Homeowner with €11k left to pay on mortgage hit with repossession order

The Oireachtas finance committee was hearing from Mabs and the Free Legal Advice Centres on concerns surrounding investment funds, or vulture funds. Picture: Denis Minihane

A homeowner with just €11,000 left to pay on their mortgage, and who was making repayments, had a repossession order granted against them in favour of an investment fund, an Oireachtas committee has heard.

Another mortgage holder, with just €6,000 left to pay, had a similar order granted against them in court, Money and Budgeting Advice Service (Mabs) business manager Dermot Sreenan said.

"The key component of both of these was the person wasn’t present in the court,” he said. 

Mr Sreenan said such court proceedings are so stressful for all concerned that even some Mabs staff have had to leave because they “just took their caseload home with them”.

The Oireachtas finance committee was hearing from Mabs and the Free Legal Advice Centres (Flac) on concerns surrounding investment funds, or vulture funds.

Flac chief executive Eilis Barry said: “The sale of loans, whether impaired or not, is now endemic in the financial system.

“The principal area of concern with funds, as ever, remains the fate of family home mortgages that have been in arrears over lengthy periods of time, many of which are now owned by funds and are also in the repossession process.” 

According to Central Bank figures, close to 56% of loans in arrears are now owned by an investment fund — a figure that has grown consistently in recent years.

Ms Barry said the cost-of-living crisis and interest rate hikes are likely to cause a spike in new arrears cases. She said investment funds now own nearly seven in every 10 accounts in the repossession process.

However, in 2021, 80% of the repossession proceedings resolved did not result in a possession order.

“The attrition, distress, cost and economic loss that results from lengthy repossession cases is both regrettable and unnecessary,” she said.

Mr Sreenan cited one case of a client whose mortgage loan was sold by one of the banks exiting the market to a non-bank. In a letter, the fund told the mortgage holder to apply for a mortgage-to-rent and they were given 21 days to respond.

He said it was “appalling” that the way the letter was worded implied the homeowner had no options.

Some of these investment funds lacked "meaningful engagement”, he said, and he was concerned rising interest rates would put more mortgage holders into arrears.

“For everyone who gets a letter, I think the message is you need to be in contact with Mabs because nobody should be walking into a courtroom for the repossession of their home without Mabs present,” he said.