Banking Inquiry: BoI will continue to seek repossession shortfall costs

Bank of Ireland has signalled that it will continue to seek shortfall costs from people even after they have lost their home.

Thu, 30 Apr, 2015 - 01:00

Noel Baker

Addressing the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, Stephen Mason of the bank’s mortgage division said: “That is the nature of full recourse lending.”

The bank told the committee it had performed strongly in 2014, and that 92% of its owner-occupier mortgages were not in default.

The committee heard that 90% of mortgage holders in difficulty had been offered a sustainable solution and that a similar rate of customers in those circumstances were meeting the terms of the new arrangements. The bank also said it was responsible for just 6% of civil bills issued for repossession last year.

However, when pressed by Fianna Fáil’s Seán Fleming, the bank said it would look to speak to the debtor about the residual balance owed after the property had been disposed of.

Mr Fleming said: “I’m amazed that you can’t leave homeless people alone.”

Bank of Ireland CEO Richie Boucher said the bank recognised there had to be an incentive to the customer to support a work-out proposal. “We restructure more than any other bank,” he said, adding it did not use the threat of court action as a negotiating tactic.

Bank of Ireland representation at the committee came after Ulster Bank had said that it had made “significant progress” in helping 22,000 customers to resolve their mortgage difficulties.

Ulster Bank said on Monday it was undertaking a new initiative, writing to 2,000 customers to tell them that if they sell their homes, they will not be pursued for the outstanding debt if they are on low incomes and eligible for social housing.

Speaking to the Oireachtas committee yesterday, Ulster Bank CEO Jim Brown said there had been reductions in customer mortgage arrears every month for the past 25 months, with 10,000 customers who were in arrears now up to date and paying and a further 12,000 customers on alternative solutions. The bank vetoed five personal insolvency proposals last year, but said there were about 2,000 customers who were not paying anything towards their mortgage and who had refused to engage with them.

Mr Brown said there had been an increase in the number of repossessions in which the bank was involved, but said the vast majority involved vacant and abandoned properties.

The bank also said there had been no writedowns whe”re the mortgage holder remained in the house, and that each case was dealt with on an individual basis. Paul Stanley of Ulster Bank said if there was a continuing lack of engagement, there was no alternative but to enter legal proceedings, following which repossession was the “only realistic outcome”.