# A big improvement in Ulster Bank's arrears figures



## Brendan Burgess (31 Mar 2014)

The Irish Times has an interesting report on Ulster Bank's arrears figures. 

*Ulster Bank takes more than 4,000 legal cases over mortgage arrears*



It would be easy to miss the most important information due to the headline. 



> The number of Ulster Bank owner-occupied mortgages in arrears of 90 days  or more declined from 16,247 in March of last year to 13,714 in  February 2014. The number of cases in arrears of less than 90 days fell  from 10,548 to 7,866 over the same period.


and 


> The number of repossessions by Ulster Bank remains  low relative to the overall number of arrears cases. In the year to  date, Ulster Bank has repossessed 25 owner-occupied homes, of which 21  were by way of voluntary surrender by the customer.
> This compares with 136 in 2013 as a whole and  84 in the previous year. In addition, *the bank has appointed 1,149 rent  receivers to buy-to-let properties *where it has an issue with  repayments.



*2,205 "economic concessions"
*This is where they reduce the interest rate for a period of up to 7 years.
69 customers have split mortgages.


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## Bronte (31 Mar 2014)

The Ulster bank method of 'economic concession' seems a better model than the writing down of debt model of other banks as it avoids questions on moral hazard as debated on here and elsewhere. 

Very clever putting an exceedingly low interest rate for 7 years so that the capital is paid down quickly, narrows the gap on the negative equity and makes the house owner have an achievable target that gets them out of debt and making headway on ownership.


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## Brendan Burgess (31 Mar 2014)

> In terms of solutions agreed with customers, 6,756 involve reduced  payments, *3,807 involve capitalisation,* 2,346 are interest-only, and  2,156 are term extensions.





 |March 2013|Feb 2014
Arrears <90 days|10,548|7,866
Arrears> 90 days|16,247|13,714
Total|26,800|21,700
There is a total drop of 5,000 cases in arrears. 

How much of that is due to the capitalisation?  A lender can wipe out its arrears overnight,by changing its policy on arrears capitalising.


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## Brendan Burgess (31 Mar 2014)

*Press Release:* 

*Number of Ulster Bank Customers in Arrears of 90 Days or More Decreases for 12 months*
*Fair Solutions Keep Customers in their Homes*
Ulster Bank provides the following update on its progress to assist mortgage customers in arrears.  
*Customers*
Since March 2013, the number of  mortgage customers in arrears of 90 days or more has fallen  month-on-month – a trend which is not seen elsewhere in the market.   Ulster Bank has invested in people and systems and has developed fair  and attractive solutions to make it easier for customers to stay in  their homes and the communities they have chosen by entering into  suitable payment arrangements.  Over the past twelve months, 2,500  customers have moved out of arrears of 90 days or more.
Ulster Bank also focuses on  customers in pre-arrears to try to help customers through early-stage  problems.  The hardest payment for a customer to miss is the first  payment and we want to be there to work with them to avoid the problem  building up.
For those customers with payment  difficulties who are engaging with us, we have contact with them four  times in a typical month (three outbound calls, one inbound call) and  with some we have a face-to-face meeting.  Often these calls are made to  proactively ensure that the customer remains on track with their  current arrangement, has all the support they need and to early-identify  any new issues. Others will represent first-contact with customers who  need our support and we work with them to enter into an arrangement. We  also send 11,000 letters per month to customers to encourage them to  engage with us to find a solution.  We have almost 200 people on the  phones who typically have over four years experience who know how to  help and who recognise that things have to be viewed on a case-by-case  basis. We have also increased our field team to 78 experienced people  who are available to speak to our customers face to face if that is  their preference.
As well as speaking to our  customers directly we will discuss matters with any representative that  they prefer.  However we have no exclusive or specific arrangements with  any particular body though we are supportive of anyone who we believe  can improve engagement between customers and their lenders.  
*Solutions*
We believe that we have a  responsibility to find the best solution for our customers but this  means all our customers - those keeping their mortgage current as well  as those in difficulty.  Of course we want to help but offering  overly-generous solutions which can’t be made available broadly can  cause issues.  What we offer to our customers is always based on what  they can afford, when you take other reasonable living expenses into  account. However we are very clear that the mortgage has to be viewed as  a priority debt over unsecured loans. 
While we are happy to offer  split mortgages, our customers prefer Ulster Bank’s innovative ‘Economic  Concession’ product.  This solution features a discounted interest  rate, as low as 0.5%, over varying durations. We also offer solutions  such as capitalisation, term extension and probate warehousing. 
*Targets*
Ulster Bank has worked on the  critical issue of mortgage arrears alongside complying with the CBI  targets. The UBIL Board has agreed an overall approach to managing  customers with genuine payment difficulties and it’s clear that approach  is working well.  While we have met the targets so far, they are not  the only goal for us.  Indeed, we have previously expressed concern that  they may not drive meaningful help for customers based on their own  unique circumstances. Some problems are short-term issues that impacted  the customer and as a result, a temporary arrangement may provide a  permanent solution. 
*Legal*
There is a cost to living in a  home, whether a mortgage payment or rent. While the majority of our  customers recognise this, even as recently as February this year some  14% of our arrears customers would neither contribute to their mortgage  nor discuss this issue with us despite our efforts via letter, telephone  and in person.  That said it has improved significantly from last  summer when the figure was 35%.
In these situations, we have no  choice but to pursue the legal route.  However, the primary intent of  this activity remains to encourage meaningful reengagement so we can  help the customer. The alternative for most customers is to lose their  home, be liable for any shortfall and have to pay more in rent than in  their mortgage repayment.  Any customers can take themselves out of the  legal process at any stage by meaningfully reengaging. Almost half our  our customers in the legal process have reengaged with us.
Ulster Bank Chief Risk Officer, Stephen Bell said:
_“Ulster Bank’s primary  objective has always been to help our customers come to a fair,  affordable solution which allows them to remain in their homes and the  communities which they have chosen. It is vital that our approach is  fair for all customers – both those maintaining their mortgages and  those who are in difficulty. _
_“The numbers of customers in  arrears of 90 days or more has decreased month on month for the past  year. In 2013 we decreased our arrears book by almost €1bn and we have  helped 2,500 customers out of arrears of 90 days plus. These figures  demonstrate that our approach is working.  _
_“Our customers who are  engaging recognise that there is a cost to living in a home but we will  continue to see legal activity where the customer still does not engage  or make any payment.  However any customer can take themselves out of  this process at any time by engaging and restablishing a formal payment  habit.  We encourage any customer in financial difficulty to engage with  us as early as possible so that we can work together to find the right  solution.”_


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## Kine (31 Mar 2014)

Completely contrary to my experience with UB.


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## Magpie (31 Mar 2014)

Kine said:


> Completely contrary to my experience with UB.



Me too. Completely unrecognisable as the entity Ive been dealing with for several years.


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## WizardDr (31 Mar 2014)

My experience with UB is now very poor.


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## Gerry Canning (1 Apr 2014)

What Ulster have put in print reads well.
.
Has not been what I have seen on the ground.
Maybe I have yet to catch up.

I hope they are being honest on this.


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