Deal with the devil

INVESTIGATORS from the Central Bank have started to interview distressed mortgage holders as part of a probe into the sales practices used by mortgage brokers during the boom.

In an unprecedented move, officials from the bank’s enforcement section are calling to the homes of those in arrears to take detailed statements on how loans were secured.

These could be used in any court action or inquiry against the mortgage seller.

Documents seen by the Irish Examiner show that, as part of the probe, the Central Bank has examined mortgage and loan forms drawn up by the Irish Mortgage Corporation (IMC).

They state: “The Central Bank of Ireland regulates IMC as a mortgage intermediary and is currently looking at the sales process used by IMC in relation to the sale of mortgages to clients of IMC.”

One IMC client, who has given a detailed statement to the Central Bank investigators, said she had signed a “deal with the devil” and was approved for a €300,000 loan with her husband despite the fact that both were on social welfare.

She said the couple should never have been approved for the remortgage of their Dublin home by IMC as her husband only operated a fruit and veg stall.

Her husband took his own life last year and his widow has told the Central Bank investigators that the pressure over trying to repay the loan was a “major contribution towards his death”.

The widow has agreed to participate in any inquiry or court proceedings.

Fine Gael TD Paschal Donohoe met the widow and her family yesterday and said they were the victims of bad lending decisions and a lack of regulation.

“I’ve met this family and seen the tragic consequences of bad banking,” said Mr Donohoe.

“They have been broken apart by terrible lending decisions and lack of regulation.

“It’s the single saddest case I’ve ever come across and makes me determined more than ever that we put in place a framework that will stop this happening to other homes and families.”

A Government-commissioned report examining relief measures for troubled borrowers will be discussed by Cabinet ministers today and is expected to be published in the near future.

In a statement, IMC managing director Derek Maguire confirmed that Central Bank officials had visited IMC offices and that the company had “dealt with all queries raised”.

He said the company could not answer other questions because of data protection laws, but added: “All complaints raised by consumers are handled in accordance with the Central Bank’s consumer protection code and IMC is fully compliant in this regard.”

The Central Bank declined to comment on the actions of its enforcement section.

New Beginning, a support group for families fighting the repossession of their home, said it was aware of other cases where borrowers with financial troubles had been given excessive loans.

Co-founder David Hall said: “It is unacceptable that families are living in fear from lending institutions.”