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Borrower-lender engagement during the Irish mortgage arrears crisis

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  • McCann, Fergal

    (Central Bank of Ireland)

Abstract

Arrears resolution strategies that focus on mortgage modification such as those proliferated by Irish mortgage lenders in recent years can only be put into effect when borrowers engage with the process proposed. Where borrowers do not engage, there is little alternative course of action available for lenders other than to pursue the borrower through the legal system. The potential role of borrower non-engagement in the rise in long-term mortgage arrears has been the subject of much speculation in Ireland during the economic crisis and recent recovery. Due to data availability, the scale and nature of borrower engagement has not received much attention in the Irish mortgage market up to this point. In this Letter I present estimates of the extent of engagement across loans of varying arrears balances, as well as an analysis of modification outcomes after engagement and a comparison of the characteristics of engaged and non-engaged borrowers.

Suggested Citation

  • McCann, Fergal, 2017. "Borrower-lender engagement during the Irish mortgage arrears crisis," Economic Letters 17/EL/17, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:17/el/17
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    References listed on IDEAS

    as
    1. Kyle F. Herkenhoff & Lee E. Ohanian, 2016. "Foreclosure Delay and the U.S. Labor Market," Economic Policy Paper 16-7, Federal Reserve Bank of Minneapolis.
    2. Kelly, Robert & McCann, Fergal, 2016. "Some defaults are deeper than others: Understanding long-term mortgage arrears," Journal of Banking & Finance, Elsevier, vol. 72(C), pages 15-27.
    3. Danne, Christian & McGuinness, Anne, 2016. "Mortgage modifications and loan performance," Research Technical Papers 05/RT/16, Central Bank of Ireland.
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