Expert: Lots of vulture offers but no mortgage refinancing to secure deals

Vulture funds will offer many more people write-downs in the value of mortgages but few borrowers will benefit because their arrears will prevent them cutting refinance deals with any new lender, a leading expert has said.

Michael Dowling, chair of the mortgage committee at the Irish Brokers’ Association, said vulture funds who bought billions worth of distressed mortgage loans at heavily discounted rates in recent years were now looking to cash in on increased levels of property values by offering deals to borrowers. Citing a letter received by one of his clients, Mr Dowling said Tanager, a unit of equity fund Apollo, had offered a discount of 40% from the mortgage debt.

However, few borrowers would be able to refinance their loans with the small roster of Irish lenders that survived the shake-out of the financial crisis because lenders won’t take on borrowers with arrears.

He said one client on a €310,000 mortgage had been offered a write-off worth €123,000 from her loan but that with arrears no bank was going to refinance the loan. Vulture funds were seeking to sell up tracker mortgages because as much 20 basis points of the margin of up to 1% they earn on tracker rates is paid over to service providers which manage the loans on their behalf. Irish banks would only refinance loans which are performing, he said.

Finance Minister Michael Noonan said he welcomed news that a property fund was offering a discount of 40%. “But of course, the balance then might attract a higher interest rate, so people would be very well advised to take advice and do the full sum before they decide whether to opt for it or not,” he told reporters.

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