LESS THAN a tenth of applications by banks and building societies to repossess homes from borrowers in default on mortgages lead to repossessions, the Irish Banking Federation (IBF) has told an Oireachtas committee.
Court applications by lenders to repossess homes ran “into the hundreds” but between 7 and 9 per cent ended up in repossessions, IBF spokesman Felix O’Regan told the Oireachtas Committee on Economic and Regulatory Affairs.
Most cases are taken by subprime lenders which are not members of the IBF, said Mr O’Regan.
The bank representative group attended the committee after unveiling “a statement of intent” by 10 banks and building societies under which they agreed to wait at least six months before seeking to repossess homes of borrowers who fell behind on mortgage repayments through the courts.
Pat Farrell, chief executive of the IBF, said there had been just 21 repossessions out of hundreds of thousands of mortgages in the first half of this year. A further 49 properties were voluntary relinquished or abandoned by borrowers. Mr Farrell said a level of forbearance had been shown to mortgage holders by banks that did not exist in the UK. Repossessions accounted for one in every 10,000 mortgages in Ireland compared with 35 in the UK, he said. He added that the statement agreed by 10 lenders was further assurance that if borrowers found themselves in difficulty, they could receive a grace period of at least six months if they engage with their lender.
“I am confident that the vast amount of homeowners will be able to come with a satisfactory arrangement with their lender – the figures bear it out,” Mr Farrell told the committee.
Under the agreement, the lenders will wait six months from the time the loan falls into arrears before taking legal action. Lenders must adopt flexible procedures for handling mortgage arrears and assist the borrower by deferring payments, extending the term of the mortgage or capitalising arrears and interest.
The application of the plan will be monitored by an IBF oversight committee with the Money Advice and Budgeting Service (Mabs).
AIB and Bank of Ireland have agreed to wait 12 months under the terms of their €7 billion State recapitalisation by the Government last February.
The other banks agreeing to a six-month moratorium are ACC Bank, Ulster Bank, Bank of Scotland (Ireland), National Irish Bank and KBC Bank Ireland. Three guaranteed lenders – Permanent TSB, EBS building society and Irish Nationwide Building Society – have also signed up to the plan.
Fine Gael TD Kieran O’Donnell and Labour TD Sean Sherlock, members of the committee, called for the statement to be put on a statutory basis.
