Vulture fund to get 7,000 home loans in arrears
Families will be thrown out, fears Hall
MORE than 7,000 homeowners in arrears will see their non-performing mortgages sold off to a ‘vulture fund’, provoking concern among campaigners.
Bailed-out bank Permanent TSB is selling off 10,700 mortgages, including 7,400 on private homes, that are in arrears to Start Mortgages.
The bank’s chief, Jeremy Masding said: ‘Customers will continue to be afforded the protection of existing regulatory protections after the transfer.’
But David Hall of the Irish Mortgage Holders’ Organisation claimed the new loan-owners may ‘throw out’ families in arrears.
And Fianna Fáil finance spokesman Michael McGrath warned: ‘There will be understandable concern among affected borrowers given its [Start Mortgages’] background as a sub-prime lender and the fact that it is owned by giant US vulture fund Lone Star.’
PTSB is selling the loans at a discount, with the €2.1billion worth of mortgages going for €1.3billion – €800million less than the loans on them are worth.
Mr Masding said cutting bad loans was ‘a necessary step for us to take to complete the rebuilding of PTSB as a viable, competitive lender’. But Mr McGrath said the company buying the loans had refused to appear before the Oireachtas finance committee several times over the past 18 months.
He added: ‘When the Minister for Finance is consulted on this loan sale, he has to ensure Start Mortgages makes itself available for parliamentary scrutiny.’
The value of the thousands of mortgages being sold off is about €175,000 each, the average length of the arrears is three years and six months, and the average amount of arrears is €28,800.
The cash from the deal will be used for ‘general corporate purposes’, says the bank, which got a taxpayer bailout of €2.7billion and is 75% State-owned.
Selling off the ‘non-performing mortgages’ will reduce its proportion of bad loans from about one in four to around one in six.
But Mr Hall said: ‘These people and others are going to end up homeless. Alternatives must be found, as flogging citizens to vulture funds in the middle of a housing crisis is not acceptable.
‘Lone Star doesn’t offer any restructuring. It is a horrible day for mortgage holders. There is uncertainty around the numbers given. It is reprehensible that Irish families have being thrown to vultures by a bank which only exists from State support and funds from the taxpayer.’
Deputy McGrath said: ‘It would be much better if Permanent TSB dealt with the loans itself and made case-by-case decisions involving restructuring the loans, writing off debt in some cases and only taking enforcement action as a last resort.’
He added: ‘A key question is whether Start Mortgages will now offer a wide suite of restructuring solutions to borrowers in arrears.
‘In addition to the enactment of Fianna Fáil legislation requiring loan owners to be regulated by the Central Bank, we also need to see changes to the Code of Conduct on Mortgage Arrears requiring loan owners to consider all possible restructuring options, and not just the options considered by that institution.’
This would be vital for borrowers who are engaging with their lender to find a solution, he said.
‘Background as sub-prime lender’