Irish Examiner view: Heartless investment funds going too far

How dysfunctional is a market when even those advising people in mortgage difficulties are leaving their jobs?

The role of banks in selling mortgages to investment funds merits closer examination. Picture: PA

Occasionally, the news headlines introduce a story so egregious that a few words of description become immediately synonymous with an entire set of circumstances. The €11,000 mortgage story earlier this week is a case in point.

The story detailed a homeowner having a repossession order granted against them in favour of an investment fund, despite having just €11,000 left on the mortgage. Another mortgage holder was left in a similar situation with just €6,000 left to pay.

The clear impression is that of a heartless, anonymous monolith seeking to crush an ordinary citizen, with the investment fund cast in the role of villain. That impression is hard to argue against, even for those who choose to see this as a case of the free market at work.

In such cases, the source of these stories should be credited — they came from Mabs, the national Money Advice and Budgeting Service, which is dealing with such cases at the coalface.

One Mabs representative said the sense of stress — of distress — for those directly involved with these cases is so powerful that it also has an adverse effect on the Mabs advisers who are trying to help them. Some of those advisers have already quit their jobs because of that stress.

How dysfunctional is a market when even those at one remove from its machinations — those advising people who face such judgments and proceedings — are leaving their jobs behind rather than continuing to work in this area?

The role of banks in selling mortgages to these investment funds is one which could also do with some closer examination — a throwaway line in one report cites a mortgage “sold by a bank exiting the market to a non-bank”, and is a sharp insight into just how this system operates.

There is also, of course, a shocking contrast with recent stories about high-profile individuals who have been facilitated by the banks writing off huge amounts of debt — amounts literally a thousand times larger than those mentioned in some of the cases above.

These stories reinforce the old saw that if a bank is owed €11,000, then it’s the borrower’s problem to solve — but if the borrower owes €9.5m, it’s the bank which has to find a solution.