Thursday 21 September 2017

Ireland's main banks meeting targets on mortgage arrears solutions

The Central Bank
The Central Bank

Ireland’s banks have met the current targets set out for them to propose solutions to struggling mortgage owners, according to the Central Bank.

The Central Bank of Ireland today published the outcome of the Mortgage Arrears Resolution Targets for quarter two and quarter three of 2013.

In line with requirements, all banks Allied Irish Banks, Bank of Ireland, permanent TSB, Ulster Bank, ACC Bank and KBC Bank have reported "sufficient proposed solutions to meet the target of 20 per cent proposed sustainable solutions in quarter two and 30 per cent in Quarter three", the Central Bank said.

The Central Bank conducted an audit of the banks’ quarter two results. It examined the banks’ processes of determining and proposing sustainable solutions against its' own guidelines. 

The Central Bank said the banks will need to address "a number of issues" to ensure that the solutions being proposed are sustainable in the long term. 

The key issues identified by the Central Bank include:

Short-term loan modifications were proposed in some cases where there was:

  • no tangible evidence of a borrower’s circumstances improving
  • no clarity on the ultimate long-term solution;
  • An absence of requisite information, such as verification of borrower income or property value; and
  • A lack of evidence of legal follow up in cases counted under legal heading.

The Central Bank's Director of Credit Institutions and Insurance, Fiona Muldoon, said the latest data is “encouraging”.

“We are now starting to see some signs of progress in addressing the significant issue of mortgage arrears.”

“The audit process, while highlighting some key issues which require attention, shows evidence of long-term loan modifications being offered to borrowers who are no longer able to afford the original repayment requirements.”

She said “The latest data on mortgage arrears is also encouraging, with indications that the level of new arrears cases is declining and an emerging pattern of stabilisation in the numbers generally.

She added: “We expect that lenders will continue to progress and develop their approaches to ensure that future sustainability targets will be achieved.”

 

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