I issued a briefing note to the media
Briefing note by Brendan Burgess on Ulster Bank sale to Cerberus
13th August 2018
If the legal system does not allow Ulster Bank to repossess properties, politicians should not complain if the banks sells on the mortgages
· Average arrears over 4 years!
· Ulster Bank has been very flexible in dealing with borrowers in arrears – but some borrowers just don’t engage or are just unsustainable.
Some of these borrowers do need state help with their mortgage payments
· Some borrowers are in genuine financial difficulty and would get the Housing Assistance Payment if they were renting. The HAP should be adapted to help borrowers who can’t pay their full mortgage.
· In the UK, borrowers get Support for Mortgage Interest. Since April, this has been provided as a loan instead of a benefit
Mortgage rates in Ireland are 1.5% higher than the average eurozone rate because we don’t allow repossessions
· Responsible borrowers are paying the price for irresponsible borrowers.
· This costs a borrower with a mortgage of €200,000 around €250 a month more than they should be paying. That is the real scandal
There is little evidence that Vulture Funds will hound the borrowers more than the main banks
· Borrowers whose loans are sold will have the same legal protections.
· The Code of Conduct on Mortgage Arrears will continue to apply
· Lenders are prevented from taking trackers from home owners in default
· However, Cerberus may be more efficient or may be less of a soft touch in dealing with defaulters
· But if they try to repossess a family home, they will face the same extremely difficult legal system
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Banks are three times more likely to take legal action than vulture funds
· Borrowers in negative equity are much more likely to get a write off from a vulture fund
Irish borrowers are the best protected in the World
· Irish banks have restructured over 100,000 mortgages , while fewer than 10,000 borrowers have lost their homes through voluntary sale or repossession
· The Code of Conduct on Mortgage Arrears gives every borrower a great opportunity to have their mortgage rescheduled
· The Personal Insolvency Arrangements means that many borrowers can have their negative equity written off. In some cases, the banks have imposed deals on banks which were outrageously generous to the borrowers.
In May 2016, Ulster Bank sold 900 homes which were already in the courts
· These were the non-engaging borrowers
· 95% were over 2 years in arrears
· Part of a portfolio sold to Cerberus
About Cerberus aka Promontoria (Pluto) Ltd
· Have already bought mortgages from Ulster Bank, Danske and Stepstone
· Loans will probably be managed by [broken link removed] ( formerly Capita )
· Cerberus is the three headed dog which guards the entrance to the Underworld