Regulation of Vulture funds

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witz1234

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I just saw an interview on the news which said that when mortgages are transferred to vulture funds, there will be no regulations and they are beyond the reach of the central bank.

Is this true? What is the implication of this for mortgage holders who are transferred to Vulture funds?
 
They're still subject to the exact same laws as every other lender in the state.

They may not offer the same "solutions" as the state owned banks (mainly extend and pretend because the taxpayers and SVR borrowers are paying for that) but there are no laws applicable to the regular banks that don't also apply to funds.

Regardless of that fact, you should be afraid. Very afraid. So afraid you should vote for FF as they promise they'll regulate them. FF's proposal may be very vague, it may appear wishy washy or without substance, it may seem like it's only purpose is to get them on the tv or radio but remember, deep down they're the champions of the People.

In summary, legally it makes no difference
 
They may not offer the same "solutions" as the state owned banks (mainly extend and pretend because the taxpayers and SVR borrowers are paying for that)

If I reach an agreement with a bank to "extend and pretend" as you put it, how are taxpayers and other borrowers paying for it, if my repayments have always at least covered the interest? It's actually the opposite: I’ll probably end up paying far more interest over the lifetime of the loan.

By contrast, who do you think is funding the profits the vulture funds intend to make? That is, who picks up the tab for the write-down the loan is sold for in order to attract to funds in the first place? Oh, yes, that would be the taxpayer and other borrowers....

To the OP: whilst it's true tha the terms and conditions on the loan don't change, the bahviour of the lender may change, perhaps very significantly. As regulated entities, the banks can't just do what they want: they are subject to oversight and regulations from the Central Bank (however inadaquate they might be). Funds are not subject to that regulation and can do pretty much what they want within the normal constraints of the law that apply to anyone. So, yes, there is a very big difference.
 
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They're still subject to the exact same laws as every other lender in the state.

They may not offer the same "solutions" as the state owned banks (mainly extend and pretend because the taxpayers and SVR borrowers are paying for that) but there are no laws applicable to the regular banks that don't also apply to funds.

Regardless of that fact, you should be afraid. Very afraid. So afraid you should vote for FF as they promise they'll regulate them. FF's proposal may be very vague, it may appear wishy washy or without substance, it may seem like it's only purpose is to get them on the tv or radio but remember, deep down they're the champions of the People.

In summary, legally it makes no difference

Balderdash, of course it makes a difference. Ed Sibley of the CBI stated on the record (8th December 2016) in front of the Joint Oirechtas Committee investigating the tracker mortgage scandal, that the CBI had lobbied very hard for these funds to be regulated like banks, but the FG led Government of the time opted (ludicrously), to regulate the intermediate credit service provider instead (albeit, after been intensly lobbied by the vulture funds not to be regulated). So,from the vulture funds prospective, you can bet your bottom dollar, it does make a difference to them, otherwise why did they lobby Government so intensely not to be regulated.
 
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My Danske mortgage has been sold to Proteus, owned by PIMCO / Goldman Sachs.

Are these buyers "vulture funds"?

We should be aware of the use of language.

AFAIK, every Danish mortgage is sold on by the originating bank.

Does the selling of a mortgage automatically mean that the buyer is a vulture?
 
Ed Shipley of the CBI stated on the record (8th December 2016) in front of the Joint Oirechtas Committee investigating the tracker mortgage scandal, that the CBI had lobbied very hard for these funds to be regulated like banks
Well, his boss seems to be of a different view...

Philip Lane, Governor of the Central Bank, has also signalled his discomfort with the [FF] bill, according to Goodbody stockbrokers.

Last Friday, at a speech to the Institute for International and European Affairs in Dublin, Professor Lane claimed that borrowers whose loans are sold are afforded the same regulatory protection they had prior to the sale.

In a note to clients yesterday, Goodbody claimed these remarks represented a "veiled reference" to Fianna Fáil finance spokesperson, Michael McGrath, and indicated that Professor Lane believes "there is no need for ...[the] proposed new bill to regulate non-regulated funds".

https://www.independent.ie/business...back-in-favour-as-banks-deliver-36698641.html
 
My Danske mortgage has been sold to Proteus, owned by PIMCO / Goldman Sachs.

