As data shows 70,000 mortgages in arrears, deals done on loans sold to vulture funds must be honored

23 March 2018

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As data shows 70,000 mortgages in arrears, deals done on loans sold to vulture funds must be honored

State must insist that homeowners protected after loans transferred

Statistics released by the Central Bank today show that a total of 70,488 family homes were in mortgage arrears at the end of December 2017. 

As the Permanent TSB, CEO outlined to the Oireachtas Finance Committee today their plans to transfer a portion of family mortgages in arrears to vulture funds, FLAC (Free Legal Advice Centres) is concerned that this will mean that families are placed at the mercy of unregulated corporate entities.

In particular, FLAC has expressed its concern that homeowners who had reached deals with their banks may not have these arrangements honored when their loans are sold to vulture funds and so has urged the government to demand that homeowners are safeguarded.

The Central Bank statistics also reveal that in the last quarter, 311 homes were taken into possession by lenders bringing the total to 7,182 since 2013.

Paul Joyce, FLAC, Senior Policy Analyst said; “Thousands of families made financial sacrifices in order to meet the restructuring arrangements with their lenders. By entering into these agreements, which were encouraged by the Central Bank, they believed that they had found a sustainable solution to their mortgage arrears.

Now with the pending sale of their debt, they are once again thrown into uncertainty and insecurity. FLAC believes that the State must now use its leverage to ensure that the restructuring deals lenders have done with their customers are honored by vulture funds. They cannot allow a situation to develop whereby agreed repayment arrangements are discarded or abandoned. This is especially pertinent in the case of 4,300 split mortgages to be sold as part of PTSB's loan sale.”

FLAC is also advocating that the write-down mechanism available under the personal insolvency legislation is advanced by both banks and policy makers in order to once and for all address the issue of mortgage debt.

Paul Joyce said; “Radical responses are required if this crisis is to be finally solved. For instance, Personal Insolvency Arrangements (PIAs) should be used to a greater extent.  In addition, FLAC believes solutions for cases where people simply can’t afford to pay, such as the mortgage-to-rent scheme, whereby the home is sold by the lender to a housing association and rented back to the occupier must be prioritized.”

As part of its work, FLAC researches, lobbies and advocates for reforms to personal debt legislation and regulations.