Issues emerge during banks audit

The Central Bank uncovered a number of issues — including no evidence of an improvement in the borrower’s circumstances — during its audit of the banks’ attempts to tackle the mortgage arrears crisis.

Other problems encountered by the Central Bank included no clarity on the ultimate long-term solution between the bank and the distressed borrower; an absence of requisite information, such as verification of borrower income or property value; and, a lack of evidence of legal follow-up in cases counted under the legal heading.

Despite these problems, the banks’ still met the targets imposed by the Central Bank last March.

The six banks covered by the scheme — Bank of Ireland, AIB, PTSB, KBC, ACC and Ulster Bank — have to have made offers to the bulk of mortgage arrears customers over the course of this year.

Moreover, they need to have put in place workable solutions for 15% of mortgages by the end of December and 25% by the end of March next year.

The extent of the crisis was underlined on Thursday when the Central Bank released the latest figures which show that there is a total of 141,520 mortgages in arrears with 99,189 of these in arrears over 90 days. The value of mortgages in arrears over 90 days is €18.9bn.

During Oireachtas Committee meetings with the chief executives of the banks last September, the head of AIB, David Duffy, was heavily criticised because he included 5,894 legal letters in the 8,600 offers made to mortgage arrears customers over the summer months.

The Central Bank confirmed that legal letters could be included to meet offer targets, but it pointed out these offers then had to be translated into durable solutions.

If the banks do not meet the remaining targets over the next 12 months, then they will incur capital charges beginning in the financial year January 1, 2014.

The Central Bank is understood to be also overseeing the resolution of SME debt, however, it has not released any figures for this process.

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