Mortgage crisis gets crisisier according to new Q4,2012 statistics

The Central Bank of Ireland has this morning released statistics on mortgage arrears and repossessions for the three months ending 31st December 2012 – the main press release is here which has links to tables etc. An extra 3,000 are now in arrears of more than 90 days compared with Q3,2012 and such accounts in arrears are up by a very worrying 25,000 in the past 12 months. In October, 2011 President Clinton – pictured above at the Global Irish Network in October 2011 – described the mortgage crisis as the single biggest economic issue facing this State. At that time, there were “just” 62,970 mortgage accounts in arrears of over 90 days, today, such accounts stand at 94,488, a 50% increase. The mortgage crisis has become a lot more crisisier.

The Central Bank has yet again said the “introduction of a new collection system in recent months has resulted in some changes to previous quarters’ data” Given the stonking big error that the Central Bank made in 2011 in counting bondholders, I wonder how much of the changes are really due to “a new collection” system and not just good old-fashioned cock-ups by the folks on Dame Street whose serried ranks always seem to have their well-fed heads stuck in the sports section of newspapers whenever visited. I see that the Central Bank also managed to leak the statistics yesterday, ahead of their formal publication this morning.

Anyway, here is the summary which goes back to Q3,2009 when the statistics were first collected – I have checked Q3,2012 and Q2, 2012 to ensure it matches current Central Bank data, but previous quarters reflect the data as presented AT THAT TIME by the Central Bank. (click to ENLARGE)

Overall at the end of Q4,2012 there were 143,851 mortgage accounts in arrears including 49,363 in arrears of less than 90 days. In addition there were 43,021 restructured accounts NOT in arrears but mostly just paying interest. Recent figures from social protection minister, Joan Burton revealed that in 2012, there were 14,127 households in receipt of mortgage interest supplement payments. These are all what are termed principal dwelling mortgages, pr owner occupier and at worst, you could say that 1 in 4 mortgages is in some sort of obvious distress.

The above figures exclude buy-to-let mortgage accounts where the statistics released this morning show that 19% or 28,000 out of 140,000-odd BTL mortgages were in arrears of more than 90 days. In other words, that sector is in even worse condition.

The only less dark spot is the pace of increase in arrears is slowing, but with property prices still declining, unemployment still elevated, cuts to disposable income and interest rate rises looming, we are far from out of the woods in terms of new problems. And regardless , that still leaves the current problem.

Repossessions in Ireland remain teensy by international standards with just 134 repossessions in the Q4,2012 and 604 in the past year. The so-called Dunne case which prevents repossession in pre-2009 mortgages might be cited as a factor but in truth, our draconian bankruptcy laws and forebearance by banks are the primary factors. Repossessions will rise under the new Personal Insolvency Act 2012 – when it is finally commenced – but at present you are 27 times more likely to have your home repossessed in the UK than in Ireland, if you fall into arrears.

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Noonan says Sunday Times reporting is wrong

Whilst there is genuine concern for the future of the Sunday Business Post which is expected to enter a 100-day examinership process today, from which it will hopefully exit with a new proprietor, it seems there might also be cause for concern about Ireland’s No 4 best-selling Sunday newspaper, the Sunday Times; not about its finances, it should be stressed – after all it has the backing of News International – but it seems its reporting is questionable.

In the Dail this week, the Minister for Finance Michael Noonan was asked about a report in the Sunday Times on 24th February, 2013 in which reporter Aine Coffey had a story about Irish Bank Resolution Corporation and its process for selling off loans. It was reported – sorry, it’s not online unless you have a subscription – that “borrowers will receive letters in the middle of this week” from IBRC offering them their loans. The report went on to say that liquidators were that weekend – 23rd and 24th February 2013 – finalizing details of the loan sell-off. The report confidently stated that borrowers with loans over €10m who are unable to refinance their loans at par value, would be entitled to bid for their loans subsequently on a “best and final offer” basis.  If the loans were not sold at their minimum “or reserve” valuation, then they will go to NAMA. Lastly, the report stated that the previous week – that would have been 17-24th February, the Special Liquidator of IBRC issued “requests for proposals” (RFPs) to unspecified companies so that they could bid to provide independent valuations of the IBRC loan portfolio. Aine reported that the replies were due by the following week to the RFPs – that is, by 3rd March 2013 – and that there would be a four week valuation period. UBS, the former employer of Department of Finance boss, John Moran, is said to be one of the lucky companies selected to be sent an RFP.

