BoI will chase left-over debt after loss of homes

Bank of Ireland expects mortgage customers who surrender their properties voluntarily because of loan arrears to pay off the residual debt plus interest after they leave their home.

This emerged yesterday from an exchange between Bank of Ireland chief executive Richie Boucher and Ciarán Lynch, the Labour Party TD and chairman of the joint committee on finance, public expenditure and reform. Mr Boucher was attending the final day of hearings by the committee into mortgage arrears.

Mr Boucher said mortgage holders would only be asked to pay what they could afford after living expenses – which were above guidelines set out by the Insolvency Service of Ireland – had been taken into account.

Stephen Mason, who is leading Bank of Ireland's mortgage arrears resolution strategy, said this repayment could be as little as €50 a month.

Mr Boucher said it was Bank of Ireland's "policy and practice" not to write off debt on mortgages outside of a legal process such as bankruptcy proceedings. "We have to take into consideration the responsibility that we have to our stakeholders to maximise the recovery of the loan," Mr Boucher told Dublin TD Richard Boyd Barrett.

Mr Boyd Barrett said it was “cruel” to chase people who had been forced to give up their homes for residual debt, adding it was a form of “torture”.

“I think you are using rather dramatic words,” Mr Boucher replied. He said Bank of Ireland had written off debt on unsecured loans, such as credit cards or personal loans, where interest rates charged are higher and there is typically no security for the bank on the debt.

It also emerged that Bank of Ireland has voted against two of the four proposed restructurings that have so far come before the bank under the new personal insolvency regime. One of these still proceeded as Bank of Ireland didn’t have sufficient votes among the creditors to block the deal. Mr Mason said it was too early to extrapolate any meaningful insight from this as the numbers were so low.

Mr Boucher declined to put a figure on the number of likely repossessions given that legal proceedings are in train in relation to 7,630 owner-occupied and buy-to-let mortgage accounts that are in arrears.

Mr Boucher said nine out of every 10 owner-occupied mortages was performing and eight out of 10 buy-to-lets.

From a mortgage book of €20.4 billion at the end of 2013, €2.1 billion of owner-occupied mortgages were more than 90 days past due. In addition, another €1.9 billion of the book represented account holders in some form of forbearance measure. The bank had 17,500 mortgage forbearance measures in place in the Republic at the end of last year.

Mr Boucher was asked by Pearse Doherty of Sinn Féin to justify his €843,000 remuneration package. Mr Boucher said it is voted on by shareholders at the annual meeting. This year's AGM is later this month.