Minister ‘confident’ vultures won’t prey
He says law still protects 10,000 offloaded PTSB loans
Paschal Donohoe says he is confident that Permanent TSB mortgage holders will be protected after the bank announced plans to offload more than 10,000 loans to a so-called vulture fund.
The Finance Minister told listeners on RTÉ’s Morning Ireland that Central Bank legal protections would shield the ‘non-performing’ mortgages as well as customers in arrears.
He said it was important ‘to be fair to the people affected’ but also that his job was ‘to do the right thing by the taxpayer’ for the future of the economy.
Minister Donohoe said that those living in the houses affected would not be impacted by the sale of the loan book as the existing protections under Rules: Paschal Donohoe their original bank would still be in place.
He explained that PTSB were forced to sell the accounts because the Central Bank and European Central Bank require that if 25% of a bank’s loans are in arrears this must be rectified.
He said that 25% of the loans at the bank had been in arrears for over three and a half years and that action had to be taken to resolve the situation.
Although Permanent TSB reduced affected loans from €9billion to €5billion, their rates were still five times the average rate across Europe.
Minister Donohoe said that while he had been aware of the sale since the beginning of the year, he was not in a position to intervene as he is prohibited from doing so under Central Bank regulations.
He added that more than 127,000 mortgages had been restructured in the country to date and that 87% of those loans had complied with the terms of the restructuring process.
He reiterated that the legal protections that applied to those processes would continue to protect those affected by the current situation.
Minister Donohoe added that he had asked the Central Bank to review the code of conduct of restructuring mortgages and added that 7,000 split mortgages (which split the mortgage into separate terms of fixed and adjustable interest rates) were not included in the current sale. On Monday, the bank agreed to sell 10,700 mortgages including 7,500 that concern private homes to hedge fund, Start Mortgages for approximately €1.4billion.
According to the bank, of the almost 7,500 mortgages affected, 2,500 of those are not complying with ‘treatments’, while a further 3,850 have refused ‘treatments’ or failed to comply with them. Start Mortgages is affiliated to private American equity firm Lone Star.
The bank’s CEO Jeremy Masding assured customers that the original terms of their mortgage would still apply. However, David Hall of the Irish Mortgages Holders organisation expressed concern that the fund would ‘throw out’ families who are behind in their payments.