Mortgage body denies strategic default claim

The Independent Mortgage Advisers Federation has denied claims by financial adviser Karl Deeter that up to a quarter of mortgage holders in arrears are voluntarily allowing their mortgages to slip towards default.

IMAF spokesman Michael Dowling described Mr Deeter’s claims as an insult to all the families who are struggling to pay their mortgages. He said the banks have been pushing the same allegations as Mr Deeter in an attempt to water down the planned personal insolvency bill.

“There will always be a small number of opportunists that seek to avoid their responsibilities in all areas of life, but the banks have been using this misleading tale as a red herring in a desperate attempt to have the personal insolvency provisions watered down to ensure that the banks retain their dominant position and keep distressed mortgage holders under continuing pressure,” said Mr Dowling.

“It would appear that Karl Deeter’s primary source of data are those same banks, so it’s questionable whose best interest Karl is serving.”

Mr Deeter said he did not really care what IMAF had to say.

“This is what happens when you say something that is unpalatable to some people,” he said. “I talked down the national piety. Some people don’t do what they are told, suddenly I’m the biggest bollocks in the world.”

Mr Deeter defended his research, and said he talked to two banks on an off-the-record basis. Both of these banks kept track of people who were strategically in default.

He said that, in relation to the banks that did not keep figures on customers strategically in default, he had spoken to the collection teams who reported a high percentage of people who could pay their mortgages but were refusing to do so.

Mr Deeter said that, in his capacity as a financial adviser, he had clients who were refusing to pay their mortgages.

“I don’t know why they are shooting the messenger,” he said. “Why don’t they just do their own research?”

Mr Dowling said the banks go through a very thorough process, including a 12-page statement of affairs with the Free Legal Advice Centre, before they even consider restructuring mortgages. The only way an individual could hide any assets from the banks would be to have an undeclared bank account, he said.

The reason so many mortgages are in arrears is because they are simply unsustainable based on the reduction in borrowers’ income, he said.