RTE's programme on Vulture Funds

Brendan Burgess

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Did anyone watch this and Claire Byrne afterwards?

http://www.rte.ie/player/ie/show/the-great-irish-sell-off-30004491/10671887/

There was some balance in that they extensively interviewed John Moran , who was Secretary General of the Department of Finance, when the foreign investors were encouraged to come into Ireland. They also interviewed the MD of I-Res who made no apology for charging market rents.

Ross Maguire was excellent on Claire Byrne pointing out that the protections for home owners in Ireland were excellent. He also pointed out that the Vulture Funds were no worse than the mainstream mortgage lenders, and in some cases they are better, as they are prepared to deals on writing off the mortgage shortfall.

But the main guy to feature in the programme and on Claire Byrne afterwards went into arrears on his home in 2010. He had borrowed money for his construction business and secured it on his family home which was a large house on its own grounds. And he is still in it in 2017! No one raised this. This would not happen in any other country in the World. He would have been repossessed back in 2011 and he would have moved on.


As usual, they trotted out Ashoka Modi who was described as "Head of IMF's Irish Mission" during the bailout. He may have been, but he had been involved in Ireland for some time before that. This is what he wrote in July 2010, a few months before the Bailout
IMF Survey: After Deep Slump, Nascent Recovery for Ireland
He is portrayed as God. He is not.

And the programme gave the impression that the charity loophole was developed to facilitate vulture funds. As John McManus has pointed out, it is the flipside of our very generous tax regime which canibalises the tax revenues of other countries. But when they use the Irish tax incentives to canibalise Irish tax revenues,they become "loopholes".

http://www.irishtimes.com/opinion/j...tax-avoidance-rings-a-little-hollow-1.2739431

Of course, these incentives are wrong. But they are wrong for all the multinationals and not just the vulture funds.

Brendan
 
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I saw it. Much as I expected, nothing new for anyone who has been even half following the subject.

The Canadian MD of I-Res...let he be a warning to anyone who talks about having a more organised, concentrated rental market with just a few big players.

The Charity angle...loophole or not, the Dept of Finance was well aware that the Vulture funds coming in to purchase property at knock down rates were going to avail of the tax status. John Moran said as much. And by the time the loopholes are closed, they will have left the Irish market.
It's one thing getting to buy cheap property but its really a kick in the teeth to have them paying no tax as well.
 

AFAIK legal proceedings hadn't even commenced in this case which is the fault of the bank and subsequently the vulture fund.

Brendan Burgess said:
Ross Maguire was excellent on Claire Byrne pointing out that the protections for home owners in Ireland were excellent
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I agree. Maguire also pointed out that borrowers weren't using the protections that were available and we see that time and again where DSAs or PIAs aren't even mentioned as part of a solution to a mortgage arrears problem. In that context maybe the guy mentioned above can save his house and imo a possession order should not be granted on a family home unless a PIA or the like is deemed unsuitable by the court.
 
demoivre said:
In that context maybe the guy mentioned above can save his house and imo a possession order should not be granted on a family home unless a PIA or the like is deemed unsuitable by the court.
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His house appeared to me to be a very large detached house on its own grounds.

If he is insolvent, he does not need to live in a house like that. But he might not be insolvent so he won't get a PIA.

Brendan
 
Here is a transcript of the piece on Donal Burns - starts at 45 minutes


Voiceover: Even now hedge funds which buy funds operate without much regulation or oversight. And this impacts on real people

Dermot Burns ran a successful business.

Burns "In late 08 businesses collapsed all around us. That was the start of it.

We had a yard. We put the house up as collateral for that.

We had the mortgage with BoS .BoS were at that time in trouble themselves, so we thought that might be a good thing for us.

We thought we could do a deal with them.

Try and get the house back from them anyway."

Voiceover: Donal’s loan was sold to Tanager.

AS he began negotiations, his wife became ill and passed away 3months after the diagnosis.

It was something like €275k + there was arrears on that as way.

Donal’s brother offered to buy the house from Tanager."

"We got the house valued and we offered that value to Tanager and they refused.

We made a second offer and they turned down that as well. No reason.

They decided that they just want the house back. They put the gun to your head and ask you to pull the trigger."

This mortgage appears to have been in arrears for many years. It's not clear if it was in arrears since 2008.

He hoped to exploit Bank of Scotland's difficulties.

He says that BoS just wants the house back. Eh no. They just want him to pay the loan which he took out to finance his business.

