Monday 19 March 2018

Brokers call for arrears 'solution' to be probed

The Central Bank headquarters in Dublin
The Central Bank headquarters in Dublin
Charlie Weston

Charlie Weston

The Central Bank has been urged to review thousands of mortgage arrears cases where banks claim to have restructured the home loans.

Close to 34,000 mortgage holders have had their arrears capitalised, this is where the arrears amount is added to the mortgage principal.

But broker body Professional Insurance Brokers' Association (PIBA) has questioned this 'solution', which it says just extends the problem and does not deal with the underlying issue of people being unable to afford the repayments.

Chief operations officer at PIBA Rachel Doyle said the Central Bank should insist on a review of the 33,825 restructured mortgages where arrears have been capitalised.

The broker body, which represents 900 firms, said despite the news that overall arrears levels were falling, arrears capitalisation was showing the most significant quarterly increase.

She said arrears capitalisation accounted for almost a third of the 120,800 restructured mortgages on homes at the end of September.

Ms Doyle said: "Arrears capitalisation should not be termed a 'solution' to mortgage arrears. It amounts to kicking the can down the road and not facing up to the issue. People in such circumstances deserve to have realistic solutions to their predicament so that they can begin to move on with their lives.

"These cases need real solutions and the Central Bank should not be accepting that they are 'restructured'. They are in name only," she said.

Ms Doyle said the Central Bank's own research had shown that long-term arrears were highest among those on standard variable rates of interest.

"These rates, as we've seen, are among the highest in Europe," she said.

She also pointed out that cases for those in arrears for more than two years account for almost 84pc of residential mortgage arrears cases.

The recent introduction of a court review for those whose lenders reject proposed arrears solutions should help in many cases, Ms Doyle added.

"However, we believe that the so-called 'restructured' arrears cases involving arrears capitalisation should be reviewed and realistic solutions put in place."

A spokeswoman for the Central Bank said its code of conduct on mortgage arrears required lenders to treat borrowers in arrears on the basis that each case was unique and needed to be considered on its own merits.

She added: "A lender must explore all of the options for alternative repayment arrangements that they offer.

"This includes adding arrears and interest to the principal amount due."

Banks are required to review the alternative repayment arrangement.

Irish Independent

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