Here is the statement from the Central Bank on mortgage arrears targets:
Statement 17 September 2013
In March 2013, the Central Bank announced targets (end June, end September and end December) for banks offering sustainable long term solutions for mortgage arrears customers. The Central Bank also intimated that targets for ‘concluded’ arrangements with mortgage arrears customers would follow. The Central Bank, in agreement with the Troika, has now set its expectations of the banks in this regard and requires banks to have concluded arrangements with 15 per cent of their over 90-day mortgage arrears customers by end of December 2013. Furthermore, the Central Bank is now setting expectations for end March 2014 for sustainable solutions offered to customers to reach 70 per cent of over 90-day arrears and for concluded solutions to reach 25 per cent.
What does it mean? It means the banks had to make a certain number of ‘offers’ (20% by end of June) but to have ‘concluded’ them by December 2013, which means get signatures or agreements.
Effect: One of two things, we’ll either see a lot of write-downs, split mortgages and other long term forbearance measures, or we’ll see a large ramping up in completion of legal proceedings which have proved popular to date.
There is a trade off here, legals can get ‘completion’ without client consent, it also reduces the barriers to banks in opting for this as a ‘quick fix’, but equally, they may well never pursue the client legally meaning it all drags out for longer. The other choices can be more costly for a bank, take longer to do (reduces banking confidence and perhaps state cost) and some appear not to work at all (mortgage to rent) on an operational level.