Ulster Bank takes 4,000 legal cases over mortgage arrears

Ulster Bank has taken legal action against 4,170 mortgage arrears customers who have refused to engage with the bank about their home loan repayments.

It has also taken a legal route with 485 buy-to-let customers who refuse to have contact with the bank about their arrears on investment properties.

Of these cases, about 166 orders for repossession have been granted to the bank in relation to owner-occupied properties and 19 for buy-to-lets.

In an update on its mortgage arrears provided to The Irish Times , Ulster Bank said it had "no choice" but to pursue a legal route with these customers and said the "primary intent" was to "encourage meaningful engagement" on their repayments.

Ulster Bank said the number of mortgage arrears customers refusing to engage with the bank has dropped from 35 per cent of the total last summer to 14 per cent at present.

Payment habit
"Any customer can take themselves out of this process at any time by engaging and re-establishing a formal payment habit," Ulster Bank's chief risk officer Stephen Bell said. "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."

Ulster Bank said its mortgage arrears book reduced by €1 billion in 2013, with about 2,500 customers coming out of arrears of 90 days plus. The bank expects to have all of its arrears customers up to date with their revised payment plans by the end of this year.

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.

“These figures demonstrate that our approach is working,” Mr Bell said. “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.”

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.

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.

'Economic concession'
In addition, 2,205 are on what Ulster Bank terms its "economic concession". This is where customers are asked to repay the principal and an interest rate of as low as 0.5 per cent.

This arrangement is preferred by Ulster Bank to split mortgages, and can last for up to seven years depending on a customer’s circumstances.

Just 69 customers are on a split mortgage, while 543 are on a payment break and 1,090 are on normal repayments.

The bank said its offers are always based on what a customer can afford when other reasonable living expenses are taken into account. It insists “the mortgage has to be viewed as a priority debt over unsecured loans”.

Ulster Bank says it sends 11,000 letters a month to customers to encourage them to engage with the bank to find a solution.