The Sinn Fein finance spokesperson Pearse Doherty asked Minister Noonan about IBRC writing to borrowers by 27th February 2013 and what the process would be for the disposal of the loans.

In his response, Minister Noonan said “I am advised by the Special Liquidators that the reports in the Sunday newspaper referred to are incorrect.”

Indeed, from other parliamentary questions, it seems that the loan valuation process will only be completed in June 2013 which doesn’t leave a lot of time before NAMA is set to take over the unsold loans by the end of August 2013.

Here is the full parliamentary question and response.

Deputy Pearse Doherty: To ask the Minister for Finance further to reports in a Sunday newspaper that Irish Bank Resolution Corporation is this week, week ending 27 February 2013, writing to borrowers regarding the disposal of their loans, the process to be adopted by the Special Liquidator KPMG to ensure that any sale is transparent, that potential buyers have access to adequate information and sufficient time to arrange financing and that the interests of the taxpayer will in general be protected and the sale price maximised.

Minister for Finance, Michael Noonan: I am advised by the Special Liquidators that the reports in the Sunday newspaper referred to are incorrect. The Special Liquidators are still in the process of devising and implementing the sales process in respect of IBRC’s assets and are therefore not in a position to write to borrowers with regards the disposal of their loans.

The Special Liquidators are in the process of obtaining suitable independent professional advisors who shall employ standard valuation methodologies appropriate to each class of asset of IBRC. Following that independent valuation process, the Special Liquidators will sell the assets of IBRC (which are subject to the floating charge). Borrowers, third parties and other financial institutions will be given the opportunity to bid for specific portfolios (or component parts thereof) as part of an open and transparent process at or above their independent valuation and failing that, the Special Liquidators will sell the assets to NAMA at their valuation price.

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Formerly high flying developers sue NAMA

On 12th January 2013, we reported on here how NAMA had receivers appointed to Tailored Homes (Irl) Limited, a company controlled by brothers Michael and John Taggart, two developers from county (London)Derry.  During the 2000s, the brothers and slew of companies were highly successful in residential and commercial development on both sides of the Border, but in 2010, the banks moved against them, and in January 2013, NAMA moved against them. When times were good, they were very, very good and the Taggarts were one of Ireland’s premier helicopter class of developers, their’s was a twin-engined Eurocopter EC 135. However banks have moved against them in recent times.

Yesterday, in Dublin’s High Court, the Taggarts hit back with an application against Anglo, NAMA and receivers Grant Thornton who were appointed to Tailored Homes in January 2013. The precise respondents are Irish Bank Resolution Corporation, National Asset Loan Management Limited and Michael McAteer. As is usual with recently-filed applications, there are no solicitors on record for the respondents.

The applicants are Tailored Homes (Irl) Limited and Michael Taggart personally. Both applicants are represented by Downey Property Solicitors. The case reference is 2013/2364 P.

We don’t presently know the subject of the application or the remedies sought. The Taggarts have previously threatened to sue the banks which had lent to them, claiming that they have been unfairly dealt with. The Taggarts are also understood to have a separate action against Ulster Bank and against Tughans solicitors in Belfast.

So far this year, NAMA has been on the receiving end of 14 applications in Dublin’s High Court, though 12 of these relate to deposits at a single Portugese golf resort. NAMA has launched eight applications of its own in Dublin’s High Court.

For those of you unfamiliar with the Taggarts, the BBC has a 30 minute special on them which is available here, and is available for viewing in the Republic of Ireland.

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