‘Families must get mortgage arrears solutions’

The Central Bank needs to intervene with lenders to ensure they are giving struggling families sustainable mortgage debt solutions, and not just crisis management options, a TD has warned.

Ciarán Lynch, chairman of the Oireachtas finance committee, is concerned that official figures hide the true picture of debt misery.

The Cork TD, who also heads the Oireachtas probe into the banking collapse, wants the Central Bank to tell lenders they need to be more transparent about how they are treating households with repayment problems.

“The banks need to give a fuller picture of what is happening regarding distressed mortgages,” Mr Lynch said.

“Long-term solutions and restructuring are not the same things.

“The focus must be on realistic repayment programmes that allow families to remain in their homes, rather than short-term changes.

“The Central Bank needs to give more direction to banks to categorise what structures are in place.

“Banks need to refine the information they produce so we have a clearer idea of what is taking place.”

The call came as new figures from the Department of Finance show the six banks had agreed to 72,819 permanent mortgage restructures by the end of June. That represents a rise of 3,513 accounts at the end of May and 10,754 at the end of March.

Mortgages in arrears of three months fell from 73,719 to 72,897, the department said.

Split mortgages granted rose from 4,114 in the first three months of the year to 14,158 by the end of June.

The number of family home non-restructured mortgages in arrears of over 90 days fell from 62,210 last August to 52,053 in June.

Recent Central Bank figures showed that just over one in ten “permanently modified” mortgages are constantly in default. Some 29% of such loans are only making partial payments.

The figures also showed that 55% of modified mortgage holders were managing to keep up with full payments at the end of December 2013, compared with just 28% in the first quarter of 2011.

By the end of last year, there were 38,086 permanently modified mortgages with AIB, Bank of Ireland, and Permanent TSB.

The Central Bank report noted that the crisis is far from over, but its survey found that the stock of permanently modified loans was increasing more rapidly than loans in default.

“Given that 55% of the stock of permanently modified defaulted loans made a full repayment in December 2013, more needs to be done before the arrears issue is resolved,” the report stated.

Mr Lynch wants the Central Bank to act on a report by the finance committee which criticises the way the mortgage crisis has been handled.

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