Lenders draw up plans to deal with mortgage arrears

Significant policy and operational changes in how Irish banks deal with mortgages and other loan arrears are to come into force in the coming months.

Yesterday, the Central Bank disclosed it has started to receive supplemental information from the leading mortgage lenders concerning their mortgage arrears resolution strategies.

The proposed strategies have to be in place and in force by October and will include mortgage-to-rent schemes and variations of split mortgages.

The Central Bank said the material supplied by the lenders included the lenders’ responses to the Central Bank’s assessment of their distressed credit operations, undertaken by BlackRock, which indicated the need for a vast improvement in operational capabilities.

“The banks have committed to a step change in their operations and have provided detailed plans to enhance their handling of arrears cases.

“The Central Bank will continue to monitor their implementation closely,” the regulator said.

The lenders provided details of their menu of forbearance and loan modification techniques.

Individual lenders are expected to move to pilot stage shortly.

However, while the banks are going through their loan portfolios thoroughly, any prediction “is still subject to considerable uncertainty and modelling assumptions”, according to the Central Bank.