Struggling homeowners told sell house or face legal action
Published 06/09/2013 | 05:00
PERMANENT TSB is under fire over a sharp rise in cases where the bank has told struggling homeowners that surrendering their house is the best way to sort out their mortgage arrears.
And the Irish Independent has learned that any borrower who turns down the "voluntary sale" option faces immediate legal action by the bank to recover the property.
State-owned Permanent TSB is the latest lender criticised after figures from across all the banks revealed that a majority of solutions being offered by banks to customers in arrears involve the loss of their family homes.
Yesterday, the bank said it had recommended "assisted voluntary sales" deals to 2,000 customers, who in some cases are as little as €300 behind on repayments, the joint Oireachtas Finance Committee heard.
But fewer than 100 customers have taken the bank up on that proposal, the Irish Independent has learned.
However, for those who turn the bank down, the options are stark. The bank gives homeowners 90 days to decide whether to accept the offer. If they refuse or if they do not respond, Permanent TSB will then initiate legal proceedings that could ultimately see the house repossessed anyway.
By the start of this week, the bank had recommended the "assisted voluntary sales" to 2,000 customers who are behind on their home loan, chief executive of Permanent TSB Jeremy Masding said.
The figure is up from 1,000 at the end of June.
When a house is sold, the borrower is still liable for any shortfall on their mortgage, but the bank said it will look at each situation on a case-by-case basis and may write-off debt at the end of a sale process.
Mr Masding was the last of the heads of the four main banks to be grilled by the Finance Committee this week about progress to meet a target set by the Central Bank.
Banks were told to offer a debt deal to 20pc of customers in long-term arrears by the end of June, rising to 30pc by the end of this month and 50pc by the end of the year.
Mr Masding said Permanent TSB met the June target.
Out of 25,000 customer accounts in deep arrears, the bank offered a long-term restructuring such as split mortgage, interest-only arrangement or loan extension to 2,750 homeowners by the deadline, he said.
Another 1,500 homeowners have been offered short-term arrangements, he said.
More controversially, the bank said 800 of those in long-term arrears were offered the "voluntary sale" option by the June deadline, and 1,600 arrears cases are now being handled by lawyers acting for the bank.
Committee members welcomed the clear figures presented by Permanent TSB, but Fine Gael's Kieran O'Donnell questioned the high number of "assisted voluntary sales" being offered by the bank.
He noted a sharp rise in the number of those offers since June, and the fact that the bank's own data shows the option of selling their home is being recommended even to people in short-term arrears.
He was backed by Sinn Fein's Pearse Doherty who said the bank is pushing the house sale option even to people who have been working with the lender, and in at least one case, are less than one month behind in repayments.
Independent TD Stephen Donnelly said a struggling couple came to him after being told by Permanent TSB to default on a credit union loan that is helping pay for a degree course to prioritise their mortgage.
Mr Masding defended that decision and the recommendation that families should sell unaffordable houses, saying in some cases short-term moratoriums have been exhausted even if people are not in deep arrears.