Two-thirds in long-term mortgage arrears risk losing homes, banks say

Credit: Irish Times

Banks calculate that two-thirds of those in long-term arrears on their mortgage repayments ultimately risk losing their homes, it has emerged.

About 26,000 people are 720 days or more behind with their home-loan repayments, classing these debts as being in long-term arrears.

An email from Central Bank economist Fergal McCann, responding to questions from consumer rights campaigners, says information from lenders suggests that two-thirds of the long-term mortgage arrears group have “loss of ownership flagged as the banks’ resolution path”.

Mr McCann’s mail, sent on July 30th this year, refers to a paper written by his colleague Terry O’Malley two years ago, but does not indicate that banks’ views have changed since then.

According to Mr O’Malley’s note, the Central Bank collects information from lenders on how they intend to deal with arrears cases.

“Sixty-seven per cent of the sample of loans analysed in this paper are linked to potential loss of ownership by the borrower,” it says.

Mr McCann tells David Hall of the Irish Mortgage Holders’ Organisation (IMHO), Brendan Burgess of financial advice website askaboutmoney, and Seamus CoffeyUniversity College Cork economist, that in half the cases, banks believe they will have to go to court to repossess the properties.

“However, this does not give any indication of where in the process the bank is,” says Mr McCann.

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