Working group for mortgage arrears policy urged

Thousands of mortgage holders are sleepwalking towards bank repossessions because they have not filled out their standard financial statements, according to the Irish Mortgage Holders Organisation (IMHO).

The warning came as the group said an initiative in association with AIB, designed to help distressed mortgage holders, resulted in 123 long-term sustainable solutions being fully agreed.

The fast-track arrears process, introduced last Nove-mber, is free and bypasses the Government’s personal insolvency practitioners’ service which can incur charges of €6,000 with no guarantee of success.

As part of the pilot scheme, the IMHO said 1,011 mortgage holders received introductory packs from AIB which explain the core procedures for dealing with arrears and of these, 441 have been received back from the borrowers.

“Given that the pilot scheme has been in operation for just 55 working days since the launch, this is a very significant result and confirms our contention that this service would be successful,” said David Hall of the IMHO.

However, he said it was worrying that 42% of clients had sought assistance filling out their standard financial statements.

As of last July, the Central Bank has insisted that distressed mortgage holders who do not fill out the statement will be deemed as not properly engaging with their lender and this will lead to the compulsory escalation of the regulatory process towards repossession.

“People need to know that if one person isn’t paying off any of their mortgage and another meets 70% of monthly payments, both will be treated as uncooperative if they haven’t filled out the standard financial statement,” said Mr Hall.

He said the pilot scheme showed there was an urgent need to establish a consumer-led working group to review the standard financial statement and make it more consumer friendly.

The head of the Financial Solutions Group at AIB, Brendan O’Connor, said the pilot scheme was meeting expectations and showed that AIB customers who availed of it valued having a trusted adviser who could offer them objective and practical advice in pursuit of a resolution.

There are over 100,000 mortgages in Ireland in arrears for 90 days ore more.

The most worrying statistic is the 57,000 mortgage holders who are in arrears one and two years combined, because their total loan book is €11.5bn — €1.8bn of which are arrears.