Tue Jan 28 2020

Commenting on today’s Residential Mortgage Arrears & Repossessions from the Central Bank for Q3, 2019, Brokers Ireland said the arrears problem remains persistent with the most severe arrears in the category of arrears capitalisation, which for the most part is not a true restructure, despite being classified as such by the Central Bank.

Rachel McGovern, Director of Financial Services at the organisation which represents 1,250 Broker firms said while there was just a marginal improvement since the previous quarter there is still almost €2.4 billion involving 27,892 mortgages in arrears for over 720 days.

“The majority of the arrears, 33%, are being dealt with by way of arrears capitalisation, adding the arrears to the principle balance, largely a non-solution.

“Furthermore, over one in five of these, 21%, are not even meeting the terms of this so-called restructure,” she said.

The failure to deal with these and other arrears is costing those impacted but it is also costing other borrowers dearly, those who are paying substantially more in interest charges that their euro area counterparts, she said.

“We have repeatedly said lenders should have been separating the unwilling to pay from those who are unable to pay and writing down debt in the case of the latter.

“But it would appear that lenders are not facing up to the issue in any way that could be considered satisfactory and some are putting up impediments at every juncture in the process.

“In this regard comments in recent days from the head of the Insolvency Service of Ireland to the effect that banks and funds should be less defensive in the process are instructive, but also gives rise to concern that we could still be a long way off tackling the issue.”

She said the whole insolvency process was intended to take Ireland “from the dark ages of debt shaming to giving people an opportunity to resolve their debt and start again.  It has existed for enterprises but, sadly, it has a long way to go in the personal finance arena to reach the intended outcome,” she said.

Ms McGovern pointed out that the European Commission has supported the call for banks to write down debt.

27 January 2020

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