Residential Mortgage Arrears, Restructures and Repossessions


#3821

Seems a lot like a 1% I/O mortgage.


#3822

These sweetheart deals are not available unless you happened to take out a mortgage from an Irish government owned bank. If you had a mortgage with BOI or Ulster or the other foreign lenders you are disadvantaged here. It is hard to believe these arrangements are constitutional or not an abuse of market/competition regulations.


#3823

Hall also said that this was quids in for the taxpayer as a repossession inevitably meant emergency accomodation at vast expense!

He also said the arrears rate on AHB tenancies was 2%. Seems very hard to credit that a quarter of DCC tenancies are in arrears of three months or more.


#3824

Not really - the system is selective for people who have difficulty renting in the private sector - people who just don’t earn enough money to keep their heads above water, people with poor money management skills (poor education, mental health, alcohol and drug issues) as well as a proportion of chancers who believe they are unlikely to get caught and criminals (who can’t show any income in case questions are asked - remember the General lived all his life in a Council House).


#3825

Sorry. I left out a word.

I mean very hard to believe AHBs have a 2% arrears rate **given ** DCC are at a quarter.

PS: The general paid cash for a house in Rathgar!


#3826

I’ll never get my head around write-offs in situations like this but I suppose Shoreline bought it for such a discount from IBRC (i.e. Irish citizens), that they are still making a tidy sum and don’t need the hassle of pursuing this to the end.

independent.ie/irish-news/c … 03534.html


#3827

Permanent TSB triples size of non-performing mortgages sale to €4bn

irishtimes.com/business/fin … -1.3392050


#3828

rte.ie/news/business/2018/0219/941756-vulture-funds/

This is now a matter where Fianna Fail with David Hall’s group lurking in the background also want to force Banks such as BOI which is not Government owned and Ulster Bank which is owned by the British to dance to their tune and write down mortgage debts. They have implemented their write down policies in PTSB to date, as it was the largest Mortgage book in the country and government owned. But how can you have a PTSB customer benefiting and not an Ulster/BOI one? Just because the customer happened to pick that particular Mortgage provider at the time. In the case of Ulster (probably 2nd or 3rd largest Mortgage Book) you are also asking British taxpayers to fund the write off. Why should Irish mortgages get written off and not extend this to UK mortgages?, so you could have a contagion of David Hall economics outside of Ireland, populist for those seeking write downs, but causing chaos through the Banking systems. Eventually someone shouts stop.


#3829

Hall just finished a rant on SOR show on Radio 1 on this subject. He was even more excitable/agressive than normal


#3830

It seems from the Irish Times article above it’s Lloyds who are selling a portfolio of €5bn - which is the old Bank of Scotland/Halifax book. They are now out of UK Govt ownership, but the same still applies. Why does Paddy get a deal while the British either pay their mortgages or they are out. Freeing up the property for the demand that is clearly out there now.


#3831

PDH mortgages held by unregulated loan owners

economic-incentives.blogspot.ie/ … -loan.html


#3832

I’ll bite.
If they are in arrears, how can they afford to buy their own loan, even with discount?


#3833

He’s also missing the point.

By all accounts funds are much easier to cut a deal with than the banks if you can find the money down the back of the sofa.

They don’t have a long-term perspective, are less worried about moral hazard, and have already purchased the loan at a big discount (no loss aversion.)


#3834

He’s also missing the point on another aspect, as was Stephen Donnelly (who should know better) who has previously pushed a similar argument. Donnelly’s argument was along the lines of “if the big bad vulture fund is allowed to buy a portfolio of loans at a 50% discount then the individual borrowers should first be offered the chance to buy at a 50% discount”. This ignores the fact that the purchaser of a loan book is anticipating a range of outcomes across the loan book. Some loans will be completely irrecoverable, some will realise 100%, and most will be somewhere in between. The purchaser will estimate the average return across the loan book and then accordingly with a margin built in. Maybe bidding at 50% if it expects to achieve a 65% recovery rate for example. If individual borrowers are permitted to cherry pick their own loans at 50% then the ones in a position to avail of that are most likely to be the cohort who can actually afford to repay 65%-100%. So if a load of those loans are removed from the portfolio then the average recovery rate on what remains is going to fall drastically and the purchaser will no longer be willing to pay 50%.


#3835

Donnelly knows only too well how this stuff works. But he’s in FF now so has to walk the walk


#3836

Front page of tomorrow’s edition of The Tmes has a headline story about €400m of arrears on Govt backed home loans


#3837

This is an intriguing issue but I’ve only glanced at snippets of the media reporting.

Pascal Donohue was on the RTE radio news at 1. He is clearly scared of the uproar about this. From FG’s perspective you could see their thinking was, ‘we instructed Nama and the banks to sell loads of commercial loans and assets and blocks of apartments to foreign funds, this will be no different’. But it is a bit like Enda congratuling himself on seeing off the Troika and then a few months later people being told they would be paying 500 euro per annum + for water. FG already announced that they had brought about “the recovery” and that we should vote for them to “keep it going”. Throwing mortgage holders to foreign vultures now is completely incongruent with this.

Then you have David Hall going nuts. He knows that foreign funds don’t give him any respect. But you have Ross Maguire saying in the Irish Times saying that this is a good thing as foreign funds are here to do deals and give quick write downs.

I heard snatches of the last two late debates
rte.ie/radio1/the-late-debate/podcasts/
Michael Fitzmaurice TD described the loan servicing companies appointed by the foreign funds as ‘absolute scumbags’ or words to that effect. He’d been to Belfast to meet them and he didn’t like their carry on in how demanding they were to borrowers. He’s not used to this because he hasn’t encountered a debt collector who doesn’t care about brand image or reputation. An angry TD can get somewhere with an Irish bank, a loan servicer doesn’t note it on the file because he knows the loan owners don’t give a damn.

I can’t help thinking that a lot of the anger about this is really existential angst by the political and chattering class. They are forced to come to terms with the realisation that if you won’t allow Irish banks to rigorously collect debts then they have to sell them to someone who will. Someone on tonight’s late debate was telling the story of their dealings with a loan buyer and how they’ll be going bankrupt. The net effect of the Central Banks moratorium on repossessions, failure to instantly transpose UK insolvency law into Irish law in 2009, and failure to collect debts since is that there are people who should have gone bankrupt in 2009 who will only go bankrupt in 2019. A massive waste of human potential.

The massive failure of PTSB’s upper management team (even with their hands tied) is what strikes me. They are just so shockingly bad at collecting debts.


#3838

There are no strategic defaults just defaulters with a few bob in saving :laughing:


#3839

Exactly.
What does that say about FF and our greater political process ?


#3840

Great post. This part in particular resonates.
Someone close to me has had a mortgage that has been non-performing. This person lost their job and retrained in a different field. They used payment holidays and then built up arrears too. Ended up as accidental landlord after moving to Dublin for work.

House is still cashflow negative every month, still in negative equity after capitalising the arrears. Owner would happily sell if it would break even.
I can’t for the life of me see the point of having held onto the millstone for the past several years. It’s been a financial drain, plus the hassle of dealing with renting it out. The owner had no other significant assets that would have been affected. As for creditworthiness, individual involved can’t even get a credit card with a small limit currently because arrears are still on their record even though now capitalised.

Had he done something along the lines of UK bankruptcy in 2009 he’d have no negative equity gaff, no landlord hassles, no monthly cash drain into the mortgage, and probably a clean credit report by now. Madness.