PTSB loan sale ‘a horrible day for mortgage holders’: Hall
Permanent TSB’s sale of family home loans to Lone Star is a disaster, according to the Irish Mortgage Holders Organisation (IMHO) who called on the Government to provide alternative solutions to mortgages in long-term arrears.
The IMHO said Irish homeowners have now “found themselves at the mercy of Lone Star who don’t offer term extension, split mortgage, rate reduction, or capitalisation of arrears”.
“PTSB has sold 7,400 family homes to vultures who will throw them out; it is also unclear how many are co-operating or in a restructure,” said David Hall, IMHO’s chief executive.
“Lone Star don’t offer any restructuring. It is a horrible day for mortgage holders. There is uncertainty around the numbers given.
“IMHO are calling for the minister for finance, the banks, and the Central Bank to finally admit that most of these people, and others in long-term arrears, simply cannot pay.
“The lies perpetrated by the establishment about strategic defaulters need to be stopped and a realisation [is needed] that these people and others are going to end up homeless.
“Alternatives must be found as flogging citizens to vulture funds in the middle of a housing crisis is not acceptable,” he said.
Pádraic Kissane, an independent financial adviser, said he was concerned that vulture funds like Lone Star take a short-term approach to make money which is at odds with a long-term view to keeping people in their homes.
“Lone Star specifically, and this is in their own website, seek investment opportunities in markets that have suffered an economic and/ or a banking crisis.
"At the bottom of that page it says they are ‘continually evaluating their exit strategy’,” Mr Kissane told Miriam O’Callaghan on RTÉ Radio One.
He also highlighted how 1,050 of the loans sold as part of the Permanent TSB portfolio are not classified and it is not known whether or not these are performing loans.
The warning that I have here is that the customers don’t know whether they are a co-operating borrower or a non-co-operating borrower.
Mr Kissane also said he believed the portfolio may also contain cases where there are issues surrounding the margins charged on the loan, and that some customers may question the classification of their loan performance by Permanent TSB.
“I am absolutely certain a lot of customers would challenge that position because I know of customers making every effort they can to meet obligations,” he said.
Mr Kissane warned that the recovery in the property market could spell bad news for people whose loans have been bought up by vulture funds.
“If the value of the property equates to the current value of the loan, then the vulture fund will be pressing to get that property sold because they get their return on money in the greatest degree by doing that,” he said.
Holders of mortgages sold to vulture fund will be protected, says Donohoe
Finance Minister Paschal Donohoe has said people who hold mortgages in arrears sold by PTSB to a vulture fund-linked group will continue to be “protected” but admitted the State was powerless to prevent anything else happening.
Opposition TDs calls for the Dáil to be recalled immediately to address the controversy amid growing fears thousands of families could at some stage lose their homes.
On Tuesday, Permanent TSB sold 10,700 mortgages in arrears to State Mortgages, a group which is backed by US vulture fund Loan Star, for €1.3bn.
The sale immediately raised concerns of increased payment demands leading to the risk that mortgage holders could ultimately lose their homes.
Mr Donohoe, on RTÉ’s Morning Ireland, said people affected will continue to receive the same protections prior to the sale.
However, asked if he had rubber-stamped the deal or could block any changed practices due to the State’s 75% stake in PTSB, the minister conceded he would be unable to intervene.
I am confident that because of protections, we have in place we will be able to give protections. If you are a tenant or borrower, your tenancy is not affected by who owns the loan book.
However, when asked if he could intervene, the minister said: “I am prohibited to be involved in any issue guided by the regulator or Central Bank.”
Opposition parties yesterday lambasted the decision to permit the sale and demanded a recall of the Dáil to introduce legislation to halt the deal.
Fianna Fáil finance spokesperson Michael McGrath said there were real fears over how the thousands of people holding the mortgages will now be affected.
Party colleague John McGuinness said: “It is wrong for the minister to say they are protected”, while Sinn Féin’s Jonathan O’Brien said people had been “thrown to the mercy of an American vulture fund”.
Lone Star profile
Lone Star Funds is a Dallas-based vulture fund founded by John Grayken in 1995.
It has organised 17 funds with aggregate capital commitments totalling over €60bn in the past 23 years.
Its interest in distressed debts such as portfolios of ‘non-performing’ mortgages sees the firm classified as a vulture fund, but it has been known to invest elsewhere.
Last year, for example, the firm announced that it was ending a co-financing partnership it had with Sony Pictures after a series of flop movies, including The Brothers Grimsby, Life, and Smurfs: The Lost Village, failed to return a profit for the fund.
