Less than 40% of homeowners with long-term mortgage arrears are co-operating with their banks by providing basic information about their finances, such as details of their earnings and expenses.
According to the Central Bank of Ireland, borrowers whose mortgage arrears exceed two years are the least likely to provide banks with a standard financial statement — a necessary condition to avail of consumer protections that delay repossession.
“This may be due in part to the challenging nature of the financial situations of many borrowers in this category,” according to the Central Bank, “as well as the lack of willingness to engage on the part of some borrowers.”
More than 34,500 homeowners had arrears of greater than two years at the end of September.
The widespread failure to engage “is likely to be reflective of difficulties facing banks and policymakers in arriving at sustainable solutions for those with the most distressed balance sheets”, according to the latest macro-financial review issued by the Central Bank last week.
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A reformed mortgage-to-rent scheme is seen as a most politically acceptable alternative to repossession. Take-up has been low so far for the initiative, which allows distressed borrowers who agree to surrender ownership to remain in their homes as tenants of a local authority or housing association.
Under reforms being considered by housing minister Simon Coveney, the scheme would be opened to private investors, who would be able to buy the homes of those with unsustainable mortgages and lease them to local authorities, which would pay up to 92% of the market rent.
The refusal of many distressed borrowers to engage with their lenders has raised concerns about their suitability for mortgage-to-rent, however, with sources questioning if those who have stopped paying their mortgages could be trusted to pay rent to a local authority.
More than a quarter of those who have defaulted on their mortgages at some point since 2010 are at risk of losing their homes, according to the Central Bank.