Ulster Bank has confirmed that over 200 mortgages classed as non-performing, but which were subject to the tracker mortgage examination, have been sold on to investment funds and debt servicing agents.
At the Oireachtas finance committee two weeks ago, the bank's chief executive Jane Howard was asked by Sinn Féin’s finance spokesman, Pearse Doherty, whether loans belonging to victims of the tracker mortgage scandal had been sold on to so-called "vulture funds".
Ms Howard was unable to provide an answer at the time, but in a subsequent response by letter to the committee she said 205 non-performing tracker mortgages that had been impacted by the tracker affair and subsequently remediated, had been sold.
She said 128 of these were buy-to-let mortgages and 77 were for private homes.
It is not clear, however, how many of the 205 mortgages were classed as non-performing purely as a consequence of the holders’ mistreatment by the bank or whether other factors were also at play.
Borrowers with non-performing mortgages owned or managed by investment funds and servicing firms are currently in the spotlight because in many cases they are being hit hard by ECB interest rate increases.
That’s because such firms don’t tend to offer fixed rate mortgages.
As a result, the mortgage holders are stuck with variable and tracker rates which continue to increase with ECB rates, because their poor credit ratings mean they cannot move their loans to other lenders.
Some are now paying variable interest rates of up to 7%.
It is estimated that over 100,000 mortgages have been sold on to such funds, with around a third of those facing escalating repayments.
The Oireachtas finance committee has written to the other main banks to find out how many of their tracker customers who were subject to the tracker mortgage examination have also been sold onto funds and servicing firms.
The Central Bank Governor, Gabriel Makhlouf, recently said that banks and financial institutions need 'to be proactive in supporting their customers' as interest rates go up.
He said the regulator doesn’t have a role in approving rates charged by lenders but it does expect financial firms to have arrangements in place to deal with customers in or facing arrears.
