Tuesday 6 December 2016

60,000 struggling homeowners have mortgage deal with bank

Siobhan Creaton

Published 01/03/2011 | 05:00

ALMOST 60,000 homeowners who are struggling to pay their mortgages have struck a new deal with their banks in an effort to keep their homes.

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New figures released yesterday from the Central Bank reveal that one-in-10 homeowners are now struggling to repay their mortgage and stave off repossession. These homeowners owe the banks a combined €103bn.

Despite striking new deals with their banks in order to cope with their mounting debts, about half of them have fallen back into arrears and have not paid their mortgage for three months, while just over 35,000 are still repaying their mortgage.

In most cases, the banks have reduced the repayments by allowing the homeowners to repay just the interest for a set period. This has happened in almost 40pc of all mortgages that have run into trouble.

In another 30pc of cases, the homeowner has been allowed to make reduced repayments for a certain period of time to help keep them out of arrears.

In other cases, the amount of money to be repaid every month has been adjusted by extending the term of the mortgage or by granting a payment moratorium to alleviate financial pressures for a short period of time.

Repossessed

The banks and building societies have been forced to restructure these mortgages by a code of conduct imposed on them to cut down on the number of homes being repossessed as a result of the property crash.

While these measures have helped slow down the number of houses being repossessed in Ireland, in recent years an increasing number of homes are still being seized by financial institutions.

In the last three months of 2010, banks and building societies repossessed 106 homes, compared with 81 in the same period in the previous year, according to the Central Bank.

Of these, 72 homes were voluntarily surrendered by the mortgage holders with 35 of them simply being abandoned and left vacant for the bank to seize.

Some 42 repossessed homes were sold by the banks in the last quarter of 2010. By the end of last year, banks and building societies in Ireland held a total of 585 repossessed homes.

Commenting on the stark rise in mortgage arrears, Ciaran Phelan, chief executive of the Irish Brokers Association, called on the next Government to address the problem.

"As the level of arrears continues to spiral there's a growing need for the next Government to devise a comprehensive solution," he said.

The Irish Bankers' Federation said it was not surprising that so many homeowners had found themselves in trouble and urged those who were in trouble with their repayments to talk to their banks.

"While the vast majority of borrowers continue to meet their mortgage repayments, it is important that those borrowers in or facing difficulties are assisted in every reasonably way possible," it said.

The Free Legal Advice Centre called for stronger measures to address the mortgage problem.

It pointed out that, before the election, Fine Gael said it would create a five-year window to allow homeowners to pay two-thirds of the mortgage if that is all they could afford, while Labour said it would ban repossessions for two years.

"Given the increasing number of home mortgages in trouble and the serious levels of personal over-indebtedness in Ireland, the Government must act quickly to implement reform," director general Noeline Blackwell said.

Irish Independent

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