Consistency Needed In Bank Handling Of Mortgage Arrears

Greater consistency is needed in how different banks handle mortgage arrears, Fianna Fáil has said.

The party's finance spokesperson Michael McGrath made the call following news that AIB had agreed 100 deals with mortgage holders involving some form of debt write off, with Deputy McGrath saying that "if you are in mortgage arrears, the outcome you will get from your bank seems to be akin to Russian roulette."

"At present, there is a distinct lack of consistency across the different banks between the deals being achieved by borrowers in mortgage arrears. For example, the decision of AIB to grant some form of mortgage write off to at least 100 borrowers contrasts sharply with the policy of the other pillar bank – Bank of Ireland – which does not support debt forgiveness of any kind," Deputy McGrath said.

He added: "One bank's sustainable solution could be another bank's unsustainable mortgage leading to repossession proceedings. For borrowers in difficulty with their mortgage, whether or not they are allowed to keep their home really shouldn't come down to a game of poker in this way.

"This lack of consistency is facilitated by the Central Bank's Code of Conduct on Mortgage Arrears (CCMA) which requires the banks to simply explore a list of alternative repayment arrangements without reference to any standardised criteria.

"Ultimately, no clear direction has been given by the Central Bank as to circumstances in which each alternative repayment arrangement is suitable. This has led to the situation we have today – of vastly different approaches being adopted by banks and of borrowers not knowing what to expect when they contact their bank with an arrears problem.

"With over 135,000 family home mortgage accounts in arrears, it is essential that mortgage arrears cases are dealt using a consistent set of principles and methodology.

"It is not acceptable, for example, that two banks supported by Irish taxpayers are allowed to adopt a drastically different approach to dealing with mortgage arrears.

"The Minister for Finance and the Governor of the Central Bank need to step in and provide much clearer direction on how mortgage arrears cases are to be approached."

(MH/JP)