An Taoiseach Enda Kenny described it as the biggest financial challenge facing this country when he spoke in front on President Bill Clinton at the Global Irish forum at Dublin Castle last October 2011. Since then, precious little has happened to alleviate the crisis with the publication of a bureaucratic report and talk of Departmental sub-committees set up, and of course the Personal Insolvency Bill has been delayed and is not expected to be published until June 2012 and Fianna Fail leader Micheal Martin suggests that no relief will be available under the new legislation until the end of 2012, and on this front, Fianna Fail has been to the fore with its finance spokesperson Michael McGrath tabling a substantial piece of bankruptcy legislation last year which has merely gathered dust.
(Click to ENLARGE)
This morning the Central Bank of Ireland published its mortgage arrears and repossession figures for the three months ending 31st March, 2012. The picture painted is of a continuing deterioration in Irish mortgages with one in 12.9 mortgages in arrears for more than six months, with “six months” regarded in the industry as the point beyond which a mortgage is generally beyond salvation. The 59,437 mortgages in arrears for more than six months is 6,000 more compared with Q4,2011 and a staggering 24,000 more than a year ago. The number of accounts in arrears between 90-180 days now stands at 18,193 which is the smallest increase since records began in Q3, 2009 which is possibly the only bright spark in an otherwise disturbing picture. In total there are 764,138 mortgage accounts in the State so 77,630 – or 10.16% – are in arrears of more than 90 days. The number of accounts in arrears has risen by 25% since An Taoiseach give his commitment to President Clinton in October 2011 to do something about the crisis.
A further 38,658 accounts have been restructured and about two thirds of these are on interest only with the remainder paying less than that and in some cases, nothing. The total of accounts in arrears and restructured (and performing) is 116,288 or 15% of all mortgages.
And “crisis” it is. Although 85% of accounts are still being repaid in accordance with the original mortgage agreement, 116,288 are not and each represents a difficult story which in total has a substantial impact on confidence and spending in the economy. It is high time for action on “the greatest financial challenge facing the country”
There were 170 repossessions in Q1,2012 which is broadly in line with previous quarters. Our repossession rate is less than a quarter of that in our neighbour, the UK. And compared with the UK generally, 10.2% of our mortgages are in arrears of more than 90 days compared with 2.1% in our neighbour. Our repossession rate is 83 per annum per 100,000 mortgages in arrears compared with 353 in our neighbour.
On this new bankruptcy laws; are they having difficulties fiddling with statute law to get it inside the Constitutional frame. Is that the why of the delay
Pffffft! The only “difficulty” is in training up all the former mortgage brokers and financial advisors in the country to become “Insolvency Trustees” for the very people they helped con into unsustainable mortgages.
But I suspect that even the Government will eventually have doubts about the PIAs once it becomes clear that after 4 years into this already, they will have people sending 6 more years in banking penury. At the rate things are going, people will have been better off simply declaring themselves bankrupt in 2008.
There is only really one solution,modern BK laws allow the borrower to walk away and get a fresh start, the rest is just window dressing.
“However, data also suggests that even these successful permanent modifications result in a significantly high re-default rate. Moody’s studied two million residential mortgage backed securities pools securitized after 2005. It found that 47% of all modified loans re-defaulted within 12 months. Even at only 6 months out, this study found that even the major lenders still suffered re-defaults in the range of 20% to 33%. This is in comparison with the national average rate of default for unmodified loans, which currently stands at 13%.”
http://bridgewaterslaw.wordpress.com/2012/02/14/residential-loan-modification-failure-rates/
Reblogged this on Machholz's Blog and commented:
With more austerity on the way because of the clueless politicians running the country and their insistence in bailing out corrupt and toxic bankers , ordinary Irish families are been squeezed for every penny .I expect to see many more families brake up and lose their homes . Kenny and his gombeen colleagues are responsible as they lied to the people when the promised not to pay not one red cent more to the bankrupt toxic banks. Since that promise was given they have paid out that 25 billion Euros.
Politicians and there lies!
That was then, this is now. I think “Wild Bill” has more important things on his mind than Irish mortgage accounts.
http://www.entertainmentwise.com/photos/76650/1/PHOTOS-Bill-Clinton-Cuddles-Up-To-Porn-Stars-At-Monaco-Fundraiser-
The % of mortgages with 90 days arrears is shocking. However if you look at the figures in value terms its quite a bit worse. After all the tax payer is on the hook for € not the number of mortgage defaulters.
The % value of all mortgages in arrears of over 13.6% or close to 16 billion out of a total of 112 billion.
@Eamonn, fair point, thanks for sharing
@John, there was reporting this morning suggesting it WAS the Troika which was retarding the new Personal Insolvency Bill, which seems like a load of rubbish, particularly with reference to the IMF
“But the word is that the IMF/ECB/EU troika clamped down on some of the greater ambitions initially sought by the Government, especially when it came to debt write-offs that would cost the banks”
http://www.irishexaminer.com/opinion/columnists/matt-cooper/banks-and-developers-bailed-out-so-should-struggling-mortgage-holders-195004.html
@Frank, after the March 2011 stress tests, the adverse stress test loss for Irish residential mortgages was 10%. If those in arrears were to 100% default and the underlying property were worth zero then we are at 14% losses today, but that scenario presently looks highly unlikely but as further budget adjustments loom, as the bankruptcy laws kick in and as house prices decline further – and I expect they will – we may well exceed the 10% adverse projection, on which basis the banks have been recapitalised.
The footdraggin,dithering around,U turns,input from bankers,discussions,reports and false starts is a sad reflection on the political influence of bankers and the timidity of Irish politicians.The ultimate no brainer decision,mirror the UK’s all active Irish financial institutions are familiar with it.
