Negative equity - the position of a mortgage worth more than the house securing it - is not a problem unique to the 11.3m homeowners underwater in the United States as of year-end. Negative equity and delinquency are plaguing even the largest lenders in the Republic of Ireland, where forbearance might be the only thing preventing home repossessions. Banking and investment firm Irish Life & Permanent reported yesterday €196m (US$267.5m) of operating loss in its preliminary yearly results for 2009, primarily driven by €376m of loan loss provisions in the mortgage and consumer finance divisions. At the end of 2009, 3.9% of IL&P mortgage accounts - or 7,228 loans - were 90+ days delinquent, while 22% of mortgage accounts were in negative equity positions. “The problem of arrears is a real and painful one for customers and we are working closely with customers to agree realistic repayment terms for those in financial stress," said group chief executive Kevin Murphy in the preliminary earnings yesterday. "Where customers talk to us we invariably can agree workable solutions with them.” The overall occurrence of arrears in the Republic of Ireland continues to increase, according to Ireland's Financial Regulator. Data released yesterday illustrates 28,603 - or 3.6% - of total Irish mortgages were 90+ days past due. Of these, 19,185 loans - or 2.4% of Ireland's total mortgages - were 180+ days delinquent. In terms of euro volume, €5.33bn was owed as of year-end in relation to accounts 90+ days past due, whereas €3.6bn was owed on accounts 180+ days past due. Irish Banking Federation - a representative body for Ireland's banking and financial services sector, noted in commentary yesterday that, despite the growing trend, the number of court cases to enforce the debt, as well as the number of home repossessions, illustrates a "dramatic" decline. The overall home repossession in the Republic of Ireland is relatively low, IBF said - for example, 13 per 100,000 compared with 93 per 100,000 in the United Kingdom. A policy of forbearance among IBF-mainstream lenders particularly drove the fall. IBF said data published by the Financial Regulator in Ireland shows legal proceedings to enforce the debt/security on a mortgage fell 54% to Q409 from Q309 on an overall market basis. But that figure is higher among IBF mortgage lenders alone, who saw legal proceedings slip 66% in the same time. Forbearance might become a more common practice among US mortgage lenders and servicers, if a recent proposal by the Mortgage Bankers Association (MBA) gains traction. The MBA suggested adding a series of forbearance "phases" to the process under the Home Affordable Modification Program (HAMP) for borrowers that involuntarily lose their jobs. The idea of forbearing on unemployed homeowners - although spurring industry criticism - seems particularly relevant in light of data out today from the US Department of Labor (DOL) that the seasonally-adjusted number of initial unemployment insurance claims was 469,000 in the week ending February 27. It's a slight drop from last week, although the overall unemployment rate still lingers near 10% and the U-6 measurement of both un- and under-employment registers 16.5%. Write to Diana Golobay.