Ulster Bank at the Oireachtas Finance Committee

Brendan Burgess

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RTE report: http://www.rte.ie/news/business/2014/0408/607591-ulster-bank-mortgages/


According to UB who are currently speaking to the Oireachtas Finance Committee, 4,333 are in the formal legal process.

And 2,000 more have received the letter telling them that legal action will commence soon.

Total 6,500 (out of 14,000 >90 days in arrears) according to Michael McGrath.

McGrath: "Not sure that is the type of action the CB had in mind when they asked for more action"

Jim Brown: There is a significant group of borrowers over a year who have paid nothing and who are over a year in arrears who are not engaging. There is nothing else we can do. Not all will end up in repossession.
 
A very interesting conversation with the Chairman of the Committee - Ciaran Lynch which I am paraphrasing

We don't like the Central Bank's guidelines. We believe that people can pay mortgages into retirement and are developing solutions with that in mind. We need to get Central Bank approval. It's a very slow process but they are not pushing back.


Steven Bell: The only incontrovertible way to hit the Central Bank targets is to take legal action. The penalties for us of not hitting those targets are swingeing.

We have had a two year period where we could not take any action, unlike any other country where we operate, so this has left us with a [backlog]
 
Stephen Bell: We go around 10% to 15% beyond the ISI guidelines for living expenses

We have been involved in around 50(?) insolvency processes. None of these has involved mortgage debt write down.
 
Only one mortgage to rent done. It's a very long and complicated process. Several parties and agencies involved. Several valuations involved.
 
We will write down no debt.

Unsecured debt should be deprioritised.

Writing down debt could only apply to "hundreds of customers" , so it's not helpful to get distracted by it.

If we write down debt to the current value, when house prices rise, the borrower will get a gift of positive equity.

Dara Murphy TD: If they can't afford it and never will, why not write it down

Stephen Bell: Because we have a split mortgage product

The UK Regulatory Authority has a different attitude to borrowers who don't pay.... [ Got interrupted by Murphy with another question]

Banks are working well together on unsecured debt and secured debt.
 
Bell: Some of the cases going through the court at them moment, we last received a payment from the customer in 2007

Regina Doherty: Why did you not offer them a sustainable solution? (??????) What did you offer them.

Bell: We can't offer anything to someone who won't speak to us.

We only got repossession where we were happy with the process and the court was happy with the process.
 
Pearse Doherty : Presumably you will write off debt in a PIA?

UB: We can usually come up with a solution outside the PIA.

Doherty: So you will veto the PIAs.

UB: We have seen no case yet where a write down has been appropriate.

We see no reason to write it off, when the unsecured debt is written down and the mortgage is restructured.

Doherty: So the PIPs are getting it wrong? I will move on.

Bell: 2,354 where we have got no repayment or no contact

Bell: It's an inevitable consequence of the way the targets are set, that we have to issue legal proceedings.

Doherty: So you would not have achieved the targets without legal proceedings.

Bell: Correct.

Doherty: 52% of your sustainable offers have been legal proceedings.

Bell: We are sticking to a regime set down by the Central Bank. You might want to take it up with them

Doherty: People are engaging, but you are taking legal action against them.

Bell: If someone is offering €50 a month, they might be technically engaging, but it's not meaningful. Now half of all customers are responding to legal proceedings, compared to 10% last year.

Doherty: You lent these guys too much, and now you are issuing legal action against them.
 
Kevin Humphries: What happens to the shortfall?

Bell: We wouldn't do a deal beforehand. But we do a deal afterwards.

Humphries: What proportion was written off?

Bell: We will tell you

JIm Brown: On average for every €1 in mortgage payments, they are paying 60 cents off unsecured debt. Paying it off at a higher rate and over a shorter period. If they stop doing that, they can usually arrive at a sustainable mortgage.

Humphries: So if there is UB unsecured debt, will you write it off?

Bell: Yes

Humphries: You are pressurising the CUs to write down debt. Are you doing it yourselves?

Bell: Yes.
 
Joe Higgins: Why did you move the Mortgage Arrears Section to Scotland

Brown: It was impossible to get experienced collectors in Ireland and we had them in Scotland. People with 4 or 5 years experience and experienced managers as well. They deal with early arrears

90 days + are done from Ireland.

Very few repossessions in buy to let

Joe Higgins: How do you deal with tenants when a receiver is appointed.

UB: We don't terminate tenancies. Often the tenant is better off as there is now a professional manager in place

UB : Around 60% to 65% are in negative equity - but we will have to come back to you with it.
 
Richard Boyd Barrett

UB: We have only started appointing receivers in the past 12 months.

RBB: Are you refunding tenants' deposits

UB: If they are complying with their contract, yes.

RBB: Are you doing deals for the unemployed?

UB: We have a solution for the unemployed,but there is a cost to staying in the family home, whether you are working or not.

Rbb: so you won't force the unemployed out?

UB: if it's for a short period of time, we have a solution available.
 
Chairman: You write off debt afterwards but not before hand.

Say you have a mortgage of €250k on a property worth €150k and €50k of CU debt.

Why not write down the debt to €150k under a pia AND THEN force the write off of the €50k CU debt?

UB: We think it's better to write off the €50k debt , and split the mortgage.
 
Kieran O'Donnell - Great contribution.

UB: Around 50% of those in arrears over 90 days are in positive equity.

KOD: Do you distinguish between PE an NE?

Bell: We make no distinction whatsoever between positive and negative equity. We look only at affordability.

[This is astonishing ]

KOD: What is coming up is that those in PE are more vulnerable. It's the Paradox of Positive Equity . If they get rid of a mortgage in arrears which is in positive equity, does the capital adequacy position improve?

UB: From an accounting perspective you are correct. But in practice we make no distraction. We do the right thing by the customer.

KOD: The banks are becoming bloodhounds for positive equity.

Of the 4,231 you have taken legal action against, how many are in positive equity.

UB: We will come back with those figures.
 
Stephen Donnelly:

How many repossessions do you expect?

UB: Too early to say. Around 25% .

SD: So around 1500 to 1600.

UB: We have a range of 1,000 to 1,500 if there is no dramatic change in the way people engage with us.

SD: Why are legal proceedings on buy to let so high?

UB: Buy to let borrowers are often happy to surrender the property to a rent receiver.

SD: Will you veto any PIA which involves write down of mortgage debt?

UB: It's hard to imagine any case where this can't be done via the write off of the unsecured debt.

We speak to the PIPs and they usually structure it to write off the unsecured debt.

SD: Can you envisage a situation where the mortgage debt is written down

UB: No. [ Wow!]
 
Stephen Donnelly

1) Do you offer a few solutions?
2) Do you explain why you offer particular solutions?

UB: We pay for them to take independent advice.

We would explain why by telephone.

UB: Our average mortgage is €164k with €11,500 of unsecured debt.
 

Astonishing? I'd say that is something of an understatement.

That last statement about doing the right thing by the customer is literally incredible.
 
Brendan,

I have been dealing with UB for several years on my mortgage arrears etc, and I must say, I am astonished. Quite alot of this contradicts what I have been told (i.e. my account manager has told me they don't offer split mortgages, whereas here they are saying they do!).

They are woefully slow to do anything, do not adhere to MARP or its process (i.e. respopnding, offering solutions etc).

It has been the most frustrating thing ever, and to make it worse I live in another country so can happily sail off into the sunset and wait for a judgement to expire (or avail of the easy UK bankruptcy process).

Several years of serious hassle is what I get for trying to do the right thing!

K
 
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