Full support of Trokia,specifically the IMF what on earth can be delaying this,Labour?
In the meantime,Irish families specifically targeted by predatory lenders suffer stress,martial breakdowns,forced emigration,low self esteem associated with suffocating debt,it’s a national and international disgrace.The current government should be ashamed of themselves.
Have the banks made an extra provision for the worsening mortgage situation. My understanding is that the banks were working off a 5% provision but this can hardly be seen as realistic any more.
I’ll trust nothing until I see the 30 and 60 day figures. People could be bouncing up and down between those—possibly under the banks’ direction—and we have no way of knowing.
Also id love to know the % value in arrears for just 2006-2007. If that information available it would be useful to someone wanting to sue the banks for reckless lending. Which is why i guess it wouldn’t be made available without some serious teeth pulling
The covered banks released all that information in their 2011 Annual Reports. There is a look at BOI here. Links to the other reports are here.
The term “Predatory Lender” is on the TV, the papers, blogs everywhere you go in the US, where to some measure banks were held accountable and had to share their bailout money with customers (imagine that).
Whatever of the wording, “predatory lender” is a concept Irish homeowners really need to embrace and explore.
To stretch a point, unless you begged them for money, they were probably predatory lenders approaching you and playing with your emotions.
That’s not enough in Irish law?
As for “hope” mentioned today on another thread….
Hope plus one dollar 25 cents, will get you a ride on the bus.(Chuck Shakespeare, Detroit)
@NWL thanks for the link to that,you probably would not allow that ‘comment’ as its non-sourced or referenced,has Cooper lost the plot ?
Its Friday,hey WSTT he lifted your debt/equity idea !
@John, apparently it’s acceptable in Irish media these days to broadcast/publish any old rubbish. RTE reported yesterday An Taoiseach Enda Kenny’s claim that the Fiscal Compact text would not change. Fair enough, Enda is as honest a Taoiseach as you could hope for, but his word was reported as gospel despite the fact that this important claim didn’t feature anywhere in the communique or other releases issued after the EU summit had concluded. In France, President Hollande indicated he could relinquish his demand for a change to the Fiscal Compact text if he gets satisfaction on a growth agreement, which seems highly conditional. However this is above RTE who merely report what they think Enda Kenny said without challenge. Welcome to the state broadcaster 2012!
Hi John, I think almost every newspaper in the Ireland and beyond has lost circulation due to the internet. Ideas, arguments and debate on the internet on blogs (particularly this one, which should be awarded “blog of the year”) leads to a lot of plagiarism in journalism.
“About the most originality that any writer can hope to achieve honestly is to steal with good judgment.”
Billings, Josh
The IMF-page 17 appeared extremely supportive,but ‘word’ according to Cooper is no, completely agree with your initial comment utter rubbish,grandstanding to appear well informed.Shame really back in the day a decent reporter,must have sold out and toeing the govt. line regurgitation the spin.
“To address unsustainable household debt, the authorities are developing comprehensive reforms to enhance the judicial bankruptcy framework and introduce voluntary out-of-court
arrangements.
A key challenge is to create a suitable framework for effective resolution of rising mortgage distress—about 12.8 percent of the number of mortgages were in distress as of September 2011 (i.e., in arrears greater than 90 days or restructured)—while upholding payment
discipline.”
http://www.imf.org/external/pubs/ft/scr/2012/cr1248.pdf
@ NWL
+1 on the Irish media. It’s one group whose total and continued failure to act in the interest of Irish society continues unhighligetd, mostly because the media is the highlighter. Critical thought, reasoning or questioning seems to be absent, the referendum is a perfect example, fear, sound bites and misinformation is left unchallenged to the extent that people will be voting or not voting on something the consequences of which they know very little about.
I find myself more and more coming around to Julian Assanges way of thinking. I.e that poor media is at the root of a lot of the worlds problems.
@John F, amazingly not one mainstream media outlet has picked up the report that Larry Goodman is behind the mega-development creating 1,130 jobs 5kms across the border, Larry being one of the most prominent businessmen in the Republic. The BBC and even IN&M’s Belfast Telegraph reported it, but the Independent didn’t. Nor did RTE, Irish Times, Examiner. Strange.
You can pay to have things put in newspapers, and you can to have things not put in newspapers.
I doubt our sycophantic media barons would dare challenge the likes of Goodman, or any other media magnate within the confines of the Republic. Once again, the rule of law and courts here leave too much wanting.
@WSTT,Hi WSTT,the real “mortgage” numbers that should and will have to be addressed are the amount of “scratch and dent” ones.
Include the number in serious negative equity,on hold,restructured,etc. and it really is a crisis that is growing daly.
The only workable and viable solution is modern bankruptcy laws,which will involve writing off large amounts of non viable debt,the banks and institutions naturally are resistant to this.
Regarding the Irish media,the Whittingdale inquiry or Hackgate has illustrated the perils off too much ownership concentration.
http://wiki.answers.com/Q/What_is_scratch_and_dent_mortgage
@JG
From the definition provided, I would say that “scratch and dent” is way too lenient a term. A more appropriate adjective would be “totaled”.
@JW lenders often reclassify non-performing loans as performing upon receipt of just one paymnent,but once scratched and dented they have extremely high re-default rates.
Interesting article on latest efforts here to assists borrowers with negative equity,HARP 2.0,1.0 is best forgotten,but perhaps some innovative ideas for the stymied and out of ideas legislators in Ireland.
http://www.nytimes.com/2012/05/26/your-money/mortgages/harp-2-0-stirs-hope-and-frustration-for-homeowners.html