Saturday 17 August 2019

AIB turns the screw on mortgage defaulters with threat of loan sale

Link-up: AIB chief executive Colin Hunt. Picture: Collins
Link-up: AIB chief executive Colin Hunt. Picture: Collins
Charlie Weston

Charlie Weston

The State's largest mortgage lender AIB has written to customers in deep arrears warning them their loans could be sold if they do not engage with the bank.

This is the first time the bank has threatened customers that it will sell their loans if they do not co-operate with it.

Around 1,500 customers who are more than two years in mortgage arrears received the letters. Half of them are five years or more in arrears.

The letter, a copy of which has been seen by the Irish Independent, says missed mortgage payments have built up.

"We believe that we have gone to great lengths to contact you but you are still not in an arrangement to solve your mortgage problem," the letter says. "If your mortgage loan remains in default with no arrangement in place, this leaves us very few ways to resolve the problem. Typically, in line with the bank's publicly stated position, mortgage loans like these end up with the loan being sold to a third party, or the home being repossessed."

AIB has not specifically sold residential mortgages in the past, although there were around 220 family mortgages linked into buy-to-lets when it sold mostly commercial loans to US fund Cerberus for €1bn earlier this year.

Other banks, including Permanent TSB and Ulster Bank, have sold home mortgages to vulture funds.

AIB did take €500m worth of residential mortgages out of the sold loans earlier this year when the announcement of the sale prompted some customers to engage with it.

AIB, headed by Colin Hunt, has a link-up with David Hall's iCare mortgage-to-rent operation. Mr Hall has also in the past written to AIB customers in mortgage distress offering to help them find solutions to keep them in their homes.

Commenting on the letter, Mr Hall said it was the first time a bank had issued a clear threat to sell loans.

"A State-owned bank has issued a clear and unequivocal threat to sell mortgages to a vulture. It is clearly saying vultures are bad for you."

Mr Hall expects his iCare charity to bid for the bad loans.

Asked why it was threatening homeowners with the sale of their loans, AIB said in a statement: "We remain focused on reducing non-­performing loans to more normalised levels. Supporting customers in difficulty remains a key priority for AIB and, where feasible, we will continue to implement sustainable solutions for customers who engage with the bank on a case-by-case basis."

Irish Independent

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