Banks and Building Societies Fully Committed to Helping Distressed Borrowers, says IBF

The mainstream banks and building societies remain fully committed to working constructively with those of their customers who are experiencing genuine difficulty with their mortgage repayments.  This commitment is reflected in the findings of a themed inspection on arrears and repossessions handling where the Financial Regulator found that the mainstream banks and building societies “had better practices in place for managing arrears, in particular with regard to customer contact”.

Both individually and collectively through the Irish Banking Federation (IBF), banks and building societies have implemented a wide range of forbearance measures to support their customers through these challenging times.  The collective measures include the following:

  • The IBF Pledge to Homeowners makes clear that legal action to repossess a home will not be commenced by IBF creditors provided the customer talks with the lender at the earliest opportunity so that a mutually-acceptable arrangement can be agreed, maintained and reviewed thereafter on a regular basis.
  • The IBF/MABS Protocol on Debt Management enables IBF creditors and MABS money advisers to work together effectively to help personal customers to address and manage debt problems and, wherever possible, to formulate a mutually-acceptable, affordable and sustainable repayment plan.
  • A new website – www.helpinghomeowners.ie – provides relevant information and guidance to mortgage borrowers who may be experiencing financial difficulties.  The initiative is in partnership with the country’s 12 mainstream mortgage lenders.

The significance of these various forbearance measures is reflected in the most recently-published (March’10) statistics from the Financial Regulator for Q4 2009.  These show:

  • a 52% fall in the number of cases where legal proceedings have been issued to enforce the debt/security on a mortgage – down from 481 in Q3 2009 to 233 in Q4; and
  • a fall-off in the number of repossessions in the same period – 27 on foot of a court order, down from 31); 74 voluntarily surrendered/abandoned (down from 79).

According to IBF, the same statistics show that, while sub-prime lenders account for just 2% of the total mortgage market, they account for 41% of all repossessions by court order.

“The forbearance policies and practices adopted by IBF-member banks and building societies are helping tens of thousands of consumers to work with their lenders in managing their mortgage and other debt repayments.  And we are fully committed to working with all key stakeholders in continuing to make this happen – most recently through our participation in the Government’s Expert Group on Mortgage Arrears and Personal Debt Review”, states Pat Farrell, IBF Chief Executive.

Note:  Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Contact: Felix O’Regan, IBF Head of PR and Public Affairs, tel. 6715311, 087 6481644

Help for Distressed Mortgage Borrowers – New Website Provides Information and Guidance

A new website – www.helpinghomeowners.ie – has been developed by the Irish Banking Federation (IBF) to provide relevant information and guidance to mortgage borrowers who may be experiencing financial difficulties.  The initiative is in partnership with the country’s 12 mainstream mortgage lenders.  The website emphasises the importance for the borrower in getting in touch with his/her lender in order to work together to find a mutually acceptable, sustainable solution.  The importance of that early engagement is reflected in the four key action steps as follows that a borrower is advised to take:

  • Contact your mortgage lender as soon as possible if you’re having trouble with your mortgage repayments or you are concerned that this might be likely to happen.
  • Look at your financial situation to make sure that you’re maximising your income and draw up a budget based on your most important spending commitments.
  • Respond to letters or phone calls from your mortgage lender or their legal representative.

If you are genuinely unable to make your mortgage repayments, ask your mortgage lender to explore with you one or more of the options available under the statutory Code of Conduct on Mortgage Arrears (which are listed on the website).

In addition to providing details of the Statutory Code, the website also provides information on the IBF Pledge on Home Repossessions and the IBF/MABS Protocol on Debt Management, which afford further assurance to borrowers facing difficulty with their repayments.  Links are also provided to other useful sites – such as the Money Advice and Budgeting Service (MABS), the Citizens Information Board, the Free Legal Advice Centres (FLAC) and the National Consumer Agency – as are contact details for the mortgage lenders who are the site partners.

The following IBF mortgage lenders are site partners on http://www.helpinghomeowners.ie/

  • ACC Bank
  • AIB Bank
  • Anglo Irish Bank
  • Bank of Ireland Group
  • Bank of Scotland (Irl)
  • EBS Building Society
  • Irish Nationwide Building Society
  • KBC Homeloans
  • Leeds Building Society
  • National Irish Bank
  • permanent tsb
  • Ulster Bank Irl

The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Third Mazars Report of Lending to SMEs

The third Mazars Report of Lending to SMEs illustrates the level of financial support provided by banks to viable SME business through these challenging times, according to the Irish Banking Federation (IBF).

The Report shows that almost €1.6 billion in credit was approved across 29,000 applications in Q4 2009, bringing total credit outstanding to the SME sector to €32.3 billion.  While total lending to SMEs decreased slightly by 1.2% quarter-on-quarter, at 0.5% the decrease was at its lowest in the Loans category which accounts for the bulk (82%) of all SME lending.

Another positive feature of the findings is that, while the number of credit applications in the last quarter of 2009 is down significantly (16.8%) compared to 2008, it shows an increase of 3.0% compared to the previous quarter.   And the Report shows that four out of five applications for credit are being approved by banks.

The Report confirms the challenging economic environment in which banks’ lending decisions are being made in that around one-third (35%) of all SME loans are currently in the watchlist/impaired category – that is, 30 days or more past due.  However, the performing section of the loan book appears to have stabilised.  At the same time, it is notable that 48% of approved overdraft limits, or €2.6 billion, is unutilised.

Welcoming the Report’s findings, the IBF’s Chief Executive, Pat Farrell, stated: “The banking sector has a crucial role to play in our economic recovery, and no more so than in the SME sector.  It is important that we address the vexed issue of credit supply for our businesses and that we do so armed with the facts – which is why the Government commissioned this research in the first instance.  The Mazars Report provides us with the facts that will continue to inform the valuable work of the Government’s Credit Supply Clearing Group and the independent Credit Review Process among other initiatives.  For our part, we remain fully committed to working with these initiatives in the mutual interests of banks and their SME customers.”

The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644