Ulster Bank to offer mortgage write-offs

About 2,000 Ulster Bank mortgage arrears customers who have yet to engage with the bank about a possible restructuring of their loan are to receive a new communication urging them to talk to the lender.

Ulster Bank has sent a one-page note to customers with six “commitments” on how the borrowers will be treated. This includes a commitment that their homes will not be repossessed if revised repayment terms can be agreed and offers the possibility of residual debt being written off in the case of voluntary sales.

But it also warns customers who are more than 90 days behind with their payments that they could face legal action to have their homes repossessed if they do not engage with the bank, which is a subsidiary of British lender Royal Bank of Scotland.

The commitments include a signal from the bank that it will deal with any “reputable” third party representative appointed by the borrower. If the bank agrees there is a “reasonable chance” of an arrears customer repaying their loan, it “may offer” a combination of reduced repayments, reduced interest rates and/or a longer time to repay the loan.

The bank says it will “look sensitively” at what is reasonable for a customer to repay each month and if terms are agreed “we will not seek to repossess your home”.

Arrears customers are informed that if the house is sold, the bank will “work with you to agree a fair process to address your obligation to pay any residual debt”.

If the home is sold and the borrower qualifies for social housing, Ulster Bank will not chase them for the residual debt.

“If we believe you may be insolvent, we will pay for an independent financial expert to meet you to discuss your options including commencing an insolvency process,” the bank adds.

Ulster Bank believes that the remaining people in home loan arrears who are not yet on an arrangement with their home loan provider, can be helped if they to engage with the lender.

Ross Maguire, founding member of New Beginning, said that the proposal is designed to make people homeless, and that people should get independent advice before agreeing to such a “bank-centric” offer.

“New Beginning believes that there is nothing in this for borrowers other than homelessness and strongly cautions against the support of such a proposal. This is a proposal that might have had merit in 2009 but now lacks any understanding of where we are,” he said.

Dealing with arrears

The leaflet being sent to arrears customers states that customers can arrange an appointment over the phone or face-to-face and that Ulster Bank will “help” them at any stage – even on the day in court.

Ulster Bank employs 350 people in Dublin and Edinburgh to deal with its mortgage arrears customers.

The number in arrears of 90 days or more has declined in each of the past 25 months. Some 12,000 customers have moved out of arrears and are back up to date with their payments while another 10,000 are on restructured arrangements.

The bank said that over the same period, just five personal insolvency proposals were vetoed by Ulster Bank due to the “specific circumstances”.

However, it noted that around 2,000 customers “neither contribute to their home loan nor discuss this issue “with Ulster Bank despite efforts via letter, telephone and in person.

Commenting on Ulster Bank's latest communication to arrears customers, Stephen Bell, its chief risk officer, said: "Ulster Bank's primary objective has always been to help our customers in difficulty come to a fair, affordable solution which allows them to remain in their homes.

“We firmly believe that through engagement, a solution can be found for the vast majority of customers who are in arrears and we are trying to encourage this in every way we can.

“For the 22,000 customers that have already come out of home loan arrears or are in an arrangement, these commitments are not new, but for those who are not reading the letters or answering the phone to our help, I appeal to them to engage with us.

“We will not seek to repossess your home if you engage with us and we can agree a solution or outcome. We will also look sensitively at your expenditure to ensure that you maintain a reasonable standard of living. But if you do not engage, we have no choice but to go down the legal route”.