I HAD HEARD from various people in mortgage arrears, about very disturbing issues with banks in how they conduct themselves in analysing information contained within standard financial statements, showing a borrowers income and expenditure.
Recently, I attended a meeting with a lady who was under severe pressure, following approaches from a high street bank concerning arrears on her mortgage. This lady is a single mother, separated from the father of her two young children. She and her former husband borrowed €185,000, which by mortgage standards at the time was a small loan.
The meeting started with some pleasantries and some banking spin about how the banks were there to help and so on. After a short time the meeting turned aggressively to a discussion about exactly what the bank wanted, and around an analysis of this lady’s income and expenditure. It was infuriating to watch the banker query simple household expenditure. It was as though the lady was being accused of some wrongdoing, and was now having to place her private affairs before some anonymous banker, who would decide how she spend her income. I have no doubt that if she was not accompanied – or if the meeting was held in the bank itself, instead of a neutral venue – it would have been much worse.
The current reality is that lenders are treating people in a completely unacceptable way, by subjecting them to detailed and oppressive examination of income and expenditure in an attempt to try and bleed as much as they can out of them. Don’t get me wrong, I’m not saying that deception should be allowed or condoned – but surely the banking system has the facility to examine genuine borrowers’ details without such horrible intrusion?
‘This is no way to treat a fellow citizen’
This is the very reason why an independent debt management agency is urgently needed. The current system allows the lender to completely control the process, including the appeal; for the appeal is made to the very bank that made the decision in the first place. This is not a system which a civilised society can or should support and not a system that government-controlled banks should be allowed to operate. Yes, people owe money. But this is not a way to treat a fellow citizen who is genuinely hurting .
The real truth is that if the banks had properly stress-tested the loans given at the time, we would not be in the mess we are today. When someone pays interest only – or deferred interest (under the Marp process) being 66 per cent of interest only – this is like cycling a bike with no chain. After a period of time the interest and capital will come and hit you over the head. Oh, sorry I forgot – this is called ‘forbearance’.
One would have to ask as to the banks’ real intentions; for let’s be very clear: the banks are only looking out for the banks. Why bleed someone of interest only or a percentage of interest? Is it that they will wait until house prices rise again, thus reducing or eliminating the loss by comparison to the loss they would have to take if they repossessed and sold the houses now?
Forbearance is a polite word, as is forgiveness, but do the banks intend showing us either long term? I believe not. If the banks were serious about forbearance they would guarantee all those who pay their mortgage (fully or what has been agreed) that they will not move against them when house prices improve.
The only chance a borrower has is in a system that offers fairness and equity, not a system that is controlled by an interested party. An independent debt resolution agency is urgently needed to help us recover and grow.
David Hall works with New Beginning, a group of lawyers, businesspeople and citizens set up to defend citizens facing home repossession. He’ll be in the studio on The Frontline on RTÉ One tonight at 10.35pm.