Ulster Bank announces sale of 3,200 mortgages on family homes.

Brendan Burgess

This is a note on the sale just announced by Ulster Bank.

Briefing note on Ulster Bank loan sale
Brendan Burgess 2nd July 2019

I fully support the sale of mortgages by banks where the borrower is not engaging and not paying anything. I don’t support the sale of loans where the borrower is engaging and is paying a material amount.

In 2016, when they first sold 900 loans, they said that they were non-engaged customers and all were in litigation. I said that they were quite right to sell these mortgages. They told us at the time that most were paying nothing at all. Others were paying something but none was engaging which made them impossible to restructure.
Number of mortgages90036003200
Not engaging100%Not givenNot given
In litigation100%
Payment recordMost paying nothingNot givenNot given
Average months in arrears4326
Average arrangements35
Average mortgage balance€250k€253k
Average arrears€52k€33k

(Cerberus also bought the Dansk loans
In 2016 they said This is seen as the last major portfolio sale by Ulster Bank, after years of restructuring and asset sales.
Ulster Bank has approximately 120,000 home loans, so 7,700 represents 6.5% of them. (3.8% of the total market is more than 2 years in arrears.)
They have given no information on whether the current customers are engaging or not.
They have given no information on whether they are in litigation or not.
They have given no information on whether these customers are paying or not.
Given that they sold off their non-engagers back in 2016 and another worse tranche last year, I suspect these borrowers are all engaging and paying.
Ulster Bank says: None of these PDH loans are in an arrangement.
This is disingenuous. That is because Ulster Bank has been refusing long term restructuring deals to these customersLast year the average number of forbearance arrangements was 3 with €52k arrears.
I have seen a case in court where the borrower was fully meeting the full arrangement of interest and capital and would repay the mortgage over the original term and, yet, Ulster Bank has deemed it unsustainable. Any other bank and most vulture funds would have restructured this mortgage on a long term basis.

What will the vulture funds do?
Just as the lenders are different, the vulture funds are different as well.
Most of them want performing profitable loans which they can securitise or sell on.
But they might be bought by a lender who just wants to repossess the house and sell it, but they would have great difficulty doing that in the Irish courts. But there is a risk that they might try.

Cerberus has bought lots of loans from Irish lenders and they have restructured many of them. The numbers of legal proceedings have been falling dramatically over the last few years.

What should borrowers do?
Don’t panic. If you have been engaging and paying a substantial amount, it is likely that whoever acquires your mortgage will do a long-term restructuring.
Keep paying as much as you can. Don’t use this as an excuse to stop paying.
The main risk borrowers face from a new owner is the lack of availability of low fixed rate mortgages. If you don’t have a tracker mortgage and you have an LTV of less than 90% tell Ulster Bank that you want to fix your mortgage rate for 2 years. The rate is 2.3%. Or you may wish to fix for 5 years which is 2.99%. After it is sold, you will not be able to avail of these rates.
What should the Central Bank do?
The Central Bank forces the lenders to adopt this stupid definition of Non Performing Loans. For example ptsb had to sell very profitable loans which were classified as NPLs.
The CB should instead publish a definition of Unsustainable Loan.
At the moment, any lender can take legal action on the grounds that a mortgage is not sustainable. They do not have to explain that and the borrower has no way of defending it.


Frequent Poster
David Hall seems to think you’re talking nonsense! https://twitter.com/davidhall75/status/1146086087242244098?s=21
Yep this is David Hall's type statement for the past 10 years - its a broken record at this stage
“this is the beginning of outsourcing. The tsunami of repossessions is coming, it has been coming for five years. A Croke Park of people will lose their homes.”
Croke Park holds 83,000 people. At av 2.4 people per home, he is suggesting 34500 repossessions! Just a tad on the sensationalist side

I wonder if he can point out any unjust/unreasonable repossessions made by any of the funds.

Also, would David Hall tell us who is paying for those not paying their mortgages? - Yep, everyone not on a tracker!