B of I ready to move on distressed mortgages
BANK OF Ireland wants to tackle distressed mortgage cases more quickly but claims that the need for all banks to move at the same time has led to slow progress.
Chief executive Richie Boucher told the Oireachtas finance committee that the bank had just 13 mortgage-to-rent cases being processed but would not break down the number of each of the other long-term fixes put in place.
He wasn’t seeking to apportion blame on the delay in tackling the mortgage crisis, he said, but added the bank had to move with rival lenders in a co-ordinated effort.
“There has been some desire to move all of the wagons together in terms of the banking sector and we would have liked to have got on with some stuff more quickly ourselves,” Mr Boucher told the Oireachtas Committee on Finance, Public Expenditure and Reform.
The bank said it wanted to move faster to fix more mortgages but had to consult with the Central Bank and third parties such as the Department of the Environment on the mortgage-to-rent plans.
Some 222 cases were on advanced forbearance measures in June, he said, while 16,000 customers had mortgages modified and 86 per cent of these were meeting the reduced repayments.
Banks were recently berated by the Central Bank for not moving to fix the mortgage crisis more quickly and politicians were equally critical about the progress.
Sinn Féin TD Pearse Doherty said the number of mortgage-to-rent proposals – where borrowers become tenants in their homes – was “pathetic” after 12 months.
Mr Boucher ruled out a general write-down of mortgage debt for struggling customers, saying the State capital injected into the bank was “not allocated for write-off”.
“It’s a transfer of someone else’s money to someone. We deal with our customers on an individual-by-individual basis,” he said.
“A blanket transfer of cash from depositors or shareholders to another form of the customer base is not something that we can do.”
Mr Doherty said the State had invested €4 billion following stress tests showing hundreds of millions of euro in mortgages losses.
“Yet the bank is refusing to write down any of that money and is hoping that customers pay every single penny of that back to the bank and will pocket the capital that the taxpayer paid,” he said.
Mr Boucher said house prices were stabilising and the pace of rising mortgage arrears had continued to fall. There were no immediate plans to raise standard variable mortgage rates, he said, but he didn’t rule out future increases depending on funding costs.
Mr Boucher defended his €620,000 annual salary, saying shareholders had approved it.
Fine Gael TD Kieran O’Donnell said it was “mind-boggling” that the bank was paying an annual pension of about €650,000 a year – close to Mr Boucher’s pay – to his predecessor Brian Goggin when the worst arrears cases were on 100 per cent mortgages sold since 2006 when both men held senior executive roles at the bank.
Mr O’Donnell said Mr Boucher was responsible for many of those who were in arrears but he would not tell the TD how much mortgage debt was written off.