Aoife O’Carroll didn’t party.
Back in the 2000s, as the country grappled with arriving in the first division of national economies, she was busy trying to raise young children and subsequently keep her marriage intact.
“We all partied,” former minister for finance Brian Lenihan said of those allegedly halcyon days. That vista was entirely alien to the mother of three living in the hinterland of Killarney, Co Kerry.
And despite keeping her feet firmly on the ground, despite never missing a mortgage payment on the family home, today she still finds herself at the mercy of a vulture fund as a result of the fallout from the crash in 2008.
Fifteen years later, her children now reared, she is still living in fear of a debt that was not of her making but which hangs over her life like a black cloud.
She is, like thousands of others, what financial personnel are now describing as a “mortgage prisoner”.
“You can do everything you’re supposed to do, never miss a payment, attempt to resolve directly with them and still they have this hold over you,” she says of the vulture fund.
“There is also a stigma attached to being tied to one of these funds this far on. You feel as if some think you’re one of those from that time who were bleeding the country dry, the kind of people who went mental during the boom and bought houses all over the place or abroad. I never did any of that.
Aoife was expecting her third child when she and her husband moved into a former farmhouse in Kilcummin, a rural parish outside Killarney, in 2004.
Her husband Rory was handy so he managed to do it up into a spacious family home, perfectly fashioned for the five of them. He was also self employed and didn’t have a pension.
On advice, the couple decided to buy an apartment in Killorglin to rent out as a form of pension. The practice was, and remains, common among a large cohort of people to make provision for their retirement. The mortgage was taken out with Irish Nationwide, the building society with which the couple already had the original loan.
Other pressures were exercised on the couple over the following years leading to breakdown of the marriage. By 2007, they decided they could no longer co-habit. They came to an arrangement that Rory would move into Killarney, and he could buy a place for himself on the back of the security of the farmhouse. Aoife would continue to live there with the children and she would take full responsibility to meet the mortgage payments on the home.
The following year, the ship of state foundered on the rocks of both global and home made financial catastrophes. The estranged couple found themselves under severe financial hardship and the value of the properties they had bought went through the floor.
Battling against the odds, Aoife continued to uphold her side of the bargain. The monthly mortgage was serviced without fail, despite her now operating effectively as a single mother with three young children.
The bigger picture of mortgage and banking restructure was rapidly changing. After nationalising Anglo Irish Bank, a decision was taken in government to do likewise with Irish Nationwide, such was the gaping hole in its finances.
The building society was rolled into the nationalised bank and the new entity renamed, Irish Bank Resolution Corporation (IBRC). By then, proceedings to repossess the farmhouse were underway.
Aoife’s ex-husband had not been in a position to maintain payments on the other two properties so the bank was coming after the security.
“When it started I thought it was for the house in Killarney,” she says. “But then it became obvious they wanted to take everything. I was stunned. It was all a very fraught time, especially with money.
"My focus was on trying to make sure the kids weren’t affected, trying to protect them and just pay the mortgage and then I discover that our home could be gone from under us. Looking back on it, I don’t know how I coped but I was lucky in the solicitor I had, Pat Sheehan. He was really great.”
The process came to a head in December 2011. Following investigation on behalf of Aoife, her solicitor discovered that the building society originally had made a mistake in how the loan was catagorised as commercial rather than residential and therefore the IBRC was not legally likely to win repossession of the family home.
The stress was temporarily relieved. An agreement was reached with IBRC that a representative would go to Kerry to engage with Aoife and her ex-husband to set out how exactly the outstanding debt could be addressed.
“We assumed that within a short period somebody would come down and we could come to an agreement,” Aoife remembers.
“We were told to get rid of the Killorglin and Killarney properties and we thought that if we sold those they would take whatever money from the sale and come to an agreement with my ex and I could continue paying the mortgage on the family home.”
Nobody came. Over the following two years, the couple got rid of the properties in Killarney and Killorglin, yielding a combined total of €150,000 which went towards the debt.
Still, no effort was made by the IBRC to engage with its creditors on how to sort things out. Instead, the IBRC contacted Aoife every so often, often through different agents, as if the arrangement had not been in place. In May 2013, she got a call telling her the family home was about to be repossessed. She went to her solicitor distraught at this turn of events. He wrote to the IBRC and assured his client that they were out of order.
“It is unacceptable that somebody on a phone would glibly advise you that they can repossess your property and to cause you distress and anxiety which necessitated you in calling to me last Friday,” Patrick Sheehan wrote to Aoife.
