MABS (the Money Advice and Budgeting Service) a publicly funded group who are given €18,500,000 a year to help the indebted, have produced research which indicates that when it comes to people with mortgage difficulty that the people affected are mainly those with children and are aged from 41 to 65.
They also found that the loan was typically with a regular lender, not a sub-primer.
This is counter to the popular message that the 'negative equity generation' are all in their late 20's and 30's. In fact, here is a piece we wrote about a recent client (couple in early 60's) who were being asked to 'give up their home' as two of only one solution offered! The letter provided wasn't even fully legible as the EBS clearly had some printing issues that day.
On an anecdotal level, the distressed cases that come to Irish Mortgage Brokers for advice are often older too. This may be because people of a certain age are more likely to turn to advisors, or it may reinforce the research which MABS has produced as our sample pool is nowhere near big enough to provide similar data (MABS used a 6,000 strong sample of people).
The report went on to claim that banks were taking up to two months to get back to people on mortgage arrears issues and this is in line with what we see regularly. Getting banks to give any kind of definitive answer, reply to anything where there is any level of commitment to a plan or even making a decision requires everything to go up the line to management and then back down the line to the consumer (eventually), making negotiations a protracted and painful process at the best of times.
Something else we are seeing is that older people are more likely to pay unsecured creditors who are aggressive with them. While the Code of Conduct on Mortgage arrears sets out limits on the number of calls banks can make this code doesn't apply to Credit Unions or Credit Card companies.
They are subject to the Consumer Protection Code which has similar limitations but this is difficult to police because the national focus is on the mortgage portion of the loan. We know of no complaint (to date) on unsecured debt being based around excessive calls, but what I can say is that the actual collectors are often aggressive (mortgage arrears require empathy by law) and in some cases have broken regulation codes.
Where regulation codes were broken we acted immediately to complain to the firms compliance officer, but a normal person wouldn't realise that nuanced points of financial regulation were not being adhered to, even when you do this for a living you find out new methods lenders employ to get around the code and then have to change tack in order to prevent them.
The MABS report also found that a high number of people are suffering from anxiety, stress and depression. That use of the word 'high' has no definitive number attached, but again, based on our firms clients we would agree. A key issue here though is not the debt itself, it is the protracted resolution process where people are kept in a position of uncertainty.
The lack of an alternative resolution scheme only makes it worse, but for why that is still not in operation and yet again delayed we might need to ask our minister of justice Mr. Shatter.
Karl Deeter is Compliance Manager of Irish Mortgage Brokers in Dublin 2.
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