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Saturday 23 August 2014

Banks 'need to act' as just one in five gets arrears deal

Charlie Weston Personal Finance Editor

Published 11/07/2014 | 02:30

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BANKS have been told to "get a move on" in dealing with mortgage arrears.

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The comments were prompted by new figures that show just one in five homeowners who are in arrears have been offered a long-term deal to lower their payments by their bank.

Permanent restructures have been put in place on close to 15,000 residential mortgage accounts at the six main banks.

This is out of almost 74,000 residential mortgage accounts that are in arrears for three months or more.

David Hall of the Irish Mortgage Holders Organisation said banks were taking too long to get on top of the mortgage crisis.

The overall number of residential mortgage accounts that are in arrears fell in May, the Department of Finance said.

There are now close to 74,000 residential mortgage accounts in arrears for three months or more, down from close to 80,000 at the end of last year.

But Mr Hall claimed banks were using what he called an "accountancy trick" to deal with the arrears cases they were prepared to tackle.

Just over 20,000 residential mortgage account holders have now been facilitated with what is known as an arrears capitalisation – this is the largest category of permanent mortgage restructure, according to the department.

Arrears capitalisation is where the amount owed in arrears is added to the principal of the mortgage.

"Capitalising the arrears does not deal with the reasons people are behind on their repayments and their inability to pay. To say it is an accountancy trick and a sleight of hand would be polite ways of putting it," Mr Hall said.

"Banks need to get on with it," he added.

When all residential mortgage accounts that are in some form of arrears, even for more than one day, are counted up the total comes to 105,958, the department said.

But the Department of Finance insisted that there was increased engagement between stricken borrowers and lenders.

Irish Independent

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