Troika wants deals for 25% of mortgage arrears by March

Irish banks could be required to have concluded agreements with one-quarter of their customers in mortgage arrears of 90 days or more by the end of next March as part of an agreement between the Government and the EU-IMF troika.

It is understood that “active negotiations” on this target are under way between the Central Bank of Ireland, which has responsibility for this area, and the troika and will conclude shortly.

These targets are expected to be announced in the coming weeks as part of the latest update of our bailout programme with the European Commission, European Central Bank and International Monetary Fund.

Boosting targets
An initial target of 15 per cent for concluded agreements is expected to be pencilled in for the end of this year, ratcheting up to 25 per cent by the close of the first quarter of next year.

In March, the Central Bank outlined its initial targets to deal with the mortgage arrears crisis. This included the banks having made offers to 20 per cent of customers by the end of June, to 30 per cent of customers by the end of September and to 50 per cent by the end of this year.

Specific targets
At that time, the regulator stopped short of setting specific targets for concluded agreements between the banks and their customers.

The targets apply to Allied Irish Banks and its subsidiary EBS; Bank of Ireland and its subsidiary ICS; Ulster Bank; KBC; and Permanent TSB.

No comment was available from the Central Bank on this matter yesterday.

A spokesman for the Department of Finance declined to comment on negotiations with the troika but said: “These targets would be broadly in line with what we would expect the banks to achieve by the end of the first quarter.”

If a 25 per cent target is set, this means that more than 24,000 home owners who are in arrears would have to have a concluded deal with their bank by the end of next March next.

Central bank
Latest figures from the Central Bank show that 97,894 residential mortgage accounts relating to private dwelling homes were in arrears of 90 days or more at the end of June. That was 12.7 per cent of the total.

There were also 30,326 residential mortgage accounts for buy-to-let properties in arrears at the end of June. This represented 20.4 per cent of the total. Sinn Féin finance spokesman Pearse Doherty said the Government needed to breath “down the necks of the banks to ensure they are offering fair solutions to distressed mortgage holders”.

CHARITIES VOICE CONCERNS

A number of non-government organisation handed in pre-budget submissions to the Oireachtas Committee on Finance yesterday. During the presentations the majority of charities called on the Government not to enforce any more cuts and to increase the level of investment in the country.

The director of children’s charity Barnardos, Fergus Finlay, said young people have been extremely affected since the recession began.

“Since austerity began, support to families to get their children to school has virtually halved. Every single Barnardos project has a waiting list they never used to have.

“Depression, drug-use, anti-social behaviour has increased. Somebody somewhere in charge of public policy regards children as being the cause of the mess we’re in. There are hungry children in Ireland.”

Around seven people a day are forced to register as homeless, according to director of advocacy at Focus Ireland Mike Allen, who said most cases are “shockingly unavoidable”.

“Somewhere along the way through the trauma of the crisis we’ve been through the State has brutalised and become incapable of recognising the damage they are doing to the persons within the State.”

A rise of €5 to basic social welfare has been proposed by Social Justice Ireland, with its director Fr Séan Healy saying that high-income earners would not be overly affected by the increase, but it would mean a lot to people on a low income.