Ulster won't write off debt for those who stay in home
Published 28/04/2015 | 02:30
Ulster Bank is on a collision course with the Government after it insisted it will not write off any mortgage debt for those unable to meet their repayments if they stay in the home.
The admission came after the bank said it would write off mortgage debt for low-income families that sell up and hand back the keys.
But chief risk officer of the bank Stephen Bell said it would be unfair to customers of the lender who were managing to meet their repayments to write off mortgage debt for those unable to meet their commitments.
The Government is concerned that banks are vetoing State-backed insolvency deals, known as personal insolvency arrangements (PIAs).
These are designed to reduce mortgage and other debts.
The Government is planning to bring in mechanisms such as an appeals process to force banks to review cases where lenders reject settlement terms proposed by the Insolvency Service of Ireland, as reported by the Irish Independent in early March.
But Mr Bell was unrepentant: "We are opposed to writing down mortgage debt where people remain in the home."
He said there was no need to change anything about the banks' veto in insolvency deals.
Most people were able to meet restructured mortgage payments if their unsecured debts were written off, which was the approach favoured by Ulster Bank, he added.
The bank is appealing to 2,000 mortgage customers who were not engaging with it to contact it and promised to offer fair solutions.
For those unable to meet their repayments, and if they are eligible for social housing, Mr Bell said the home could be sold and the bank will not pursue the customers for the outstanding debt.
But debt advisers warned those considering this to take legal and financial advice as the bank is only making this offer as it has no hope of recouping the money.
Director of the Free Legal Advice Centres Noeline Blackwell said people need to be careful that they do not end up homeless.
"Ulster Bank and the Government will have to be conscious that this sort of proposal doesn't lead to increased homelessness," she said.
Ms Blackwell questioned if debt-ridden people would get objective assessment of their situation from a bank and said there was a need for an independent third party to assess those in chronic debt.
Labour's Senator Lorraine Higgins accused the bank of spinning.
She said the bank had little chance of getting money out of those overburdened with debts.