Banks don't want the keys back!!

Accounts recently filed by AIB’s mortgage unit include details about the health of the bank's mortgage lending and their efforts to restore normality, make for very grim reading. What the accounts show is that repossessing property is not a solution for either the Bank or Borrower. In the last year AIB have forcibly repossessed and sold 17 properties for €2 million with an associated debt of approximately €6 million, this resulted in a LOSS of €4 million to the Bank. AIB will now look to the borrowers for repayment of this €4 million loss.  The chances of them retrieving all of the shortfall…well, I’d say there is more chance of Joe Brolly getting the freedom of County Tyrone!!!

 GDP Partnership has been pioneering an alternative method to forced repossessions for the last 4 years in Northern Ireland and more recently in the Republic of Ireland. This is the Consensual Sale method which results in a greater return to the Bank on the sale of the property and also maximum debt reduction for the borrower. The Consensual Sales method is where the property is sold privately by the borrower on the open market to achieve the best possible price, all with the blessing of the bank. As we have all come to know when word gets out that a property is being sold by the bank its value typically plummets at times up to 50%.

The consensual sale process mitigates this risk, which clearly is better for the bank and borrower.  The other positive for the bank is that they do not have to instruct their lawyers or receivers saving money and time.  In conclusion it’s the best way forward on many occasions.

The method requires both bank and borrower to work together in an open, willing and transparent manner. GDP Partnership has been working to facilitate this relationship between bank and borrower through our mediation services. Our experience has proven that debts issues can be successfully and quickly resolved to the economic benefit of borrower and bank through the mediation and consensual sale process.

Over the next few months, thousands of properties will be coming to the open market as the banks continue with the very difficult job of cleaning up their balance sheets. It would be our view that we will see a more consensual approach being applied to the sales process and less fixed charge receiver appointments.

Conor Devine MRICS – Principal