Monday 22 October 2018

Bank offers to sell house back to tracker victim

Financial institutions face legal action over 'incompetent' mortgage scandal

(Stock picture)
(Stock picture)

Maeve Sheehan and Philip Ryan

Banks are being threatened with High Court action to stop them selling homes they seized from victims of the tracker mortgage scandal.

The threats were made by an advocacy group after AIB wrote to one of its tracker victims offering to sell back the house repossessed two years ago to the affected customer at open market value.

The customer's tracker case is understood to be still under review by AIB. In a letter last month, the bank offered the customer several options: buying back the home at market value, with the bank clearing any remaining balance on the mortgage account; applying for a new repayment scheme on "the corrected mortgage balance"; or selling the property, clearing any remaining balance.

As a result of the letter, all of the main banks are understood to have received letters in recent weeks threatening to injunct them if they try to sell properties repossessed from customers wrongly moved off their tracker mortgages.

The Central Bank has so far identified 23 mortgage holders who have lost their homes as a result of being improperly taken off a low-rate tracker and charged a higher interest rate, and that figure is expected to rise. It also identified a further 79 buy-to-let mortgage holders.

It is understood that the legal threats were made by the Irish Mortgage Holders Organisation (IMHO).

David Hall, founder of the IMHO, declined to comment on this, but said: "We are looking at escalating this now. Our primary concern is the incompetent manner in which properties were wrongly repossessed from customers, and they are still in possession of the banks."

He said while the tracker mortgage cases were being reviewed, the banks should not move on the properties.

The threat of legal action follows advice from the governor of the Central Bank, Philip Lane, that tracker mortgage victims could go to the courts or to the Ombudsman because he did not have the power to help them. He was speaking at the Oireachtas Finance Committee, which has called the banks and regulators to account over the tracker scandal. John McGuinness, chairman of the committee, yesterday called on the "Opposition to come together with the Government to take a united stand against banks" and calling a halt to "every repossession until this tracker issue is dealt with".

A spokesperson for AIB said: "To date 97pc of the 3,200 customer accounts identified as impacted have been paid redress and compensation and this process is progressing. A total of €133m has been utilised covering both redress and related costs to 30 June 2017.

"The tracker review is ongoing and our expectation remains that work will continue into 2018. Our review will be fully complete when the Central Bank concludes its own assurance work."

Minister for Finance Paschal Donohoe will this week warn the chief executives of the country's banks that he will strictly enforce salary caps and seek to have more influence on their boards if they do not urgently address the tracker mortgage scandal.

The current salary cap of €500,000 for bank bosses can only be breached on a request to the Minister of Finance.

Mr Donohoe is considering a ban on any breaches of the rule. He also plans to keep a current ban on bonuses.

Sunday Independent

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