More than 3,000 home owners to be affected, plus 400 buy-to-let loans
More than 3,000 home owners, who owe Ulster Bank €900 million, face the prospect of their mortgages being sold to a vulture fund.
The bank signalled late in 2018 that it intended selling boom-era home loans where borrowers are several years in arrears. The bank confirmed on Tuesday that it is selling 3,200 owner-occupier mortgages, where it loaned €810 million to people to buy their own homes. In addition the lender is offering for sale 400 buy-to-let mortgages, where it loaned €90 million to people to buy properties that they rented to others.
Ulster Bank’s figures show that the average owner-occupier involved owes arrears of €33,000 and is 58 months behind with repayments. The buy-to-let customers have fallen 41 months behind and owe €36,000 in arrears on average.
The bank is likely to sell the loans for less than the €900 million owed, but the borrowers will still be liable to repay the full amount to any buyer.
It is thought a “vulture fund”, that is an investor which buys debts or other assets in financial difficulty at a discount, could purchase the mortgages.
US company Cerberus, which over the past five years has bought Irish property debts on which more than €20 billion was due, has purchased several tranches of troubled loans from Ulster Bank.
Fianna Fáil finance spokesman Michael McGrath TD, argued that 3,600 homeowners faced “uncertain futures” as a result of Ulster Bank’s move.
“By selling the loans in this fashion, the bank is taking the easy way out and has demonstrated little regard for the long-term welfare of its customers,” he said.
Ulster Bank said that the borrowers have had multiple “forbearance arrangements” where the lender agreed to cut loan repayments while borrowers dealt with financial difficulties.
It is understood that these generally involved agreeing that the borrowers paid only the interest due on their loans every month for a set period of time. The owner-occupiers involved have typically had five such arrangements, while the buy-to-let clients have had three.
Ulster Bank said that it only included the loans against customers’ homes after concentrated efforts to ensure that borrowers with difficulties were given every opportunity to agree “sustainable solutions” allowing them to stay in a house they could afford.
“For all of these customers, the continued extension of forbearance cannot unfortunately be maintained,” the bank said. The bank pointed out that it was obliged to cut the level of home loans in serious arrears on its balance sheet.
“For mortgages that are not sustainable, additional forbearance will not bring them back to a performing position,” the bank said.
David Hall of the Irish Mortgage Holders’ Organisation claimed that the families involved could not afford to repay their home loans and faced homelessness as a result. He accused the Government of being complicit in the sale of family homes to vulture funds. “The taxpayer, of course, is the one who keeps on paying to house families,” he added.