@Pepper customers - you need to get together to challenge the rates you are being charged

[Kingoftench]

Louth man fears eviction after mortgage transfers to new bank

Jimmy Crosby's mortgage repayments have almost doubled in recent months.

www.lmfm.ie

 

[caughtinatrap]

Another letter today.....this is a helpful thread for those who need help making a challenge. Reading with interest. Thank you.

 

[Brendan Burgess]

yes but its pointless if one of you doesnt coordinate the group and if no one is prepared to go public.

Brendan

 

[Unionk]

I wrote to Deputy Doherty after he raised this issue in the Dáil. Please see below response, if anyone else is interest I suggest you contact his office.

As you may be aware, Deputy Doherty has raised this issue in the Dáil, with borrowers such as yourself seeing more sudden and higher interest rate hikes than those borrowers who are with the pillar retail banks.

RTÉ Prime Time are exploring the possibility of covering the issue of mortgage interest rates charged by vulture funds, and have approached Deputy Doherty and asked if there was anyone who would be open to having a conversation about potentially contributing to their coverage.

Let me know if you would be interested or open to speaking to RTÉ Prime Time about your own experience.

 

[Paul F]

Northern Rock mortgage holders take legal action over interest rate charges

Lawyers seek compensation of at least £150m for loans sold on after lender collapsed

www.irishtimes.com

Harcus Parker has argued that these firms did not reduce the standard variable rate on these loans from 5 per cent, even though the Bank of England cut the base rate to as low as 0.1 per cent in 2020.

The case relates only to UK mortgages. But, depending on its outcome, could it have any bearing on Irish mortgages that were sold to vulture funds and that are now managed by the likes of Start and Pepper, etc?

In a November article, Charlie Weston of the Irish Independent said:

Start did not reply when asked to explain why customer rates were rising when the vulture funds that bought the mortgages, which Start services, funded them with finance as low as 1pc fixed for up to 35 years, according to the publicly available prospectuses for these transactions.

Does that make the UK and Irish cases sufficiently similar such that a case taken here might succeed (assuming the UK case succeeds)? Or is it not as simple as that?

 

[Paul F]

Microsoft job cuts: No indications yet of impact on Irish workforce, Minister says

Davos 2023: Michael McGrath to press Central Bank on ‘vulture fund’ mortgage rates of up to 7%

www.irishtimes.com

Meanwhile, Mr McGrath said he will use his first meeting as Minister for Finance with the Central Bank governor, Gabriel Makhlouf, to engage on the “concerning” issue of how holders of 100,000 mortgages sold by banks to overseas investment funds are facing above-the-odds rates of as much as 7 per cent on their loans.

A Bill published by Mr McGrath in 2016, when in opposition, aimed at giving the Central Bank the ability to cap variable rates did not progress through the Oireachtas. Mr McGrath, who took over as Minister for Finance last month, signalled, however, that he is not supportive of a Labour Party Bill introduced last summer that is similar to the one he previously championed.

 

[peemac]

Frankly, the available rates on offer from the investment funds should have mirrored the rates offered by the original lender. That would have been fair.

 

[CarrotStick]

Frankly, the available rates on offer from the investment funds should have mirrored the rates offered by the original lender. That would have been fair.

The funds will argue that the risk of default is greater with their particular customer cohort and that therefore they must charge their customers higher interest rates to negate this potential risk. This argument is specious, as the fund originally purchased these loans portfolios at a commercial discount (usually a substantial one). Most funds pay fully for the portfolio upfront and then mitigate their risk by offering covered bonds or rmbs’s to the market. Finally, these funds do not have a branch network, have less staff, pensions etc so the day to day running of their business is also a lot cheaper than a Main Street Bank, this should exert downward pressure on the interest rate that these funds charge to their customers. But hang on a second, they are called vulture funds for a reason.

peemac, what you have stated can certainly be described as being fair to the consumer.

Imagine, a PTSB variable interest rate mortgage customer is paying 3.5% and a similar borrower with an identical mortgage loan agreement that has been transferred to Pepper (for whatever reason) is being charged 7%. Hardly fair or reasonable!

