AIB to address problem of homeowners with debt difficulties


MORTGAGE LENDER AIB has outlined new solutions for helping struggling homeowners faced with mounting arrears and repayment difficulty.

In an email to staff, AIB set out details of how mortgage holders in difficulty will be identified and provided with new longer-term solutions and the implementation approach being undertaken.

During July and August of this year, the bank’s Arrears Support Unit will identify customers in difficulty from two groupings: customers who have identified themselves as pre-arrears or are already in early arrears, and customers who are in serious arrears.

A suitable short or long-term forbearance solution will then be selected for the customer, based on the customer’s repayment capacity.

The solutions include a split mortgage, a negative equity trade down (where a customer trades down to a property more appropriate to his/her current financial circumstances), voluntary sale of the property or short-term forbearance. The short-term forbearance solution could be an interest only repayment, a fixed repayment, a repayment break, an extension of the loan term, capitalisation of arrears or a deferred interest scheme, and is mainly for customers in temporary difficulty.

AIB’s plan follows the publication of the Personal Insolvency Bill last week, which outlines three specific mechanisms to help mortgage-holders and people with other forms of unsustainable debt reach agreements with their creditors, which in some instances will include writedowns of their debts.

These mechanisms include a debt relief notice to allow for the write-off of qualifying debt up to €20,000; a debt settlement arrangement for the agreed settlement of unsecured debt over five years; and a personal insolvency arrangement for the agreed settlement of secured debt up to €3 million (though this cap can be increased) and unsecured debt over six years.

Bank of Ireland said it was currently evaluating and progressing a number of additional long-term forbearance solutions in line with the findings of the Report of the Inter-Departmental Group on Mortgage Arrears (“Keane” report).

The bank said it has set out a timeline for delivering these additional solutions in 2012 and have provided this timeline plan to the Central Bank.