Balance on €143k subprime loan rose to €1.1m

A subprime lender has been told there are issues to be determined after the balance due on a €143,000 loan rose to more than €1.1m in less than 10 years.

The lender, Home Funding Corporation (HFC), was seeking to repossess a family home in Kerry which had been put up as security for a loan in 2004.

At a sitting in Tralee, Kerry County Registrar Padraig Burke said he could not grant the order yesterday as important issues had emerged which the company needed to clarify.

Mr Burke said the HFC’s principal, Richard Ashken, rejected that it was the subject of a confiscation order, but that Mr Grogan had raised serious issues which would likely have to be heard at trial.

He said the borrower had drawn down €100,000 in July 2004, but in April 2005 he was given another €43,000 even though he was unable to repay the first tranche.

The lender had not sought to seize the property until February 2014 which, the registrar said, raised doubts about the statute of limitations, because no repayments had been made since 2006.

Mr Burke also said the mortgage could be deemed invalid altogether if the company was not able to show the consent of the borrower’s wife was got, in line with the legislation protecting family homes.

The registrar adjourned the case for two months to allow HFC to set out its case and show the court what type of financial institution it considered itself to be, as this would govern what laws would be taken into account. Mr Burke also said the interest rate of 28.17% appeared to be “extremely high at the time” given that it applied to the first and second loan.

The borrower was represented in court by Dublin-based insolvency practitioner Michael Grogan. Mr Grogan sought a longer adjournment because he said he believed the company had been the subject of a confiscation order in Britain and he was awaiting papers from the Crown Court to support this.

Earlier, the registrar had granted three possession orders in different cases.

In one case, a home in north Kerry was the subject of a €28,000 mortgage which had repayments of €126 a month.

No repayments had been made since April 2009 and the balance due was €32,554, which included arrears of €9,071.

Mr Burke said the repayments were not large, even in the context of social welfare rates, so he granted the order.

However, in two cases he refused to grant an order in favour of the lender because the banks involved had not produced proper documentation to show proof of service.