A former building society branch manager has said he would "absolutely not" have recommended granting a €4 million mortgage to former solicitor Michael Lynn for a house in Howth, if he thought there was another mortgage on the same property.
Mark Mulcahy, the former branch manager of Irish Nationwide Building Society in Dún Laoghaire, Co Dublin was giving evidence at Mr Lynn's trial for the theft of almost €30 million.
Mr Lynn has pleaded not guilty to 21 counts of theft from seven financial institutions in 2006 and 2007 by applying for multiple mortgages on the same properties.
Mr Mulcahy recommended to the building society's headquarters that Mr Lynn and his wife Brid Murphy's application for a mortgage of just over €4 million to buy Glenlion House in Howth for €5.5 million should be approved.
He told Dublin Circuit Criminal Court he understood the purpose of the mortgage was for the couple to purchase the house as their home and agreed that, as far as he was aware, this was to be the sole mortgage on the property.
Mr Mulcahy said branch managers could not authorise the granting of a mortgage and all documentation had to be sent to the head office for approval.
A memo sent to head office by the branch has been described in evidence as a "ringing endorsement" of Mr Lynn’s application.
It outlined that he had an immaculate repayment record on his previous borrowings, that he had made a profit of over €1 million the previous year and assets valued at more than €45 million.
It fully recommended the granting of the mortgage.
Mr Mulcahy said he would "absolutely not" have made this recommendation if he thought there was another mortgage on the same property.
It is the prosecution’s case that Mr Lynn took out three mortgages on Glenlion House, totalling more than €11 million.
Mr Mulcahy said he had been introduced to Mr Lynn by a broker as a "young progressive solicitor" who had started his own practice and might be a good person to meet.
He said he entered into a business relationship in the early 2000s, and dealt with his first mortgage applications for some buy-to-let properties.
Mr Mulcahy said Mr Lynn had started off small and had repaid some of these original mortgages. However, he said by 2006/2007, he had not seen him for a number of years, as Mr Lynn had outgrown him and was "doing bigger things".
He said he spoke to Mr Lynn in 2006, who told him he was buying Glenlion House as a family home and asked what Loan to Value ratio the bank would consider lending in relation to it. He said after checking, he told Mr Lynn the maximum LTV the building society would consider was 75%.
Mr Mulcahy agreed that in dealing with a mortgage application, the building society would look for a statement of affairs showing assets and liabilities, as well as proof a person’s tax affairs, were in order and audited accounts to show proof of their income.
Underwriter Olivia Greene gave evidence of dealing with the mortgage application in the head office of INBS.
She said some of the factors taken into account when considering an application were a person’s income, salary, employment, repayment history and what exposure a person had to any other banks.
If a loan was for more than €500,000, she said she had to get approval from the home loans manager, Brian Fitzgibbon or the managing director, Michael Fingleton. The court has heard this application was approved by Mr Fingleton.
She said as far as she and the building society were concerned, Mr Lynn had one mortgage with Irish Nationwide on each of the investment properties they had lent money to him for. These properties were listed on documentation as part of his mortgage application.
Ms Greene said receiving a certified statement of affairs from a borrower was important, as when it was certified by an accountancy firm, she could take it that it was "the truth".
She also told the court that she would not have advanced the money to Mr Lynn for the Howth house if there were other mortgages on the property.
The court also heard evidence about two further mortgages in Mr Lynn's name for the same house.
An employee of Bank of Scotland Ireland gave evidence that Mr Lynn spoke to him in December 2006 about getting a home loan to buy Glenlion House.
Mr Lynn was seeking a loan of €3.85m from Bank of Scotland Ireland, with whom he already had property loans of just over €10m.
Andrew Snow said Mr Lynn had been referred to him by the bank's commercial division.
The court heard Mr Lynn provided documentation to support the mortgage application showing he had assets of €39m, including properties in Portugal and Hungary.
His wife was a nurse in St Vincent's Hospital but was taking a career break to look after her ill father.
The bank agreed to lend the money to the couple on a number of conditions, including having the first and only legal charge on the house.
Mr Snow agreed the money would not have been lent if there was another charge on the property. The court heard it was a condition of the mortgage that a second charge on the property was not allowed without the prior consent of the bank.
Another condition of the mortgage was that a solicitor other than Mr Lynn himself had to be appointed to deal with the transaction.
The court heard letters purportedly signed by solicitor Fiona McAleenan were submitted to the bank setting out that she would be acting for Mr Lynn in the property transaction and undertaking to register the bank's charge over the house.
Mr Snow said on 19 April 2007, Bank of Scotland Ireland transferred €3.85m in the names of Mr Lynn and Ms Brid Murphy to buy the house.
He said the bank had since established that the undertaking to register the mortgage in favour of Bank of Scotland Ireland was not complied with and the bank suffered a loss of the entire loan.
The bank also established that another mortgage with ACC bank for the same property had also been obtained by Michael Lynn. This third mortgage was registered in October 2007.
The trial will continue on Monday.
