The recruitment of Swindon-based White Horse Mortgage Services signals growing market con- cern that as growth in the Irish economy slows to its lowest level for 16 years and unemployment rises, highly indebted home owners will find it increasingly difficult to keep up their mortgage repayments.
As part of the company’s service, White Horse staff assist borrowers who are in arrears or are thought to be at risk of falling into arrears, giving them advice on debt management and budgeting.
According to White Horse chief executive Richard Lay, more than 80% of borrowers counselled by his staff make full financial re-coveries and keep their homes.
Lay claimed that the Republic is heading for a significant economic downturn and that the days of trouble-free mortgage len-ding are over.
He added that a rise in bad debts in the country was a macro-economic certainty as economic growth has slowed and unemploy-ment increased.
He suggested that arrears were not yet at crisis level but represented a significant problem.
White Horse already has some 40 staff working in the Republic and that number could rise if more lenders sign up to use its arrears services.
Lay declined to identify the financial institutions using his firm’s service, which he said is pretty routine in the UK but new to the Republic.
He expects his staff, working on behalf of banks, to process around 4,200 arrears cases this year.
But critics such as Michael Culloty, social policy spokesman for independent agency Money Ad-vice and Budgeting Service (Ireland) question banks’ motives in bringing in White Horse.
Culloty said: “Banks are using White Horse to create a veneer of helpfulness while bringing in len-ders as priority creditors.”
He also questioned the ethics of giving loan data to third parties without first clearing this with customers.
Irish banks have been reluctant to admit to any increases in loan defaults in the past year, with most putting their bad debts at less than 1%.
But court lists tell a different story, with 465 possession cases recorded last year – a trebling in number since 2004.
And even that may not tell the whole story. Solicitors report that an increasing number of borrowers in arrears simply hand their keys over to banks and walk away, believing they won’t be able to sell in a falling market and that if they do, they won’t get an appropriate price.