Ulster Bank believes that many of the 2,000 borrowers in mortgage arrears who have refused to engage with it on their debts are "determined" defaulters deliberately stringing the bank along.

This view emerged as the bank launched a final campaign yesterday to encourage these customers to engage with the lender to try and agree a restructuring deal that would keep them in their homes.

Speaking to The Irish Times, Stephen Bell, Ulster Bank's chief risk officer, said: "As the [mortgage arrears] process becomes less one that you can hide behind, they've become determined defaulters rather than strategic defaulters. They've just decided not to pay and to see how long they can string it out for."

Mr Bell said the “last thing” Ulster Bank wants is a “bunch of repossessed properties to worry about” but in the “absence of dialogue, we’re left with no alternative but to go the legal route”.

Voluntary sales

Ulster Bank has designed a new user-friendly communication, urging the customers to engage with the bank. This will be sent out this week. It includes a commitment that 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 that they could face legal action to have their homes repossessed if they do not engage with the bank. 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.

Reasonable

The bank 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 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.

Mr Bell said it is only “too late” for an arrears customer to engage with the bank when a judge has granted an order for repossession and the date for eviction has been set.

Mr Bell is hoping that this latest communication will also demonstrate to the courts that Ulster Bank has taken every step possible to engage with customers and explain the process in simple terms.

“It’s been too easy to date for some people to turn up in court having not engaged and still get the benefit of the doubt,” he said. “Our hope is that we’ll get more of a shared view of what’s reasonable between the banks, the customers and the judiciary.

Ulster Bank has 4,500 legal cases pending against mortgage arrears customers. It has repossessed about 570 homes in the past three years.