Wednesday, March 23, 2011

Almost half Start home loans over 90 days in arrears | The Post

Almost half Start home loans over 90 days in arrears
20 March 2011 By Jon Ihle

Nearly half the home loans underwritten by subprime lender Start Mortgages during the boom are deep in arrears, according to new data by ratings agency Moody’s.

Figures up to the end of 2010 on two bonds backed by Start loans show 48 per cent of remaining borrowers have fallen more than 90 days behind in their payments. About 30 per cent have defaulted outright, meaning they are at least nine months in arrears.

Moody’s issued downgrades on the bonds - Lansdowne Mortgage Securities 1 and 2 - on the basis of the poor performance of the underlying mortgages.

The action comes just weeks after the Central Bank revealed that more than 10 per cent of all private residential mortgages in Ireland were either 90 days or more overdue, or had been restructured due to financial stress.

Moody’s said it expected the arrears profile in securities backed by Irish mortgages to keep deteriorating in 2011 due to the weakened macro-economic environment here.

‘‘Moody’s expects that the increasing unemployment and lower income arising from the austerity measures will continue to hurt borrowers’ ability to fulfil their financial obligations," the agency said.

The Lansdowne securities closed in 2006 and contain pools of mortgages issued by Start between 2004, when the lender first entered the Irish market, and 2006. Many of the performing mortgages in the pools have been refinanced with other lenders or redeemed, leaving a high proportion of bad debts

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