AIB hit the reality button yesterday. In a landmark agreement with the Irish Mortgage Holders Association, the bank agreed a deal that would place independent IMHO between them and mortgage holders in distress.

Mortgage distress for almost 100,000 Irish families

The model is relatively straight forward. Mortgage holders in arrears will receive advice from the IMHO on an independent basis as they prepare their case and documentation for AIB. It is an independent ‘buffer’ between the customer that cannot pay all or some of the full mortgage amount and the bank to which they owe.

Of real significance is that mortgage holders pay nothing for using the service, unlike the State’s personal insolvency service which does.

The new IMHO / AIB initiative is similar to a model that exists in the UK between banks and other credit institutions and a non-profit organisation called StepChange (formally called the CCCS or Consumer Credit Counselling Service).

It’s a progressive move by the lender (EBS and Haven customers are also included in the arrangement). Until now, leaders have resisted including third-party facilitator in the mortgage mediation process. But the meteoric rise in arrears has undermined their efforts to rein arrears in.

“This is the right move for this time. Consumers can have real fears of dealing directly with banks for any number of reasons. AIB is finally putting its customers needs first and while the underlying reasons for arrears have not gone away, the fear factor can be mitigated by a free, independent advice service” said Mr Frank Conway, Founder of the Irish Financial Review.