Irish Nationwide mortgage holders not getting a fair deal

Monday 10 February 2014 15.32
family

The McCormack family from Co Wexford are one of the 13,000 mortgage holders whose loan is to be sold

by Business Editor David Murphy

Is the State being unfair on Irish Nationwide mortgage holders?

Here is why that might be the case:

Irish Nationwide was merged with Anglo Irish Bank to become IBRC. Now the Government is liquidating IBRC and the mortgages are being sold. It is possible they will be bought by an investment fund – if not they will be transferred to Nama.

If the buyer is an unregulated fund it does not have to comply with the Central Bank’s code of conduct on mortgage arrears which protects borrowers who are behind on repayments.

An investor who buys the mortgages can volunteer to sign up to the code – but without legislation they cannot be compelled to do so. About half of the 13,250 mortgages are in arrears – so this is a big concern.

The Central Bank has written to the liquidators KPMG and the Department of Finance about the issue.

A letter seen by RTE’s Prime Time shows the Central Bank wants the existing protections to continue.

Mortgage holders are also at a disadvantage because they are being excluded from published targets imposed on banks to offer sustainable solutions to those in arrears.

The main lenders are already part of the targets but it seems unfair that a cohort of customers who are part of a State-owned lender are excluded.

A further setback for mortgage borrowers is that when they wrote to the Financial Services Ombudsman complaining about the sales process, the Ombudsman replied that restrictions set by the IBRC liquidation legislation block him from intervening.

The mortgage holders are also angered by the fact that they cannot bid for their own loans.

Liquidators KPMG are selling the loans in four large tranches at discounts in a competitive bidding process.

The portfolios are being independently valued by PriceWaterhouseCoopers. The highest bids above the independent valuation wins.

As they are being sold as part of a portfolio, mortgage-holders don’t have an opportunity to bid for their own loans. Finance Minister Michael Noonan told the Dáil last month it would be “impractical” to sell the mortgages individually.

However, the liquidator has decided a small number of commercial loans could be sold on their own.

As a result, TV3 has bought back its borrowings from the liquidators in a deal which saw €80m wiped off its debts.

US investment group Apollo has bought a €180m IBRC loan issued to Arnotts for around €41m.

Denis O’Brien, who had been a minority shareholder in Topaz, refinanced part of the petrol retailer’s borrowings of €205m with a €150m bank loan. So he bought the Topaz loan at a 27% discount and will now control the group.

The mortgage holders believe they should be given the opportunity to enter a competitive bidding process for their own loans.

They say if they are being sold by the State at a discount the owners of the homes should have an opportunity to buy them.

The Government may argue that this is impractical. However, if some big players have been able to bid for their borrowings, but ordinary people are being denied the same opportunity.

The Irish Nationwide report will be broadcast at 10.35pm tonight.

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