BANKS have initiated legal action to repossess thousands of houses and apartments, it has emerged.
This is despite a loophole in the law blocking repossessions.
A new report estimates that lenders have issued legal proceedings to take properties off up to 44,000 borrowers.
These are made up of residential and buy-to-let properties, according to calculations contained in a new report by Davy Stockbrokers.
An analysis estimates that what it calls non-cooperative borrowers number between 23,700 and 43,700.
Letters threatening legal action have been sent to these borrowers.
And there are fears that large numbers of properties, particularly buy-to-lets, will be repossessed.
Legal action to repossess properties has been taken by both AIB and Bank of Ireland in around one in five of arrears cases, according to the report by Davy's Conail Mac Coille.
Ulster Bank said that up to a third of its property owners in arrears were making no payments at all. The bank said it would not hesitate to repossess in these cases.
Strong demand for family-type homes and the presence in the market of large numbers of cash buyers mean that a flood of newly repossessed properties can be absorbed.
A number of banks were also likely to keep repossessed properties on their books, take the rental income and slowly release them on the market, Mr Mac Coille wrote. Changes in the law to restore the right of lenders to repossess properties have been passed by the Houses of the Oireachtas and are expected to become law soon.
Davy reckons that arrears will keep rising this year, with large numbers of homeowners struggling to repay largely due to income decreases rather than job losses.
Two-thirds of those in arrears are in a job, according to comments by Central Bank governor Patrick Honohan.
For large numbers of borrowers in trouble the mortgage repayments are so high they represent more than half of their income, Davy reported, citing unpublished Central Bank studies.
A separate MABS (Money Advice and Budgeting Service) report found that distressed borrowers had just €777 a month left, after paying for utilities, food and childcare. But the mortgage was around €500 a month.
Banks will have to write down up to €11.5bn of mortgage debt. Most of this will be in the form of split mortgages where part of the mortgage owed is put to one side, and in most cases will probably have to be written off at the end of the mortgage term.
But one-third of borrowers are in such a bad financial position that a debt writedown will not work. These are mainly buy-to-let investors.
Half of investor mortgages are paying interest only. Despite this, almost 30,000 out of 150,000 buy-to-let mortgages are in arrears.