Are these buyers "vulture funds"?

We should be aware of the use of language.

AFAIK, every Danish mortgage is sold on by the originating bank.

Does the selling of a mortgage automatically mean that the buyer is a vulture?

I don't think anyone presents themselves to the market as a "vulture fund": it's an informal pejorative term people use. Much as you may dislike banks, when you take out a mortgage with them you do so on the basis of understanding who they are (and the fact they operate in a highly regulated market) and what they are likely to do. In particular, their interest is in seeing the agreement through as a long-term arrangement. Vulture funds have absolutely no interest in long term arrangements: they are there to turn a quick profit. They are not regulated: if it's a SVR rate mortgage they could for example raise the interest rate to 20% overnight unless there's something in the agreement that says otherwise. I'm not suggesting they would, or that banks don't have questions to answer too, but it is a very different kettle of fish in dealing with them.
 
If I reach an agreement with a bank to "extend and pretend" as you put it, how are taxpayers and other borrowers paying for it, if my repayments have always at least covered the interest? It's actually the opposite: I’ll probably end up paying far more interest over the lifetime of the loan.

By contrast, who do you think is funding the profits the vulture funds intend to make? That is, who picks up the tab for the write-down the loan is sold for in order to attract to funds in the first place? Oh, yes, that would be the taxpayer and other borrowers....

To the OP: whilst it's true tha the terms and conditions on the loan don't change, the bahviour of the lender may change, perhaps very significantly. As regulated entities, the banks can't just do what they want: they are subject to oversight and regulations from the Central Bank (however inadaquate they might be). Funds are not subject to that regulation and can do pretty much what they want within the normal constraints of the law that apply to anyone. So, yes, there is a very big difference.

The credit servicer who manages the loan for the fund is subject to the exact same regulatory oversight as regular lenders.

there is no difference

The fact you are covering the "interest" does not mean it is profitable. If you are on a tracker rate and the loan is impaired, and thus subject to a capital provision, then the interest received probably wouldn't cover the cost of capital for the loan. Add to that the fact you're a problem borrower so you consume much more operating expenses (bank employee time) than a regular borrower so that reduces any potential profitability.
 
Balderdash, of course it makes a difference. Ed Shipley of the CBI stated on the record (8th December 2016) in front of the Joint Oirechtas Committee investigating the tracker mortgage scandal, that the CBI had lobbied very hard for these funds to be regulated like banks, but the FG led Government of the time opted (ludicrously), to regulate the intermediate credit service provider instead (albeit, after been intensly lobbied by the vulture funds not to be regulated). So,from the vulture funds prospective, you can bet your bottom dollar, it does make a difference to them, otherwise why did they lobby Government so intensely not to be regulated.

Right, but if the funds were regulated can you name anything specific that would be different or of additional a benefit to defaulted borrowers?
 
Right, but if the funds were regulated can you name anything specific that would be different or of additional a benefit to defaulted borrowers?

Andy,

Quite simply, the funds lobbied Government very intensively not to be regulated, so much so, that the Government of the time, disregarded the Governor of the Central Bank of Ireland, Mr Patrick Honohan's concern regarding this issue.


http://www.thejournal.ie/honohan-vulture-funds-ibrc-warning-1441483-Apr2014/



In reply to your question, I believe section 28(f) of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 provides the answer, it states


“(2) For the purposes of this Part ‘credit servicing’ does not include—

(a) the determination of the overall strategy for the management and administration of a portfolio of credit agreements,

(b) the maintenance of control over key decisions relating to such portfolio, or

(c) taking such steps as may be necessary for the purposes of—

(i) enabling the undertaking of credit servicing by another person, or

(ii) enforcing a credit agreement,

A key decision relating to a portfolio would include the setting of the variable interest rates for the portfolio.

In other words these functions are still unregulated and the vulture funds can do what they wish with regard to those exemptions listed.

These exemptions were put in at the specific request of lobbyists for the vulture funds to the Dept of Finance and Dept of Taoiseach.

Andy, what I can say is that vulture funds are going to be regulated (FG and FF have already agreed to this) and political expediency triumphs everything else, no matter what any other posters might say or quote.
 
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How does the CBI regulate interest rates? They don't.

