The outline is dramatic for Ireland. 2015 has been a year that brought upheavals to both financial institutions and families. The Allied Irish Banks (AIB) incurred massive financial losses amounting to € 73 million through the sale of 439 repossessed properties, seized from families and individuals who failed to pay back their mortgage loans. These conclusions were published in the annual report of the bank.
Situation is going to worsen
The AIB could not redeem the full amount of the loans contracted through the sale of these 439 houses. Sale costs amounted to € 4 million. Furthermore, by the end of December 2015, the bank still had 714 repossessed properties on its account as well as outstanding loans totaling up to € 177 million. Compared to 2014, the scenario is worsening, as at that time, the bank closed its accounts with 630 unsold repossessed houses and outstanding loans amounting to € 164 million. The AIB had 49 buy-to-let properties and the sale resulted in € 5 million. This represented a loss of € 7 million.
Avoiding repossessions
In its report, the AIB underlined that it wants to avoid repossessions which are bringing losses to the bank and proving thorny for concerned families and individuals as well. The bank prefers to seek agreements with customers and keep repossession as the last resort to redeem its due. In case repossession proceedings have to be initiated, the bank explained that it considers the appointment of a receiver, through the services of external agents, to be more effective in trying to realize the maximum value as quickly as possible.
Increasing percentage of arrears
The AIB considers that the rate of arrears is on the rise due to the wrong approach, that is, concentrating on management of arrears. The bank has tried to seek solutions away from this common kind of approach adopted by financial institutions.
Mortgage at the AIB
The AIB has come up with the AIB SmartMove app designed for mobiles to thoroughly inform and guide customers about buying a property and mortgages. With step-by-step guidelines, the bank aims at sensitizing customers to avoid the latter to engage themselves financially in projects that perhaps they cannot sustain on the long term. The bank equally takes care to clearly inform customers about the risks they may have to face if unable to pay back their mortgage loans.
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