Central Bank Statement on Mortgage Arrears 

8 June 2012

The Central Bank of Ireland last week started to receive supplemental information from the leading mortgage lenders concerning their mortgage arrears resolution strategies.

This material included the lenders' responses to the Central Bank's assessment of their distressed credit operations, undertaken by Black Rock, which indicated the need for a significant improvement in operational capabilities. The banks have committed to a step change in their operations and have provided detailed plans to enhance their handling of arrears cases.  The Central Bank will continue to monitor their implementation closely.

The lenders provided details of their menu of forbearance and loan modification techniques.  These are broadly in line with the recommendations of the Keane report, including mortgage to rent and different variations of split mortgages.  Individual lenders are expected to move to pilot stage shortly, as they complete their analysis of portfolio segmentation and capital implications.  Lenders are required to start fully implementing their complete menu of approaches by Q4 at the latest.

The main lenders have completed or are completing a segmentation of their loan portfolio to assess the projected level of different forbearance or modification techniques. This information is still subject to considerable uncertainty and modelling assumptions.   The Central Bank will be publishing revised mortgage arrears data later this year to include Buy To Let arrears and easier tracking of the application of different forbearance and loan modification techniques.  The Central Bank is also agreeing and monitoring Key Performance Indicators (KPIs) with the banks.

The Central Bank will provide technical comments on the detail of the banks submissions in the coming weeks and will be reviewing submissions from a wider group of lenders.