Or are you suggesting that the CBI would stop a fund raising rates? Have they ever stopped a regular bank raising rates?

Basically you've come up with nothing. Nothing would change.
 
Wrong again. A fund could double variable interest rates overnight, while a regulated entity would (if enquired by the CBI) have to give full reasons for the interest rate increase. A vulture fund does not have to provide books for the CBI regarding prudential supervision, so there is no way of knowing whether the said variable rate increase by the fund was justified or just plain price gouging. The fund, if regulated by the CBI, would probably have to provide a full suite of alternative repayment arrangements just like the other regulated entities.
 
the Government of the time, disregarded the Governor of the Central Bank of Ireland, Mr Patrick Honohan's concern regarding this issue.
Patrick Honohan expressed those concerns back in 2014 - prior to the passing of the Consumer Protection (Regulation of Credit Servicing) Act 2015. That Act amends the Central Bank Act 1997 to provide for a regulatory regime in respect of Credit Servicing Firms, bringing such firms within the Central Bank’s regulatory remit.

Dr Honohan's successor as Governor, Philip Lane, has recently confirmed that this legislation is effective in ensuring borrowers whose loans are sold are afforded the same regulatory protection they had prior to the sale.

The Central Bank has no statutory power to stop a credit institution from raising any variable interest rates where it has the contractual power to do so.

The Minister for Finance did certainly initially indicate that, in principle, he was supportive of the FF Bill. However, more recently he expressed concerns that the proposed legislation could impede loan securitisations, which would have a negative impact on our economy.

If the Central Bank doesn't think the legislation is necessary - and a respected debtor advocate like Ross Maguire SC doesn't think the legislation is necessary - you really have to wonder what is the point? Is it anything more than optics and political opportunism?
 
I suppose with the vast tranches of residential property loans on the cusp of being sold to vulture funds, it would be politically expedient to regulate these funds, especially when you and others contend there is no difference between being regulated and unregulated anyway.

As a by the way, Ed Sibley and Bernard Sheridan of the CBI did note on the record to the Joint Oireachtas committee that they were concerned with the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 and the CBI's "Lack of teeth" in dealing with these funds. These comments were made in 2016, after the Act was passed into law.
 
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The main banks don't have to justify their SVRs to the CBI for apprpval.

The CBI also has no say in the repayment options the main lenders provide to defaulted borrowers.

All of you're examples are false.
 
Aah Andy, what would Mr Ed Sibley, Head of Prudential Regulation at the Central Bank of Ireland and Mr Bernard Sheridan, Head of Consumer Protection at the Central Bank of Ireland know about consumer protection, you and Sarenco are right as usual. Now wait and see, the funds will be regulated. Ha, Ha. Andy, you must be a banker, and Sarenco you must be a solicitor of some sort, two great consumer advocates on a consumer forum.
 
Going back to the original post. Suppose I have a mortgage and am paying what I can towards to the bank by agreement. If it is now transferred to Vulture funds, will they still have to go through the courts to get possession of the house.

Put another way, if I am making reasonable payments, am I likely to lose my house.
 
Yeah, we are both right. And you're wrong.

If the CBI could block or adjust interests rates set by the Banks why then were FF proposing a bill in 2016 that would give the CBI the ability to cap SVR rates?
Let me dumb it down, if they had these powers as you stated they wouldn't need to be given them.
Why did Mr Ed Silby (who you've quoted & referenced above) publicly oppose that bill?

Don't take my word or Sarenco's

Take Mr Silby's word himself:
http://www.thejournal.ie/variable-mortgage-rates-bill-central-bank-2-3127851-Dec2016/

So, in summary - you're wrong on absolutely everything you've said.
 
Going back to the original post. Suppose I have a mortgage and am paying what I can towards to the bank by agreement. If it is now transferred to Vulture funds, will they still have to go through the courts to get possession of the house.

Put another way, if I am making reasonable payments, am I likely to lose my house.

You are no less likely to loose your house to a repossession order if the loan is owned by a vulture fund than owned by a normal bank.

This has nothing to do with Central Bank regulations. This is purely down to the courts.

As Brendan has pointed out on numerous occasions, the courts will not give an order for repossession if you're making a genuine meaningful effort.
 
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