Government ‘washing its hands’ of mortgage problem

The Government has been accused of “washing its hands” of the problem of mortgage arrears after Ulster Bank becomes the latest bank to sell over 5,000 of its non-performing loans to a vulture fund.

Government ‘washing its hands’ of mortgage problem

Conall Ó Fátharta and Daniel McConnell

The Government has been accused of “washing its hands” of the problem of mortgage arrears after Ulster Bank becomes the latest bank to sell over 5,000 of its non-performing loans to a vulture fund.

The bank confirmed it had agreed the sale of 5,200 non-performing mortgage loans to Cerberus Capital Management.

The portfolio of loans is valued at €1.4bn and includes around 2,300 (€615m) mortgages relating to private homes and a further 2,900 (€740m) loans dealing with buy to let properties. Ulster Bank said the buy-to-let mortgages have been in arrears for, on average 34 months and have average arrears of €32,000.

The private homes included in the sale have been in arrears for an average of 83 months with average arrears of €61,000.

Ulster Bank confirmed the portfolio does not contain any performing home loans or any home loans in a restructuring arrangement.

It will be contacting affected customers and giving 90 days’ notice of the sale instead of the 60 days it was required to provide.

Fianna Fáil finance spokesman Michael McGrath said the sale was another example of an Irish bank “outsourcing its dirty work to a US vulture fund” and accused the Government of “washing its hands” of the mortgage arrears problem.

The opposition TD said it was hard to see many of these mortgage holders managing to negotiate a restructuring solution with the bank and that Ulster Bank needed to clarify whether the mortgages were being purchased by a regulated or unregulated entity.

The sale again underlines the abject failure of government to put in place a safety net in the form of a properly functioning mortgage to rent scheme for borrowers where a mortgage restructure is deemed not possible,” he said.

Responding to the sale, the Department of Finance said it has always been a Government priority that all mortgage holders maintain their full contractual rights, regardless of the owner of the loan.

It also said the Government is not blocking a private members bill put down by Mr McGrath, despite concerns with its contents, particularly about how to target so-called vulture funds.

We have worked closely with the Deputy McGrath to make the bill more effective,” the department said.

The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2018 was considered by the select committee on July 12.

“Report stage will be taken after the summer recess. It is of the upmost importance that we remember that the protections which borrowers enjoyed prior to the sale of their loan do not change after the loan is sold. Their rights and obligations remain the same,” a department spokesman said.

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