Banks agree to go easy on mortgages in arrears

[Brendan Burgess]

[broken link removed]

The Irish Banking Federation says customers who are unable to maintain mortgage repayments will be offered arrangements on a six-monthly basis, with no legal threat during this time.



Today's statement of intent from the ten banks and building societies represented by the Irish Banking Federation says that the period of grace will be extended by at least another six months, if the customer enters into dialogue with the lender.


The lenders say customers who are genuinely unable to meet repayments on their principle private residence will be offered arrangements, which would be reviewed every six months.

 

[Brendan Burgess]

[FONT=&quot]NEWS RELEASE – [/FONT][FONT=&quot]10th [/FONT][FONT=&quot]November 2009[/FONT][FONT=&quot][/FONT]
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[FONT=&quot]IBF Mortgage Lenders Pledge to Help Homeowners [/FONT]​

[FONT=&quot]Facing Difficulty with their Mortgage Repayments [/FONT]​

[FONT=&quot] [/FONT]
[FONT=&quot]The Irish Banking Federation (IBF) has today published a Statement of Intent as a further reassurance to homeowners who find themselves genuinely unable to maintain mortgage repayments on their principal private residence. [/FONT]
Agreed and supported by IBF mortgage lenders (see list below), the Statement of Intent reads as follows.
“All mortgage lenders who are members of the Irish Banking Federation (IBF) are fully committed to working with customers who are facing repayment difficulties in their principal private residence due to changed economic circumstances. While it is important to always make the distinction between customers who are unable to pay their mortgage and those who are unwilling to pay, IBF mortgage lenders have as their goal to work with their customers who face genuine difficulties in order to find solutions that do not involve legal action. The basis for such solutions is for the customer to talk to his/her lender at the earliest opportunity so that a mutually-acceptable arrangement can be agreed, implemented and reviewed thereafter on a six-monthly basis. Provided the customer maintains this arrangement, IBF mortgage lenders will not initiate any form of legal action against them in relation to their mortgage. An IBF Oversight Committee, with representation from the Money Advice and Budgeting Service (MABS), will monitor the application of this Statement of Intent.”
[FONT=&quot]This latest IBF initiative comes on top of the existing protection provided to homeowners by the statutory Code of Conduct on Mortgage Arrears (which builds on the original IBF voluntary code). Under the Code:[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]Lenders must adopt flexible procedures for handling mortgage arrears and assist the borrower as far as possible – whereby consideration can be given on a case-by-case basis to deferral of payments, extending term of mortgage, changing type of mortgage, or capitalising arrears and interest[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]Lenders must wait at least 6 months (12 months for the two recapitalised banks) from the time of arrears first arising before applying to the court to commence legal action for repossession.[/FONT]
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[FONT=&quot]Figures compiled by IBF confirm that house repossession remains at a low level here. The total number of houses repossessed by all mainstream mortgage lenders in the first half of 2009 was 70 – of which 49 were voluntary or abandoned and 21 stemmed from the legal process. This is a fraction of the total number of mortgages issued. [/FONT]
[FONT=&quot] “Our sector is acutely aware of the pressures facing some homeowners in the current economic environment”, states IBF’s Chief Executive, Pat Farrell. “Where repayment difficulties arise for some borrowers because of changed economic or social circumstances, the borrower should talk to his/her lender at the earliest opportunity. The importance and value of early communication between borrowers and lenders cannot be emphasised enough. Just as in the IBF/MABS Protocol on Debt Management, our members are saying that they want to explore all possible options with their customers; they want to find a mutually-acceptable arrangement as an alternative to legal action.”[/FONT]
[FONT=&quot] [/FONT][FONT=&quot]ends[/FONT]
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[FONT=&quot]Notes[/FONT]
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[FONT=&quot]The following IBF mortgage lenders have agreed to and support the ‘Statement of Intent’[/FONT]
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·[FONT=&quot] [/FONT][FONT=&quot]ACC Bank[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]AIB Bank[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]Bank of Ireland[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]Bank of Scotland (Ireland)[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]EBS Building Society [/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]Irish Nationwide Building Society[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]KBC Bank Ireland[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]National Irish Bank[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]Permanent tsb[/FONT]
·[FONT=&quot] [/FONT][FONT=&quot]Ulster Bank[/FONT]
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[FONT=&quot]The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Further Information: [/FONT][FONT=&quot]Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644 [/FONT]

 

[canicemcavoy]

Hang on - wasn't the original arrangement for 1 year? Sounds like they are rowing back on their previous promise, not "going easy".