“A wingman was meant to be appointed to the file to come to Kerry to deal directly with matters at hand. This never took place. As you can see I have demanded same. I have also left IBRC in no doubt that if they wish to deal with this matter in the glib manner in which they are dealing with it I will refer matters to the Central Bank and/or to the financial regulator.”
IBRC may had copped on after that, but pretty soon it was no longer the bank’s problem. The following year, Aoife's loan was sold to a vulture fund, Pepper Finance. Over this period thousands of homeowners found themselves in the position where their original mortgage was now owned by an entity with which they had no relationship.
The Irish banks, both IBRC and those which remained, at least nominally, in the private sector, wanted rid of non-performing loans, some of which were bundled up with those which were being serviced, and sold onto the vultures. In Aoife’s case the mortgage on the family home was working out fine, but the loans taken out on the other two properties were in big trouble.
An estimated 113,000 mortgage holders thus saw their loans transferred from the bank with whom they had made the original transaction to a vulture fund operating in a different realm.
The loans were purchased cheaply because the banks wanted to clear its books. The exact level of discounts awarded to the vultures has been a closely guarded secret, but an Oireachtas committee heard last month that in two instances which arrived in court, it was revealed that the discount was of the order of 50%.
Over the last 10 years it has repeatedly been pointed out that if mortgage holders who took out their loans during the Celtic Tiger years had received that level of discount themselves they would have been able to service their debts.
Yet it was the vultures which benefited from the expedient approach to loans, not the borrowers.
“We weren’t allowed to bid on our own mortgages,” she says. “Nobody was told that these mortgages were being bought or how much the debt was bought for. In my case, once they bought the loans they could have come to me and said you can pay off your mortgage on the house and leave it at that. They would still have made a handsome profit on the whole debt. It really kills me that I don’t even know how much they bought it for.”
Despite that, Aoife continued to make her mortgage repayments on the family home. Repeated efforts to organise a meeting with Pepper to sort out the debt came to nothing. On one occasion an agent attended a meeting at Patrick Sheehan’s office but as far as Aoife could see it was a box-ticking exercise. Meanwhile, the arrears on the loans for the two properties — by now long sold — went from €46,725 in 2014 to €233,137 last year.
Those who have, over the last decade, found themselves in similar situations to Aoife O’Carroll are routinely described by financial advisers as “mortgage prisoners”. This was the term used an Oireachtas Finance Committee earlier this month by mortgage adviser David Hall.
“Many mortgage customers are now mortgage prisoners,” he told the politicians. “Their mortgages having been sold involuntarily to vulture funds, they are now unable to get a fair mortgage or interest rates and have no control, option to move or option of a fixed-rate mortgage…Vulture funds do not provide restructuring arrangements in the same way as a bank.
"One cannot get certain restructuring arrangements such as a split mortgage or a fixed-rate mortgage and other such products. Vulture funds are less inclined to deal with insolvency arrangements. There is no ongoing relationship and no top-up loans available. It is a whole host of small things to individuals that are big things to customers.”
A spokesman for Pepper Finance said it could not comment on individual cases but he said that Pepper had “a strong track record” in helping people resolve their financial difficulties.
“The Pepper team is focused on, and committed to working with customers who may have previously been in arrears or who now find themselves under pressure and require assistance, to find the best solutions appropriate to their individual circumstances and to stop them going into arrears on their mortgage.”
For Aoife O’Carroll, the term “mortgage prisoner” rings true.
“You have to keep filling out forms every so often from Pepper saying how much you’re spending on a monthly basis,” she says. “If you won a tenner on the prize bonds you would think to yourself: ‘I better hide this in case they find out about it.’ It’s no way to live your life.”
She went down the personal insolvency route, consulting a practitioner who came up with a plan in which she made a monthly payment above and beyond the mortgage payment, which also included a monthly stipend for the practitioner himself.
After nearly a year of this she complained to the Financial Ombudsman who upheld her complaint and made an award against the practitioner. Her experience does not reflect the practices or integrity of most practitioners but it does illustrate how those in a vulnerable position can be prey to unscrupulous forces.
If she had her way Aoife would sell her home now and downsize. Her children are grown and have flown the coop. But that option is not open to her without Pepper agreeing at some point to reach some form or resolution.
“There is no legal obligation on them to come to a resolution,” she says. “They are within their rights. For me, I have all the disadvantages of owning the house but none of the advantages. I just don’t have the security of knowing or being able to act as I would if it was my own house despite paying for it for nearly 20 years now.
"Something is wrong somewhere with how this kind of thing has been allowed to go on and I’m very sure I’m not the only one in this position.”