Struggling homeowners thrown lifeline

Tuesday, 10 November 2009 14:56

The ten biggest mortgage lenders in Ireland have pledged to give homeowners more time to tackle arrears before taking legal action against them.

The Irish Banking Federation says customers who are unable to maintain mortgage repayments will be offered arrangements on a six-monthly basis, with no legal threat during this time.

The ten institutions are ACC Bank, AIB, Bank of Irealnd, Bank of Scotland (Ireland), EBS Building Society, Irish Nationwide Building Society, KBC Bank Ireland, National Irish Bank, Permanent TSB and Uster Bank.

The Money Advice and Budgeting Service has welcomed the statement of intent by the ten lenders.

Under the current statutory code of conduct, lenders must wait six months from the time the arrears first arise before beginning legal action for repossession.

In the case of the two recapitalised banks - AIB and Bank of Ireland - the moratorium is 12 months.

Today's statement of intent from the ten banks and building societies represented by the Irish Banking Federation says that the period of grace will be extended by at least another six months, if the customer enters into dialogue with the lender.

The lenders say customers who are genuinely unable to meet repayments on their principal private residence will be offered arrangements, which will be reviewed every six months.

If the customer sticks to this, no legal action will be taken against them in relation to their mortgage.

The IBF insists house repossessions remain at a low level in Ireland. It says 70 houses have been repossessed by the main lenders so far this year. 49 of these were voluntary or abandoned, and 21 were the result of legal action.

Meanwhile, MABS says one in three people contacting it are experiencing difficulty with mortgage repayments. Michael Culloty, from MABS, has urged people to contact his service or their mortgage lender as soon as they realise that meeting their monthly repayments is difficult, and not wait for a solicitor's letter to come through the door.

MABS will also negotiate with mortgage lenders on behalf of people in difficulty. MABS's helpline number is 1890-283438.