Bank of Ireland expects mortgage customers who surrender their properties voluntarily because of loan arrears to pay off the residual debt plus interest charges after they leave their home.
This emerged today 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 the mortgage holders would only be asked to pay what they could afford after living expenses, which he said were above the 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, who was before the committee for more than three hours, 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 independent TD Richard Boyd Barrett.
Mr Boyd Barrett said it was “cruel” to chase people who had been forced to give up their homes for the residual debt, adding that it was a form of “torture”.
“I think you are using rather dramatic words,” Mr Boucher replied.
Mr Boucher said Bank of Ireland has written off debt on unsecured loans, such as credit cards or personal loans, where the 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 was asked by Pearse Doherty of Sinn Fein to justify his €843,000 remuneration package. Mr Boucher said his annual pay package is voted on by shareholders at the company’s AGM. “I abide by the decisions of the shareholders,” he added.
