institutions from customers who could not meet mortgage repayments.

A straw poll among mortgage companies yesterday revealed a sorry tale of more and more borrowers falling hopelessly into debt with no hope, in some cases, of even paying off the interest on loans.

Finance houses have been left with no option but to take control of the properties and arrange for them to be auctioned.

The number of auction notices appearing in the local press has increased significantly over the last few months, said Mr. Jack Outerbridge, president of LP Gutteridge, which serves as a mortgage company and an auctioneer of properties.

"In the last six to nine months, there have been more foreclosures in Bermuda than have taken place over many years,'' he said.

"Lending institutions only call in loans as a last resort but some people are so far behind with repayments that they are beyond hope.'' As an auctioneer, his company has been involved in selling several properties which have been seized by local banks and other institutions.

In some instances, borrowers had been allowed to get away with paying little or no interest or other payments for up to four years, said Mr. Outerbridge.

"As auctioneers we are informed of the various debts built up on these properties,'' he added. "We know it's been on-going for a long time.'' Mr. Michael Collier, the Bank of Butterfield's chief general manager designate, said his bank had already foreclosed on three mortgages since January 1, compared with just one foreclosure for the whole of last year.

"What we are seeing now is the culmination of people's financial problems dating right back to the beginning of the recession,'' said Mr. Collier.

"We have bent over backwards to help these people but their problems have gone on for a long time, sometimes in excess of a year or longer.

"In most cases, we've foreclosed where people have turned their back to the problem and just ignored some of their responsibilities.'' Although he said his bank did all it could for all borrowers, it was particularly sympathetic to first-time buyers and to people who borrowed money to pay for their child's education overseas.

Mr. Richard Francis, general manager of Bermuda Commercial Bank, said his bank had increased its provision for losses at the end of its last financial year last September and had done so again since then.

Although, BCB had not foreclosed on any mortgages as yet, it was inevitable that it would happen, he said.

"We're seeing some signs of stress and people are approaching us for understanding and asking for a rescheduling of their mortgages, particularly those people dependent on rental income to supplement their cash flow,'' he added.

"We're not seeing defaults per se , although we might be discussing with clients the sale of their property in order to repay the facility where it's clear they will be unable to meet monthly repayments for the foreseeable future.

"All the banks will have recourse to the sale of a property if they absolutely had to but, generally speaking, if that's the only way out we like to do it in close consultation with the client.

"We've not had to force the sale of a residential property as yet, although we're forcing the sale of certain commercial properties or properties purchased for speculation. It's inevitable, though, that some residential properties will have to be sold eventually.

"There's nothing holding us back from doing it. Generally, we try to renegotiate the loan over a longer period and look at customers' means and circumstances.

"There's no doubt that we've had to do more restructuring of loans recently than one or two years ago.

"We try to be realistic. The market out there is not the best we've ever seen so what's the point of putting a property on the market if the price cannot be met.'' He added: "We have a formula for working out the level of provision for bad loans in our mortgage company. Just to be cautious, we revalue properties every year.

"If the existing loan on that property exceeds 80 percent of its new appraised value then we raise the general provision. That ensures our loan book never exceeds 80 percent of the value of the property.''