Personal Finance

Thursday 31 July 2014

Banks ready to seize 'thousands of homes', TDs warned

Donal O'Donovan

Published 10/04/2014|02:30

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THOUSANDS of people could see their homes repossessed by state-owned banks while thousands more will get debt write-offs, TDs have been told.

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State-owned banks are set to seize thousands of properties as they work through the fallout from the mortgage crisis, according to figures presented by nationalised lenders AIB and Permanent TSB to the Oireachtas Finance Committee.

But up to 2,000 AIB customer will see some of their home loan written off as part of a split mortgage deal or when they opt to sell the property at a loss.

Permanent TSB is also considering a scheme to cancel the debt remaining after a home is sold, TDs were told.

UPDATED

The different stances have emerged as the heads of all the main banks are appearing in front of the Oireachtas Finance Committee this week to provide updated figures on mortgage arrears.

The heads of both AIB and Permanent TSB said yesterday that the majority of repossessions would affect buy-to-let properties rather than family homes.

Based on the banks' own estimates, customers of AIB may be less likely to lose their home than people with debts to Permanent TSB, who said they expected to repossess "thousands" of properties as they work through restructuring targets set by the Central Bank.

AIB chief executive David Duffy said repossessions of family homes would run into hundreds. AIB said that 80pc of 2,570 buy-to-let mortgages in deep arrears would be repossessed. Mr Duffy said the bank's policy of selective debt forgiveness – where a share of mortgage debt is wiped off in some cases – would help keep people in family homes.

AIB repossessed 58 family home last year, up from 20 in 2012.

Earlier, PTSB said it anticipated repossessions to be in the "low single-digit" thousands.

PTSB's figures suggest 10,000 customers were heading down the road of losing their home, Fianna Fail Finance spokesman Michael McGrath said.

Most legal actions will not lead to repossession because affected customers re-engage with the lender, executives from the two bank said.

PTSB's chief executive Jeremy Masding said his bank was exceeding Central Bank targets to tackle home loan arrears.

The lender made almost 12,000 offers to customers in long-term mortgage arrears by the end of last year, he said.

Mr Masding said 2013 had been "transformative" for the bank in tackling arrears, cutting costs and reviving lending.

However, Fine Gael TD Kieran O'Donnell said the target was only reached because legal proceedings taken against customers were included, with the cases adding up to close to one- in-three offers.

At AIB, the legal actions and threat of actions accounted for nearly half of all sustainable solutions being put forward by the bank, Mr O'Donnell said.

At PTSB the pace of legal actions against customers has shot up since the start of this year, according to numbers prepared for the committee by the bank. At the end of 2013, there were 3,624 legal proceedings under way, including moves for voluntary sales of property. By the end of March the number was 5,318 – almost half of which are currently before the courts.

Irish Independent

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