Banks starting to set targest for ‘going legal’

(Original article appeared in the Irish Sun)

For thousands of property investors the time has finally come to assume the position, AIB have directed the debt collections teams in both AIB and EBS to have at least 10% of their arrears cases ‘gone legal’ by the end of April The Irish Sun has learned.

This is a massive departure from the idea of ‘forbearance’ which reigned supreme in the recent past. Customers will now be informed that there is no option for ‘interest only’ something that up to now has kept huge swathes of troubled borrowers afloat.

Senior sources in AIB have said that ‘there are no targets, there will never be any targets’ but the collectors on the coal face of this are saying the exact opposite.

The bank will honour existing interest only agreements, but any new applications for paying only interest will have to be proven to be only a short term ‘stop gap’ measure, and those who have already availed of a 12 month interest only period will be refused subsequent extensions which might provide vital …

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Will Specialist or Sub-Prime lenders be better off?

With the news coming out daily about prime lenders facing higher and higher impairment charges it begs the question of who will do better during a downturn, specialist/sub prime lenders or prime high street banks?

Banks stated that they feel impairments of up to 90 basis points were likely, some have revised this figure higher several times with NIB predicting impairment of upwards of 300 basis points. Sub-prime lenders on the other hand start off with predictions of high impairment and they price and gauge the risk accordingly from the outset. Given that starting point, could it be a case that Irish specialist lenders may come out the other side of the liquidity crisis with an overall book that fares proportionately on margins than other prime lenders?

To answer this question we must first consider margins, with many banks typical margin is from 1% to 1.5% on average, however, with many prime lenders this margin is  lower because of low margin trackers that were a point of heavy competition between …

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How can I avoid reposession?

With news coming in that repossessions are rising it is an opportune time to give our readers a few ideas of what you can do should you find yourself in difficulty. Repossession is always a last resort for a lender, they will generally not come out of the deal profitably, the person who bought the property will also come out a loser with a bad credit history to boot.

So what should you do if you think you may be have problems with your mortgage? First and foremost you need to contact your lender straight away once you feel there is a problem, ignoring the issue is the worst thing you can do because it means you will be passing by viable options and could arrive at a point where they no longer exist with the double whammy of still having problems, problems which will only escalate if not resolved.

1. Switch to an Interest Only loan: This may be an option on your home and …

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