Paying Off Pepper

Has anyone got any experience in clearing a mortgage with Pepper?

A long story short, the mortgage is years in arrears and the borrower has not engaged with Pepper.

I spoke to Pepper on the borrowers behalf with a view to clearing the debt. Pepper have said 'make us an offer'

So obviously they did not pay 100c in the Euro for the debt when they bought it. Has anyone got any idea of what they will accept to clear the debt?
If Pepper paid 30c in the Euro and I offer them 40c they will be in profit and be happy.

Has anyone had experience of paying them off and what % of the debt did they accept?

I think the first thing is to think the way they might do.

Whatever they paid is one thing except you don't know that.

What you would know is the value of the property and the borrowings. They will hardly accept 40c if the asset value to borrowings is a great deal higher.

You will know the borrowers circumstances.

It needs to be realistic and the borrower making some sacrifice.

Go in with your facts at your finger tips and negotiate.

(Ask BB if he knows what was paid for the particular tranche).

It's impossible to know.

How much is the balance on the mortgage and how much is the house worth?

What age is the borrower?

I would not get your hopes up too much.

If the house is in deep negative equity, they probably will be flexible.
If there is equity in the property, I doubt that they will give much of a discount.

But if you offer them 40 cents, I think that they will just come back and say no. I don't think that they will make a counter offer.

Brendan

Debt is about 15% of the property value. (60k on 400k home) Borrower is retirement age, hence they can't pay any longer. Pepper have already said they would accept 50k (their suggestion not mine) but 'are willing to listen to offers'.

I can play silly games with Pepper and string it our for years. I was formerly a distressed debt trader so I know how the game works.

I know they will cut a deal as it is just less painful for them and avoids years of admin costs etc, so they can just take a pay off and book a profit. I am trying to gauge how much they paid for their portfolio from KBC and get any idea where their pain level lies. If anyone has any idea at all it would be very helpful.

If I were Pepper, I would just leave it and let the interest accumulate until the owner dies.

Interest rates are high so it would be profitable.

If it is not a tracker mortgage, I would just up the rate to 10% until the owner realised that he and his estate would be better off paying the mortgage or getting a Life Loan from Seniors Money.

But I don't think that they do that calculation.

No wonder interest rates have been the highest in the eurozone for years.

Brendan

I agree if I was a long term investor who owned this loan then I would be happy waiting until the owner dies as ultimately I will get paid 100 cents

However Pepper are a fund who want profit now so they get their bonus now. I can't see them happily waiting 20 years to book their profit. The guys who bought the loans will be long gone by then and never see the profit booked.

The absolute level of interest rates isn't really an issue. All that matters is Pepper's cost of funds relative to interest rate. In fact higher rates will hurt Pepper as their investors will want a higher return.

Yes I totally agree that their is a reason why Irish interest rates are the highest as the quality of the collateral is quite poor. It take years to repossess it, if you ever can. Ultimately the Irish consumer pays for this protection in higher mortgage rates and also as the owners of the banks it reduced the value of the loan books sold by the banks the tax payer now owns

I know internally some Irish banks would value it sub 50 cents based on the level of non co-operation from the borrower and arrears built up. However the LTV being so low would then I think increase that quite a lot

How much said:

Debt is about 15% of the property value. (60k on 400k home) Borrower is retirement age, hence they can't pay any longer. Pepper have already said they would accept 50k (their suggestion not mine) but 'are willing to listen to offers'.

I can play silly games with Pepper and string it our for years. I was formerly a distressed debt trader so I know how the game works.

I know they will cut a deal as it is just less painful for them and avoids years of admin costs etc, so they can just take a pay off and book a profit. I am trying to gauge how much they paid for their portfolio from KBC and get any idea where their pain level lies. If anyone has any idea at all it would be very helpful.

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Agree would be worth considering the Seniors Money Loan and maybe also talking to a broker. They have straight forward loan calculator on their website. Seems ideal for the situation you outlined.

CoolHand said:

Agree would be worth considering the Seniors Money Loan and maybe also talking to a broker. They have straight forward loan calculator on their website. Seems ideal for the situation you outlined.

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Thanks I just Googled the Seniors Money Loan... I didn't know this existed in Ireland. Thanks a million

I live abroad and last time (many years ago) I checked this wan't available in Ireland I seem to remember there being issues of whether it was legal. I will still try and get a discount from Pepper. I was effectively going to lend to the borrower on these terms (equity release) but that was as a last resort as really I don't want to as I don't like to do business with friends (but would if it means they can stay in their present home). So if they can borrow from Seniors Money then that is brilliant and cuts me off the hook

How much said:

I am trying to gauge how much they paid for their portfolio from KBC and get any idea where their pain level lies.

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This comes up from time to time and it’s simply not relevant.

They bought a portfolio of distressed assets on the basis that they would recover zero on some mortgages, 100% on others, and everything in between.

The people dealing with the loan have the job of getting the most out of the asset and they don’t care (and maybe don’t even know) what the price was.

The fact that there is so much positive equity doesn’t help your case. The loan holder could simply downsize and pay off the outstanding balance in the morning.