Mortgage holders will not be affected by loan sale to vulture funds, says Donohoe

Minister for Finance says borrowers will not be affected by who owns their loan book

Minister for Finance Paschal Donohoe. Photograph: Brenda Fitzsimons/The Irish Times

Minister for Finance Paschal Donohoe. Photograph: Brenda Fitzsimons/The Irish Times

 

Minister for Finance Paschal Donohoe has said he is confident that holders of “non-performing” Permanent TSB mortgages that have been sold to a so-called vulture fund, will continue to have the protection of the Central Bank.

Permanent TSB, which is 75 per cent State owned, said on Monday that it had agreed to sell loans secured on 10,700 properties (of which about 7,400 are private homes), where borrowers have fallen behind on repayments, to Start, which is backed by US private equity group Lone Star.

Speaking on Wednesday morning, the Minister said the mortgage holders will not be affected by who owns their loan book.

Mr Donohoe said he did not have the ability to approve or not approve of the sale, this was prohibited by regulations of the Central Bank.

“We need to be fair to the people affected,” he told RTÉ’s Morning Ireland.

Mr Donohoe said it was a “real issue” for Permanent TSB that 25 per cent of the loans had been in arrears for more then three and half years.

The mortgage holders had “many years” to see how their loans could be restructured, he said.

Permanent TSB had reduced its non performing loans from €9 billion to €5 billion, but their rate for such loans remained five times the European average and “that really matters”.

The Minister said his job was “to do the right thing by the tax payer” and to look after the interests of the tax payer and the economy in the long term.

Already 120,000 loans had been restructured, he said, of which 87 per cent continued to adhere to the terms.

Mr Donohoe said he has asked the Central Bank to conduct a review of the code of conduct in relation to restructuring of mortgages and mortgage arrears. Supports were in place through Abhaile and the Insolvency Service and there was a need to be fair to the people affected.

He pointed out that 7,000 split mortgages had been removed from the Permanent TSB sale.