Brendan
 
Unfortunately populism makes it difficult to point out salient points such as the fact that the gentleman in question borrowed against his home to invest in his business which then (sadly) went belly-up.
 
Yeah, always fascinates me that. I admire people who can take that sort of risk, but you take the risk, you will happily have the upside but not pay any heed to the downside consequences. Which, in this case, is losing the family home.
 
Brendan Burgess said:
He also pointed out that the Vulture Funds were no worse than the mainstream mortgage lenders, and in some cases they are better, as they are prepared to deals on writing off the mortgage shortfall.
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I agree with Ross Maguire. Whilst Vulture Funds are very tough to deal with, they will engage in debt forgiveness.

It is simply surprising that so many borrowers in financial difficulty do not realise that they may be able to use a PIA to write down the mortgage on the family home to its market value, subject to certain conditions.

Jim Stafford
 
Hi Jim

That guy was the director of a building company. I would say that he has had good advice.

The story doesn't really add up. "We had a yard. We put the house up as collateral for that."
So he borrowed €275k to buy a yard? It's a BoS mortgage so it's a cheap tracker. Even if he has paid nothing at all since 2008, he probably owes a total of €350k. I would suspect that the house and yard are worth more than €350k.

So what could a PIA do for him? Sell the yard for €100k and write down the value of his family home? To what €250k? It must be worth that.

If he has paid nothing at all in 9 years, then I suspect that he wouldn't qualify for a PIA. Of course, his brother would come up with the money.

Brendan
 
they will engage in debt forgiveness
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Give me a true life example.

Whilst Vulture Funds are very tough to deal with
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Why should 13,000 Irish Nationwide mortgage holders be forced into such arrangements with 'tough' people?

I am dealing with a case at present where the home owner
  • offered to maintain interest payments - VF rejected
  • offered to pay capital and interest payments in full - VF rejected
  • offered to redeem the mortgage in full (switching mortgage) - VF rejected
I have documentary evidence to support all the above.

The VF are pushing ahead with a court case to repossess the home; despite being offered full payment of their debt.
 
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A house like that, out in the country in rural north Cork is probably worth no more then €175k. As for a yard, you probably couldn't give it away if you tried. The so-called "recovery" hasn't reached much of rural Ireland. Banks were throwing money at people in the mid-naughties and it was not being done by prudent lenders but by sales-men on commission. After all, if they banks had done a true valuation on the collateral then they would never have got into trouble in the first place

Have we really become such a heartless and soulless country ? These vulture funds bought these loans often for a pittance but no-one is asking what is a reasonable return on their investment and what is actually gouging.
 
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Thirsty said:
offered to redeem the mortgage in full (switching mortgage) - VF rejected
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Under the Consumer Credit Act, a borrower is entitled to redeem their mortgage in part or in full without penalty at any time. So the VF can't reject it.

Just repay the mortgage in full and the court case will become moot. They will probably seek their costs.

Brendan
 
thedaddyman said:
These vulture funds bought these loans often for a pittance but no-one is asking what is a reasonable return on their investment and what is actually gouging.
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The borrowers owe the money. If they can, they should repay it. If they are insolvent they can avail of a PIA as Ross and Jim have pointed out.

No other country mollycoddles borrowers to the extent that we do in Ireland.

Which is part of the reason responsible borrowers are paying the highest mortgage rates in the Eurozone.

Brendan
 
the VF can't reject it
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They refused to send a letter confirming the mortgage redemption figure to the Solicitor in question and without that the Solicitor could not draw down the new loan; so whilst we may have laws in place, these VFs are a law unto themselves.
 
One could also say no other country mollycoddles irresponsible lenders to the extent that we do in Ireland...
The fault was on both sides and both sides should take the hit.
 
Thirsty said:
They refused to send a letter confirming the mortgage redemption figure to the Solicitor in question and without that the Solicitor could not draw down the new loan;
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What reason did they give for refusing? It's a clear breach of the Consumer Credit Act.

Brendan
 
Brendan Burgess said:
His house appeared to me to be a very large detached house on its own grounds.

If he is insolvent, he does not need to live in a house like that. But he might not be insolvent so he won't get a PIA.

Brendan
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Personally didn't think much of his house, looked badly finished to me and Gorse Hill it ain't. Surly it's the numbers that should be looked at rather than the size of the house? That aside The ISI themselves say that debtors like Burns should be looking at the various options there if they can't repay their debts when due. The main purpose of the ISI was to keep people in their homes but for some reason, alluded to by Ross Maguire, it isn't being used to any great extent.
 
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