Some of the more difficult cases of owner-occupier mortgage arrears in Ireland have not yet been dealt with by the country's main banks, according to an analysis of data by Flac, an advocacy group that runs free legal advice centres.
In a 26-page report published today, Flac finds that more than 48,000 accounts in arrears of 90 days or more had not yet been restructured by the country's six main lenders - AIB/EBS, ACC, Bank of Ireland, KBC, Permanent TSB and Ulster Bank - at the end of September 2014.
Some 67,854 private dwelling home mortgage accounts were in arrears of 90 days or more. Of this number, 14,971 were subject to a permanent restructuring arrangement with one of the banks, with 4,840 on a temporary deal. That’s a total of 19,811 accounts.The balance have yet to be fully restructured.
Flac’s analysis also notes that there are more than 17,000 mortgages in arrears over 90 days with sub-prime lenders, and others such as debt purchase companies, that are not subject to the Central Bank’s of Ireland mortgage arrears targets.
“There is no specific information on how many of these have been restructured,” the report states, adding that the average arrears on these accounts was almost €50,000.
It also finds that “substantially more accounts” are exiting arrears entirely than are being restructured by the banks. “The relevant supervisory authorities and the lenders need to explain this,” the report says.
Flac finds that capitalisation of arrears and split mortgages together amounted to half of permanent restructures offered by the six main lenders at the end of September.
However, it says almost one-third of the capitalisation cases and a “small number” of splits had lapsed back into arrears. “There are serious concerns that many borrowers signed up to these arrangements without a proper objective assessment of their capacity to service them.”
Flac sys there was also a “dramatic” increase in the number of applications to repossess owner-occupied properties. Some 10,372 new repossession applications were lodged in the 12 months to the end of last September while the number of loans rescheduled by the main lenders under the Central Bank’s targets increased by a net 1,298.
“This, in our view, is entirely the wrong sort of ratio,” the report states.
In addition, Flac notes that just 80 Personal Insolvency Arrangements were approved in the 12-month period, a “negligible impact for the main tool in the new insolvency apparatus targeted at mortgage arrears”.
The “main piece of good news” was that the number of mortgage accounts falling into arrears was reducing. “This presents the best opportunity yet for brave remedial action,” the report says.
Flac has proposed that an independent authority should be established to assess the viability of mortgages in arrears and, where appropriate, to impose solutions on lenders that may involve compulsory write-down.
"Alongside this measure, the mortgage-to-rent scheme must be enhanced to deal with families in truly unsustainable arrears," Flac's director general Noeline Blackwell said."If we want to avoid making an already dreadful housing crisis even worse, action must be taken now."
Flac hopes to present its findings to the Oireachtas finance committee, which has held a number of hearings with the main banks to discuss their compliance with the Central Bank’s mortgage arrears targets.