 

[Brendan Burgess]

The Code of Conduct on Mortgage Arrears prohibits a lender from charging a higher rate to a customer whose mortgage is in arrears or whose mortgage has been restructured.

So ptsb could not charge 3.5% on a performing loan and 6.5% on a loan which has been restructured.

So by selling the loan to a vulture fund, this section of the CCMA becomes unenforceable.

So I would argue that Pepper is in breach of the CCMA by not offering the rates being offered by the lender who sold the loan.

Brendan

 

[CarrotStick]

The Code of Conduct on Mortgage Arrears prohibits a lender from charging a higher rate to a customer whose mortgage is in arrears or whose mortgage has been restructured.

So ptsb could not charge 3.5% on a performing loan and 6.5% on a loan which has been restructured.

So by selling the loan to a vulture fund, this section of the CCMA becomes unenforceable.

So I would argue that Pepper is in breach of the CCMA by not offering the rates being offered by the lender who sold the loan.

Brendan

I agree Brendan, but also read the exert from Chitty on Contracts. (Legal Bible on contract law) below.


Chitty on Contracts (Specific Contracts, 32nd Edition at para 38-255) has something to say on such variation clauses, it states;

“if a price variation clause gives a supplier an unlimited discretion to vary the price (a term with can for this purpose be assumed to be potentially unfair given its lack of limitation nor justification), then it would not be binding on the consumer with the result that even a moderate variation of the price (itself not in the context apparently unfair) would not be effective against the consumer: the unfairness of the term makes it “not binding” on the consumer”

Therefore, consumer borrowers should include an unfairness argument in any complaint to the FSPO or in any court action such as defending possession proceedings / summary judgment.

 

[Sally66@]

The Code of Conduct on Mortgage Arrears prohibits a lender from charging a higher rate to a customer whose mortgage is in arrears or whose mortgage has been restructured.

So ptsb could not charge 3.5% on a performing loan and 6.5% on a loan which has been restructured.

So by selling the loan to a vulture fund, this section of the CCMA becomes unenforceable.

So I would argue that Pepper is in breach of the CCMA by not offering the rates being offered by the lender who sold the loan.

Brendan

Hi Brendan. Can you point me to where in the Code it says that please? Start Mortgages are disputing this and I want to quote tthe sections back to them. Also why has regulator not come out and said this? Thanks

 

[ClubMan]

Hi Brendan. Can you point me to where in the Code it says that please? Start Mortgages are disputing this and I want to quote tthe sections back to them. Also why has regulator not come out and said this? Thanks

Didn't @Brendan Burgess concede elsewhere that he was mistaken on this issue?

Lenders are not prohibited from charging higher interest rates to borrowers in arrears

n other words any decision on what policy actions you take now comes down to a choice between a favouring a cohort of existing borrowers at the cost of future borrowers or vice versa. Update: I got this completely wrong as the following discussion shows. The CCMA is clear. You cannot charge...

www.askaboutmoney.com

 

[Brendan Burgess]

Hi Sally
Clubman is right. I had always assumed that the CCMA said this but it doesn't.

Brendan

 

[Sally66@]

Hi Sally
Clubman is right. I had always assumed that the CCMA said this but it doesn't.

Brendan

Ok Brendan thanks.We need to have our facts absolutely straight when taking on these funds. Is there any progress being made on the issue generally? Any idea where the regulator is at on this?

 

[Paul F]

Thousands of families could go into arrears if vulture funds refuse to fix rates, warns Mabs

The Central Bank and the State’s banking lobby group have been called on to put pressure on vulture funds to offer fixed rates to under-pressure mortgage holders.

www.independent.ie

The Central Bank and the State’s banking lobby group have been called on to put pressure on vulture funds to offer fixed rates to under-pressure mortgage holders.

Around 113,000 borrowers who took out their loans years ago with mainstream banks, and who later fell into difficulty, had their mortgages taken over by vulture funds.

Around 38,000 of these are on variable rates and their payments have gone up each time the European Central Bank has hiked its key lending rates.

Pepper has offered to put its customers who are in difficulty on fixed payments once they fill out a detailed standard financial statement and supply details of their situation. But it won’t offer fixed rates as standard.