Call for budget measures over 'entrenched' long-term mortgage arrears crisis

Long-term mortgage arrears is causing financial misery for thousands of households and the Government should prioritise measures in October’s budget to help distressed borrowers, leading legal and debt adviser Paul Joyce, has said.

The call comes as new Central Bank figures show that long-term arrears “are entrenched” as ever, with 27,979 mortgage accounts in arrears for over two years at the end of March -- an unexpected increase since the start of the year, said the senior policy analyst at the Free Legal Advice Centres, or Flac.

The Central Bank, the ECB and the Government -- which owns majority or significant stakes in three banks -- have encouraged lenders to reduce the large amount of non-performing home and commercial mortgages on their loan books, a legacy of the property and banking crash.

Mr Joyce said the policy of selling the worst soured household loans to foreign-owned retail credit firms and vulture funds is doing little to cure the underlying problem of mortgage indebtedness facing Irish households.

At 43,643, the latest figures, nonetheless, show a small decrease in the overall number of cases in arrears for over 90 days, although early-day arrears of up to 90 days are “worryingly” little changed, he said.

According to Mr Joyce, the latest figures show a confused picture of the amount of loans now held by retail credit firms and vulture funds.

Mr Joyce has - in the past - said that well over half of the country’s most distressed mortgages will end up in the hands of the so-called non-bank firms if the planned home loan sales go ahead, and he believes the latest figures support that assessment.

The latest figures from the Central Bank show the number of accounts in any type of arrears had fallen to 62,834 at the end of March from 63,112 at the start of the year.

“This is a very small decrease,” he said.

Mr Joyce said mortgage arrears in Ireland was a problem of long-term arrears.

It is unclear whether the latest survey includes the high-profile announcements and proposed loan sales by Permanent TSB, Ulster Bank, and others.

He said already almost 50% of the long-term arrears are in the hands of retail credit firms and unregulated loan owners.

And with other loan sales by banks in the future, many more mortgages will likely be owned by foreign-owned lenders.

The figures show another long standing issue with the mortgage crisis in Ireland: About 14% of all the 99,707 loans that have required some sort of new deals or restructuring have failed to meet the new terms.

They also show the two largest categories for restructured cures were arrears capitalisation and split mortgages whereby supposedly sustainable deals struck between borrowers and their banks have failed to keep up with the new payment schedules.

A brighter spot, according to Mr Joyce, is that the number of repossessions remain low.

On potential budget measures to ease the debt burden, Mr Joyce suggests the Government give increased resources to help distressed households and to provide legal aid for people facing repossessions of their homes in the courts.

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