What you need to know when a ‘vulture’ buys your mortgage

Issue arises again in light of Ulster Bank’s imminent sale of 900 homeloans

Protections may continue to apply, but that doesn’t mean nothing changes. Image: iStock

Protections may continue to apply, but that doesn’t mean nothing changes. Image: iStock

 

Ulster Bank’s decision to sell more than 900 residential mortgage as part of the sale of a package of loans which will probably be bought by a vulture fund has again raised the issue of where this leaves the householders concerned. Here are the key points:

1.

What does this mean? It means that either the loans must be sold to another bank regulated here, or that if they are bought by a fund, then the fund must appoint one of the specialist credit servicing firms operating here - such as Certus and Pepper - to deal with borrowers on their behalf. In turn these credit servicing firms must operate within existing guidelines.

2.

codes of conduct which apply. This means first that when someone’s loan is being transferred, they must get two months’ notice and must be told who they will be dealing with in future. Beyond that, borrowers can still avail of the protections under the Mortgage Arrears Resolution Process (MARP). This obliges lenders to engage with borrowers who fall behind, provide them with information on their options and, if possible, negotiate a way forward which allows the borrower to stay in their house. Only if all this fails can repossession proceedings start.

There has been ongoing debate about the way the banks have implemented this and particularly their willingness - or lack of it - to offer alternative longer-term solutions to borrowers. This has left many householders with temporary reliefs - such as interest-only loans for a period - but without longer-term, realistic solutions. Over the past year there are signs that more cases are being realistically dealt with, but the backlog of mortgage arrears remains huge.

3.

if repayments are not being made.

In the case of the Ulster Bank loans, the bank itself has said that the 900 mortgages being sold involve loans more than two years in arrears - with a majority more than four years in arrears - and mostly cases where borrowers have not engaged with the bank to seek solutions. If the bank has taken all the required steps to seek to engage with the borrower and the borrower has not cooperated then they way will be clear for whoever buys the loans to move towards repossession. The borrower can still choose to engage at a late stage.

4.

For political reasons, and because of other relationships with borrowers, banks can be loath to move to actually repossess. More and more repossions cases are coming before the courts as proceedings are lodged, but long delays tend to apply before actual repossession takes place. A vulture fund is likely to take a more focused approach. They will buy the loans at a knockdown and try to make a profit. In some cases this may be achieved by moving more aggressively towards repossession than a bank would.

However vulture funds could also be prepared in some cases to cut a deal with borrowers. After all many may in time want to sell the restructured bundles of loans back to an Irish bank, hoping to have made a profit in the middle.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.