Sunday 21 January 2018

James Fitzsimons: Banks use the least best option on mortgage arrears

The main solution being offered to distressed borrowers involves repossession

James Fitzsimons

THE main banks will reach the Central Bank's target for offering solutions to distressed borrowers by the end of September, but they won't be sustainable.

They are using the least best option, which is legal action and repossession. They can't cope with the number of bad loans they have and they've made it impossible for many customers to engage with them in finding a solution.

The Central Bank insists that completion of the Standard Financial Statement is crucial for lenders to find the best solution for customers. But they refuse to even consider most of them. It reports that at the end of June, over 60 per cent of solutions involved giving up the property: 57 per cent are private dwelling houses and 74 per cent are buy-to-let mortgages. If borrowers refuse to cooperate then the banks have little choice, but they cannot repossess unless they have made every effort to agree an alternative arrangement. They are not doing this. In fact, they will not even allow customers into the process unless it is on their terms.

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