Banks ready to repossess thousands of homes in debt

Thousands of homes face being repossessed as banks step up efforts to pursue mortgage holders in default.

The charge is being led by Permanent TSB which has become the first of the four main banks to target borrowers who are less than 90 days behind in monthly payments as well as those with long-term arrears.

Borrowers in danger of losing their homes include those in negative equity who opt for so-called assisted voluntary sales where most of the remaining shortfall is either written off or not pursued.

The Government’s much-vaunted solution to the crisis — the mortgage to rent scheme — has proved a fiasco, with banks claiming it is unworkable and cumbersome.

The scheme, which allows people in mortgage difficulty to switch to renting their homes, has only been applied to one customer of Ulster Bank while neither the AIB nor Permanent TSB have completed any such transaction.

Permanent TSB yesterday told the Oireachtas Committee on Finance, Public Expenditure and Reform it expects to repossess between 2,000 and 4,000 homes while it was revealed that AIB has more than 9,000 customers who are the subject of legal proceedings.

Permanent TSB had 22,109 family home mortgages in arrears of more than 90 days at the end of last year, with 3,815 buy-to-let mortgages also in arrears.

PTSB chief executive Jeremy Masding told Fianna Fáil finance spokesman Michael McGrath that up to 20% of customers in arrears are not involved in “meaningful engagement” with the bank.

Mr Masding also revealed two-thirds of the bank’s mortgages are tracker mortgages and this was costing it up to €100m a year.

PTSB expects the number of repossessions this year to be “in the hundreds”, Shane O’Sullivan, the bank’s managing director of asset management, told Sinn Féin TD Pearse Doherty. This compares with 60 repossessions last year.

The eventual figure is likely to be between 2,000 to 4,000 repossessions, he told independent deputy Stephen Donnelly.

Mr O’Sullivan added that the bank pursued other options, including offering 7,000 split mortgages to date for borrowers in arrears. He also said it was disappointing the bank had not been able to put mortgage-to-rent arrangements in place. He said the process is fraught and the criteria out of date.

AIB chief executive David Duffy stressed the bank must seek full repayment of mortgage debt where the customer has the ability to meet that payment. Any other outcome would be commercially unacceptable and “grossly unfair” to the majority of mortgage holders who continue to pay off their loans despite their changed circumstances.

The AIB chief told the committee the bank will only compromise on debt with co-operating customers — and only then if there is no prospect of the debt being paid.

Brendan O’Connor, head of financial solutions group at AIB, said the bank had offered 1,100 split mortgages and it is likely that 600-700 will have some write-down involved. There will also be a write-down of debt in 60%-70% of assisted voluntary sales.

Both AIB and PTSB told the committee they were on course to returning to profitability.

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