Belfast Telegraph

Saturday 19 April 2014

37,000 mortgages in 90-day arrears

Bank of Ireland chief executive Richie Boucher has revealed nearly 12,000 householders have defaulted on their mortgages

Bank of Ireland and Ulster Bank have revealed 37,000 mortgages are in arrears of more than 90 days.

As politicians ramped up pressure on the bankers to lay bare the full extent of the crisis, finance chiefs at both institutions ruled out a policy of debt forgiveness for struggling homeowners.

Bank of Ireland boss Richie Boucher revealed 19,083 mortgage accounts were at least three months behind with their repayments.

He told the Oireachtas Finance Committee that his officials had surpassed a Central Bank target to offer one-fifth of distressed borrowers a sustainable solution.

Chairman Ciaran Lynch criticised how the bank presented its figures and asked for further information, including how many customers were receiving threatening letters or genuine resolution offers.

Bank of Ireland said it had offered 53% of 11,774 accounts in arrears "sustainable solutions", which included solicitors' letters.

Sinn Fein's Pearse Doherty said: "I think you're playing this committee for fools. These aren't the figures we requested."

Bank of Ireland revealed:

:: Some 3,103 of the 11,774 distressed mortgages are in resolution - legal or consensual accounts - while another 3,164 were restructured or cured.

:: Nine out of 10 owner occupiers (143,000) were meeting payments, but 18,000 were in arrears with 2% in the resolution or legal process.

:: Another eight out of 10 buy-to-let mortgages (28,000) were performing with 8,000 in arrears and 7% of those most critical.

:: Some 15,740 accounts had already agreed to change its mortgage contract by the end of June. However 3,603 owner occupied customers and 776 buy-to-let accounts remained 90 days in arrears. Another 11,361 were meeting reduced repayments.

Ruling out debt forgiveness, Mr Boucher maintained he had a responsibility to stakeholders, of which he is one; Irish taxpayers, who bailed out the bank; and homeowners who made their mortgage payments each month.

Meanwhile, during a separate grilling by the committee, Ulster Bank boss Jim Brown revealed that 18,025 of its 122,831 mortgage accounts were in arrears of more than 90 days.

A third of the bank's mortgage customers more than three months behind on their repayments are paying nothing towards their debt and refusing to engage with the bank, he said.

Mr Brown claimed the bank uses the threat of legal action as a "tool" to push distressed borrowers into contact with their lender.

"Living in a home costs money. Unless owned outright, this cost must be met through mortgage repayments, rent or by the state through social housing," Mr Brown said.

"There are some people who do not appear to accept this premise and are living in a home today without making any contribution towards its cost despite someone else advancing the money to acquire the property. Put simply, this is not fair."

Ulster Bank also revealed:

:: Around 3,000 struggling borrowers are making no repayments and not engaging with the bank.

:: Legal action has been taken against a separate 4,900 Ulster Bank customers who have slipped into arrears.

:: Around 980 of those proceedings have sought what the bank called a sustainable solution for their debt.

:: 9,000 distressed mortgages have been renegotiated with 4,038 on new long-term arrangements such as a restructuring of their debt, and 500 on short-term plans such as a payment holiday.

Mr Brown suggested some customers who are in work and with means to pay their debts are not doing so.

He said there was no correlation between the country's unemployment rate and levels of mortgage arrears - unlike in similar jurisdictions - and used the example of arrears and unemployment rates in Northern Ireland.

Ulster Bank and Bank of Ireland were called before the committee to answer whether they had reached targets set by the Central Bank, which demanded they offered long-term sustainable solutions to at least 20% of their struggling customers by the end of June.

AIB this week told politicians that permanent resolutions had been agreed in 4,400 of its accounts.

It said more than 5,890 legal letters were issued to customers warning of potential repossession if no engagement takes place.

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