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Wednesday 24 September 2014

AIB defends 6,600 letters to customers in arrears

Published 20/06/2014 | 02:30

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Pedestrians pass a branch of the Allied Irish Bank (AIB) in Dublin, Ireland
Pedestrians pass a branch of the Allied Irish Bank (AIB) in Dublin, Ireland

HALF of AIB mortgage customers who have received a legal letter from the bank threatening repossession have since engaged with the lender about their arrears.

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The bank's chairman and chief executive yesterday both defended the fact that the bailed-out bank has sent 6,600 legal letters to customers in mortgage arrears. They were speaking at the bank's annual general meeting (AGM) in Dublin.

The legal letters are being sent to around 20pc of the 25,000 customers who are three months or more in arrears on their home loan, chairman David Hodgkinson said.

Of those who receive the letters, around half begin to engage with the bank, he said.

"Yes, it is not pleasant to get one, but if it gets re-engagement going then it's better for both parties," Mr Hodgkinson said.

As many as 15pc of that cohort go on to resume fully repaying capital and interest repayments on their home loan, he said.

The relatively high number going directly from deep arrears to full repayment is certain to reignite claims that a significant number of borrowers are so-called "strategic defaulters", a term for those who can meet their mortgage payments but have, for a variety of reasons, opted not to.

Mr Hodgkinson provided the figures in response to a question from the floor of the AGM from consumer rights campaigner, and bank shareholder, Brendan Burgess.

The bank's chief executive David Duffy said the letters being sent are not actual legal repossession letters but rather a warning to customers in arrears that if they don't engage with their lender the legal repossession process will start.

AIB will launch a "portable" tracker mortgage product on July 1, Mr Duffy told shareholders.

It will allow people to move home without losing the benefits of their tracker deal. It follows similar offerings from Permanent TSB and Bank of Ireland.

The Tracker Interest Rate Retention offer will be available to AIB, EBS and Haven customers who currently have a tracker mortgage.

They will be able to bring their existing tracker with them if they move home, at their current interest rate plus 1pc for the life of the loan.

The beneficial rate will apply up to the maximum of the current loan; any additional borrowing associated with the new home will have to be done at the current borrowing rates.

Irish Independent

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