 

[Bronte]

It's now 1 year plus 6 months renewable 6 monthly or until negative equity is gone.

Cynic in me thinks it's only in the banks interest as they have no choice as there are too many people in negative equity for it to make any sense for them to do otherwise. Forget the cynic, let there be no mistake, it is in their interest alone. Would like to have been the fly on the wall at their cartel meeting. How they must be laughing at the people of Ireland.

 

[canicemcavoy]

It's now 1 year plus 6 months renewable 6 monthly or until negative equity is gone.

Ah, OK - but does that mean if I turn up today at my bank saying "sorry guy, on the dole, can't pay" I'll get an 18-month waiver?

 

[queenlex]

It's now 1 year plus 6 months renewable 6 monthly or until negative equity is gone.

Cynic in me thinks it's only in the banks interest as they have no choice as there are too many people in negative equity for it to make any sense for them to do otherwise. Forget the cynic, let there be no mistake, it is in their interest alone. Would like to have been the fly on the wall at their cartel meeting. How they must be laughing at the people of Ireland.

+1 sure the assets are useless/worthless to them now.

 

[canicemcavoy]

Ah, OK - but does that mean if I turn up today at my bank saying "sorry guy, on the dole, can't pay" I'll get an 18-month waiver?

According to today's Herald AM, it's still only a 6 month waiver - in the case of the big 2, a 12-month waiver.

But this was _already_ the case.

So this still smells of spin.

 

[Colndas]

From my understanding it is still the initial 12 Months with a six monthly review.

Three things that spring to mind are, why would the banks employ credit controllers to constantly harass defaulters, like some insitutions mentioned in several posts elsewhere in AAM, when it is plainly obvious to them that the majority of people defaulting, who had perfect credit records before sudden cessation of payment, are doing so because of lack of income rather than a sudden shift into an unwillingness to pay?

Secondly, if the banks can set up this agreement they can offer longer deferred payment periods for their clients and therefore stop their delinquent account book deteriorating further, thus, protecting their own credit scoring with the international banks they trade with.

Finally, they would not wish to repossess, en masse, thousands of houses with negative equity which would further depress an already depreciating housing market. The costs alone with putting those cases through the court would take up more time and money than the banks are prepared to spend. Bringing these cases to court would not earn them money and would be a further opportunity cost in that they would not be spending time making money in other areas.

They are still making money on paper and compounding interest on interest with the view that over the next 25-30 years, i.e. lifetime of a mortgage, they will make considerably more money on the accounts that are currently delinquent when people actually return to paying.
Very savvy.

 

[DerKaiser]

So this still smells of spin.

You make a deal to pay for what you've borrowed and if you can't honour your end of the deal well there would normally be consequences i.e. you could lose your home and be declared bankrupt

If I was the beneficiary of these moratoriums I would be a very grateful individual indeed. But I guess with the culture of entitlement that's still out there people will still bite the hand that feeds them.

 

[canicemcavoy]

You make a deal to pay for what you've borrowed and if you can't honour your end of the deal well there would normally be consequences i.e. you could lose your home and be declared bankrupt

If I was the beneficiary of these moratoriums I would be a very grateful individual indeed. But I guess with the culture of entitlement that's still out there people will still bite the hand that feeds them.

Don't get me wrong, I do agree with you. However, I'm pointing out the banks trying to pretending they are nice guys is a load of twaddle. I've seen people before comment that, sure, you might as well get a mortgage, the banks will do alright by you in the end. This kind of optimistic thinking will get even more people into trouble.

 

[DerKaiser]

Don't get me wrong, I do agree with you. However, I'm pointing out the banks trying to pretending they are nice guys is a load of twaddle. I've seen people before comment that, sure, you might as well get a mortgage, the banks will do alright by you in the end. This kind of optimistic thinking will get even more people into trouble.

I also agree that it's not really a case of the banks being nice, with the level of potential defaults there is little else they can do!