AIB moves to repossess over 5,700 homes in mortgage arrears

AIB had started legal proceedings to repossess 5,709 owner occupied homes in mortgage arrears by the end of last year, according to figures supplied to the Oireachtas finance committee.

Another 3,871 private dwelling homes were under threat of repossession at the end of 2014. In addition, AIB started proceedings against the owners of 1,548 buy-to-let investment properties, with another 2,160 cases pending.

This high level of potential repossessions was detailed in a questionnaire given to the committee in advance of the bank’s appearance on Wednesday.

AIB's document, which has been seen by The Irish Times, supplied answers to 74 questions from the committee.

The document shows that some 26,624 solutions had been offered to its owner occupier mortgage arrears customers by the end of 2014, under the terms of the Central Bank’s resolution targets.

Just under one-third of those solutions involved letters being sent to account holders informing them that legal proceedings would be commenced.

Defaulters

This does not mean that each property would be repossessed. In many cases, it is designed to flush out strategic defaulters and others who have decided not to engage with the bank on mortgage debt.

In his opening statement to the committee this morning, AIB soon-to-depart chief executive David Duffy will say that the bank "aims to keep people in their homes where possible if customers engage with us.

“We pause the legal process when customers engage with us and enter a sustainable restructuring arrangement.”

While the number of legal cases commenced and the level of repossessions ratchets up, the overall level of arrears has eased for AIB, reducing by 18 per cent in the Republic in 2014. Of the 5,709 cases where proceedings have started, some 2,321 involved the issuing of a civil bill with the courts – an early step in the process of repossession.

Another 2,116 cases were moved to a judge’s or registrar’s list. Some 608 properties were taken into the bank’s possession while another 482 involved an order being granted for repossession.

The bank told the committee that it had disposed of 136 owner occupied properties repossessed. In addition, some 2,316 voluntary disposal offers had been issued to arrears customers, of which 452 had been concluded by the year end.

Trading down was offered in 68 cases, with three concluded by the end of December.

Receivers

Of the 1,548 legal cases on buy-to-let properties, some 819 receivers had been appointed by the end of last year, with 428 civil bills issued.

Orders for repossessions had been granted in 88 cases, with another 87 in the bank’s possession and 79 disposed of by AIB. Another 460 receivers were appointed by the bank between January and March.

AIB declined to comment last night on the submission.

Separately, Permanent TSB has warned potential investors that political pressure to cut its mortgage interest rates could impact its return to profitability, in an information memorandum circulated as part of its €525 million capital raising plan.

"There has been heightened scrutiny in connection with the setting of variable mortgage interest rates in Ireland recently," PTSB said, adding that it was "examining" its strategy on interest rates and it was "possible" that the standard or managed variable rates "may reduce" in the future.

“There is both political and regulatory focus on the pricing of variable rate mortgages with significant pressure both to align new and existing pricing levels and to bring pricing in line with selected European mortgage markets,” the bank told investors.