they managed to find resolution in about two thirds of the cases they deal with.
Residential properties account for the bulk of debts which are referred to DMM. A recent paper written by David Duffy of the ESRI highlighted the extent of debt on residential property nationally.
A total of 760,700 mortgages were taken out on residential properties between 2000 and 2008. Currently, there is outstanding debt on these properties to the value of €148bn. This is three times the value of loans being shoved into Nama. All of this is against a background of expected hikes in interest rates over the coming months. The fear is that thousands of homeowners who are now just about able to make repayments will struggle in a harsher interest rate environment.