Fury as Ulster Bank sells €1.4bn of loans
US firm buys ‘bad’ mortgages on 5,300 properties
Almost seven years in arrears
ULSTER Bank is selling off €1.4billion of ‘bad’ mortgages on thousands of homes to a so-called vulture fund in the US.
The loans – which are nearly seven years in arrears, on average – are on 5,300 properties including 2,300 family homes.
The rest are on buy-to-let properties where the landlords have failed to keep up repayments. It is latest sell-off by the banks of what they say are nonperforming loans. Both Permanent TSB and KBC have sold off such loans of late.
Cerberus, a ‘distressed debt specialist’ based in New York, is buying the Ulster Bank loans.
However, Irish Mortgage Holders Organisation chief David Hall, who campaigns for struggling homeowners, said the selloff was wrong. He said: ‘Ulster Bank says that of the 2,300 family homes they are selling to vultures, the family have been in an average of three mortgage restructuring arrangements.
‘This proves the point which banks [and] their mouthpieces are ignoring: it’s about people’s ability to pay not their willingness. Anybody who has engaged with their lender and provided documentation to attempt to restructure their homes an average of three times cannot be accused of not engaging or strategic defaulting.’
Mr Hall also predicted the loan sell-offs would trigger a ‘tsunami of repossessions and people losing their homes’.
He said: ‘When you’ve got a bank telling you that people have engaged an average of three times and have got restructures three times, that means they’ve no money. So what’s going to happen to them? I think they will start evicting.’
Cerberus previously snapped up Nama’s loan portfolio in the North in 2014. Ulster Bank yesterday said the sale of loans to the investment fund ‘does not contain any performing home loans or any home loans in an arrangement’.
It said the ‘difficult decision’ to sell the loans ‘comes a decade after the financial crisis began’, adding that ‘the continued extension of forbearance cannot be maintained’.
The bank said: ‘Not all mortgages are sustainable and we are obliged to reduce the level of non-performing loans on our balance sheet.
‘For mortgages that are not sustainable, additional forbearance will not bring them back to a performing position.
‘We will be in contact with all affected customers to help them as their loans transition to the new owner.’
However, Fianna Fáil’s finance spokesman, Michael McGrath, said Ulster Bank was ‘in effect the bank outsourcing the enforcement activity on these loans’.
Mr McGrath said: ‘While it is certainly the case many of these mortgages have been deep in arrears for some time, the net effect of the transaction remains that another bank is outsourcing its dirty work to a US vulture fund.
‘What tools does Cerberus have at its disposal for dealing with these loans that Ulster Bank doesn’t have?’
KBC sold off a portfolio of loans last week including €900million of mortgages on around 3,200 rental homes.
PTSB sold off 10,700 mortgages in arrears – including 7,400 on private homes. These were sold for €1.3billion at a discount of almost 40%.