The Central Bank of Ireland today  published the latest data on Irish mortgage arrears and repossessions for the period ended September 2010. The figures show that at end September 2010 there were almost 789,000 private residential mortgage accounts held in Ireland to a value of €117.4bn. Of these 40,472 were in arrears for more than 90 days. Furthermore, the data shows that overall mortgage debt outstanding for private residential mortgages decreased by €316m since the second quarter of 2010.

Arrears Data : As at end September 2010, 40,472 mortgage accounts, or 5.1%, were in arrears for more than 90 days of which 28,049, or 3.6% of the total mortgage accounts, were more than 180 days in arrears. In value terms, €7.8bn was owed in relation to all accounts more than 90 days in arrears, of which €5.5bn was owed for accounts more than 180 days in arrears. Mortgage accounts in arrears for more than 90 days increased by 11.1% since the end of June 2010.

There was an increase of 2.1% in the number of formal demands outstanding which have been issued by mortgage lenders bringing the total number outstanding to 5,576. In these cases the level of arrears amounts to €92.8m on outstanding mortgages totalling just over €1.2bn. There was also an increase in the level of outstanding arrears cases where court proceedings had been issued to enforce the debt/security on the mortgage. At the end of September 2010 there were 3,054 such cases which is an increase of 1% since the end of June 2010. In these cases the level of arrears amounted to €101.8m on outstanding mortgages totalling €694m.

Court Proceedings: During the quarter ended September 2010 mortgage lenders applied to Court to commence proceedings to enforce the debt/security in 210 cases. This is an increase of 23.5% on the number of cases reported in the quarter ended June 2010. These 210 cases possess arrears totalling €7.8m built up on mortgage loans that equate to €76.9m.

During the quarter 156 enforcement proceedings were concluded. This was a decrease of 27.4% on the number of cases that concluded in the quarter to June 2010. In 98 cases the Courts granted repossession orders which included 3 properties that were voluntarily surrendered and 17 that were abandoned. In the remaining 58 cases where enforcement proceedings were concluded, 39 were settled either by renegotiating the term and/or other conditions of the mortgage. The remainder of these cases were concluded by voluntary surrender or on other terms.

Repossessions: At the beginning of the quarter mortgage lenders held a stock of 495 repossessed residential properties. A further 81 were repossessed during the quarter of which 22 were repossessed on foot of Court Orders and 59 were repossessed following voluntary surrender or abandonment.

A total of 54 properties were disposed of during the quarter. This left mortgage lenders with 522 repossessed residential properties at the end of September 2010.

Expert Group on Mortgage Arrears and Personal Debt Expert Group

The Expert Group on Mortgage Arrears and Personal Debt Expert Group, chaired by Hugh Cooney, today published its final report with recommendations on measures to assist in dealing with the difficulties created by mortgage arrears. The report follows on from an Interim Report published in July.

The Minister for Finance Brian Lenihan welcomed the report stating: "The Government has already taken several decisive steps to support those in difficulty with their mortgages. A revised Code of Conduct on Mortgage Arrears is being finalised by the Central Bank and will be issued shortly. The Mortgage Interest Supplement, which provides an invaluable safety net to mortgage borrowers, is also being reformed.

We are committed to solutions that are fair and appropriate to the current circumstances of Irish homeowners. The Government accepts the groups recommendations and wants to see them implemented without delay.”

The main recommendations are:

• A Deferred Interest Scheme should be introduced for borrowers who can pay at least 66% of the interest. This would give borrowers up to 5 years to get back on their feet. Lenders representing more than half of the market have agreed to take part in a scheme along the lines of the Group proposal.

• Lenders should consider facilitating borrowers in negative equity who wish to trade down to a more affordable home.

• Where a mortgage is unsustainable, assessment for social housing should be done before repossession takes place.

• A mechanism should be put in place to allow repossessed borrowers to remain in their homes for a time, allowing the housing authority time to source appropriate accommodation.

• The Group is not recommending debt forgiveness, nor a State funded Mortgage to rent scheme.

• New bankruptcy legislation should be introduced.

• A statutory non-judicial debt settlement system should be established

• The time limit for discharge of debt should vary in line with the total value of debt.

The Minister for Finance said he is also pleased to note that the Central Bank has stated that the latest Mortgage Arrears figures imply a portfolio loss rate below the industry average base loss rate used on the PCAR and well below the stress PCAR portfolio loss rate. This indicates that the PCAR tests took a realistic view of likely losses to mortgage lenders.

The Group said it believes these recommendations represent a balanced and measured set of proposals which will improve the situation for those in mortgage and personal debt difficulties and simultaneously best serve the national interest. In its research the group found that:
Around 90% of mortgage accounts are being repaid in accordance with the contract.

The Mortgage Interest Supplement provides an essential support for almost 18,000 borrowers. As interest is paid in full, the debt of borrowers in the scheme does not increase.

An examination of international practices suggest that Irish debt legislation needs to be modernised.

In light of these findings the Minister said he believes that a targeted approach to those experiencing difficulties meeting their mortgage commitments is appropriate and in the best long term interests of the mortgage market in this country.

Final report of the Mortgage and Personal Debt Group