Investment fund chased down home loan ‘where less than €6k was owed’
REPOSSESSION orders have been granted for an investment fund in cases where less than €6,000 was owed on a mortgage, and where a mortgage was still being paid with €11,000 owed, an Oireachtas committee has been told.
The Money Advice and Budgeting Service (Mabs) criticised a ‘power imbalance’ between individuals and institutions with ‘an army of lawyers at their disposal’, and said the key component in these cases was that the mortgage holder was not present in court.
Mabs social policy and research executive Dr Amie Lajoie told the Oireachtas Committee on Finance, Public Expenditure and Reform that so-called vulture funds are playing an increasing role in Ireland’s financial sector, in direct lending to individuals.
Dr Lajoie said non-bank lenders have also increased their share of mortgage lending from 3% in 2018 to 13% in 2021, and that they own more than half of domestic mortgages in arrears.
‘As of September 2022, nonbanking entities own over 56% of all domestic mortgages in arrears, up from 43% in March 2021 and 37% in March 2019,’ she added. Mabs also expressed concern over loan transparency and communication, chain of loan ownership, and interest rate hikes over the past six months, with some clients facing spikes of more than 6%.
Also addressing the committee, Eilis Barry, the chief executive of Free Legal Advice Centres (Flac), criticised recent Consumer Protection Acts as primarily facilitating the development of a loan sale industry.
Sinn Féin finance spokesman Pearse Doherty said the sale of such loans to funds with shortterm goals was a ‘recipe for disaster’. Dr Lajoie said latest Central Bank data shows 17 authorised retail credit firms and 26 ‘transitional’ firms in this category, as well as 18 credit servicing firms and a further three ‘transitional’ firms.
Flac senior policy analyst Paul Joyce said these firms have essentially been given regulatory status to conduct their business. ‘The sale of loans is now endemic in the financial system,’ he said.