AIB pays €150k for advice service to help distressed mortgage holders
MORTGAGE lenders are set to come under pressure to offer free advice to those in arrears after AIB signed up to a new service for troubled homeowners.
AIB is grant-aiding the Irish Mortgage Holders' Organisation €150,000 to run a new third-party body that will advise distressed mortgage holders.
The move is part of the bank's attempts to increase engagement with distressed borrowers – particularly those who have not returned a standard financial statement (SFS).
Those whose mortgages with AIB, EBS and Haven are in arrears will be able to avail of the free service.
It is particularly aimed at the up to 10,000 homeowners who are behind on their repayments but will not make contact with the bank.
A separate division of the Irish Mortgage Holders' Organisation (IMHO) is to be set up with five staff to run the new service.
David Hall's body is seen as independent, with a strong pro-consumer bias.
No other banks have thus far approached the IMHO about running a similar service, but Mr Hall said he was open to offering the same service to mortgage holders of other banks.
Some 100,000 homeowners are more than three months in arrears on their home loans across all the banks.
Mr Hall explained: "The objective here is very simple, to keep as many people in their homes as possible."
And he denied vehemently that he will be compromised, or that he will stop criticising AIB and other banks.
In the past, Mr Hall has blasted AIB, for example when its chief executive David Duffy said one in five mortgage borrowers was a strategic defaulter.
The new operation is expected to process between 300 and 400 deals a month.
One in 10 residential mortgage holders in the AIB group is in arrears of three months or more.
Mr Hall insisted that the service would be free, confidential and independent.
Customers will get a financial adviser to help them fill out a standard financial statement and guide them through their dealings with the bank.
All debts owed by the homeowner would be part of a deal.
"The cost of this service is grant-aided by AIB but independently provided, staffed and managed by IMHO.
"Customers of AIB Group who are experiencing difficulty paying their mortgage will have the benefit of free and independent professional advice to help them engage with AIB Group and reach a sustainable solution," said Mr Hall.
AIB's Brendan O'Connor insisted that the bank would not be imposing any conditions on the IMHO.
"We need people to fill out the standard financial statement. Anything that helps us get more people doing that is helpful."
He said some debt write-off deals would be done if people were genuinely unable to meet repayments.
But Mr Hall admitted that some people would be forced to lose their homes, either through repossession or by a voluntary surrender.
But he said no deal would be agreed where a home was given up until there was agreement on paying off the residual owed once the property was sold.
The deals done would be alternatives to the new Insolvency Service process, Mr Hall added.