8,200 families at serous risk of losing their homes

OVER three out of every 100 mortgage holders have fallen more than 90 days behind in monthly repayments, despite interest rates being at record low levels.

Data published by the Financial Regulator shows the extent of the financial pressures that the economic downturn has placed on many households. Almost 8,200 families have received legal notices or been issued with court proceedings and are at serious risk of having their homes repossessed.

The findings reveal that various financial institutions held 331 repossessed properties at the end of September, while the number of people falling into arrears has almost doubled over the past 15 months.

A total of 26,271 home owners – 3.3% of all mortgage holders – had fallen more than 90 days behind in their monthly repayments by the end of September 2009, compared to 13,931, or just 1.4%, in June 2008.

Opposition TDs and family support groups, however, claim the current total represents just the tip of the iceberg with the numbers likely to increase further over the next 12 months.

Current mortgage defaulters owe a combined €4.8 billion. Two-thirds of them are at increasing risk of losing their family home as they have failed to make any mortgage repayments over the previous six months.

According to the Financial Regulator, 17,767 borrowers – or 2.2% of all mortgage holders who owe banks a total of €3.2 billion – were more than 180 days in arrears.

It also emerged that 4,565 formal demands – a letter from a bank’s solicitor seeking repayments or repossession of the property from defaulters – were outstanding up to the end of September. In such cases, the level of arrears amounted to €57.8m on outstanding mortgages totalling €957.5m. The figures indicate that the average loan defaulter has fallen over €12,660 into arrears.

In addition, court proceedings have been issued on another 3,617 mortgage holders who have fallen a combined €84.2m into arrears – an average of €23,279 each.

Lending institutions have launched court proceedings against 491 defaulters alone in the third quarter of 2009 for arrears totalling €10m.

Legal proceedings were concluded in 218 other cases during the period, which resulted in banks due to repossess 117 properties,either by court order, voluntary surrender or abandonment.

Overall, banks had a total of 791,634 private residential mortgage loans worth €118.6bn on their books up to the end of last September.

The Irish Banking Federation said the figures showed that mainstream lenders were continuing to hold off on taking legal action against borrowers more than six months in arrears.

IBF chief executive Pat Farrell said IBF-affiliated banks accounted for over 15,600 of the 17,767 defaulters in this category.

“While this level of arrears would normally be expected to give rise to legal action in most cases, the reality is that court proceedings have been issued in just 18% of such cases,” said Mr Farrell. He stressed that banks were open to constructive negotiation with people where genuine repayment difficulties arose. The IBF insisted that sub-prime lenders were the main drivers of repossessions.

The Irish Brokers’ Association pointed out the Financial Regulator’s figures did not take into account people on repayment moratoriums or interest-only payments.

The information provided by the Regulator is the first in what will become a regular series of data on mortgage arrears and house repossessions to be published on a quarterly basis.

Last February, the Regulator introduced a statutory code of conduct on mortgage arrears, which restricts lenders from taking legal action against property loan defaulters until six months after arrears first arise.

However, the Financial Regulator has proposed to extend that grace period to 12 months due to the difficulties being experienced by many borrowers.