# Ulster Bank sells 5,200 mortgages to Cerberus



## Brendan Burgess (13 Aug 2018)

https://www.independent.ie/business...-ulster-bank-to-us-vulture-fund-37210883.html

2,300 family homes
Average arrears: just over 4 years
Average amount: €61,000 
70% of them started going into arrears 7 years ago.


----------



## Brendan Burgess (13 Aug 2018)

An Ulster Bank spokesperson said:

_“Ulster Bank can now confirm that it has agreed terms for the sale of a portfolio of non-performing mortgages of c€1.4bn, as announced for sale in May to a purchaser managed by affiliates of Cerberus Capital Management L.P. This portfolio does not contain any performing home loans or any home loans in an arrangement.  _

_“This difficult decision comes a decade after the financial crisis began and the continued extension of forbearance cannot be maintained. Not all mortgages are sustainable and we are obliged to reduce the level of non-performing loans on our balance sheet. For mortgages that are not sustainable, additional forbearance will not bring them back to a performing position._ 

_“We will be in contact with all affected customers to help them as their loans transition to the new owner.”_

In this case Ulster Bank is giving customers 90 days notice of sale (obliged to give 60 days notice).


Customer Helpline: 1800 435 763


Data points:

§ The portfolio consists of RoI mortgages split approx. 55% BTL and 45% PDH (by value)

§ The face value of the loans that are being included is currently c €1.4bn.






PDH: 71% first entered arrears a minimum of 7 years ago.


BTL:  77% have been in arrears for more than 12 months during their lifetime.


----------



## Brendan Burgess (13 Aug 2018)

I issued a briefing note to the media

*Briefing note by Brendan Burgess on Ulster Bank sale to Cerberus *

*13th August 2018 *

*If the legal system does not allow Ulster Bank to repossess properties, politicians should not complain if the banks sells on the mortgages *

·        Average arrears over 4 years!

·        Ulster Bank has been very flexible in dealing with borrowers in arrears – but some borrowers just don’t engage or are just unsustainable.

*Some of these borrowers do need state help with their mortgage payments *

·        Some borrowers are in genuine financial difficulty and would get the Housing Assistance Payment if they were renting. The HAP should be adapted to help borrowers who can’t pay their full mortgage.

·        In the UK, borrowers get  Support for Mortgage Interest. Since April, this has been provided as a loan instead of a benefit

*Mortgage rates in Ireland are 1.5% higher than the average eurozone rate because we don’t allow repossessions *

·        Responsible borrowers are paying the price for irresponsible borrowers.

·        This costs a borrower with a mortgage of €200,000 around €250 a month more than they should be paying. That is the real scandal

*There is little evidence that Vulture Funds will hound the borrowers more than the main banks*

·        Borrowers whose loans are sold will have the same legal protections.

·        The  Code of Conduct on Mortgage Arrears will continue to apply

·        Lenders are prevented from taking trackers from home owners in default

·        However, Cerberus may be more efficient or may be less of a soft touch in dealing with defaulters

·        But if they try to repossess a family home, they will face the same extremely difficult legal system

·        

·        Banks are three times more likely to take legal action than vulture funds

·        Borrowers in negative equity are much more likely to get a write off from a vulture fund



*Irish borrowers are the best protected in the World *

·        Irish banks have restructured  over 100,000 mortgages , while fewer than 10,000 borrowers have lost their homes through voluntary sale or repossession

·        The Code of Conduct on Mortgage Arrears gives every borrower a great opportunity to have their mortgage rescheduled

·        The Personal Insolvency Arrangements means that many borrowers can have their negative equity written off. In some cases, the banks have imposed deals on banks which were outrageously generous to the borrowers.

*In May 2016, Ulster Bank sold 900 homes which were already in the courts *

·        These were the non-engaging borrowers

·        95% were over 2 years in arrears

·        Part of a portfolio sold to Cerberus

*About Cerberus aka Promontoria (Pluto) Ltd *

·        Have already bought mortgages from Ulster Bank, Danske and Stepstone

·        Loans will probably be managed by [broken link removed] ( formerly Capita )

·        Cerberus is the three headed dog which guards the entrance to the Underworld


----------



## renter45 (13 Aug 2018)

Will this lead to an increase of evictions or how will Cerberus play it??


----------



## Bronte (13 Aug 2018)

On RTE radio FF were giving out about this sale. But Karl Deeter I think it was said there was nothing wrong with this same and that vulture funds were nothing to be worried about.


----------



## losttheplot (13 Aug 2018)

http://www.thejournal.ie/ulster-bank-vulture-fund-4178665-Aug2018/

Demands for the Dail to be recalled. Some of the comments are hilarious.

FF John McGuiness - “I’m repeating my call today for the Dáil to be recalled so we can debate this and to stop it from happening.”


----------



## Delboy (13 Aug 2018)

83 months is 7 years. And thats the average!!!
Absolute madness that this has been allowed to happen.


----------



## Brendan Burgess (14 Aug 2018)

Delboy said:


> 83 months is 7 years. And thats the average!!!



PDH: 71% first entered arrears a minimum of 7 years ago.

Hi Delboy

I had never seen defaulting data published in this manner. Not sure how to interpret it. 

Most people got into difficulty some years ago with the loss of jobs and the drop in self-employed income.  There aren't that many customers whose arrears began recently.

Some of these have been irresponsible for years. 
Some have been struggling for years. 

Brendan


----------



## Bronte (14 Aug 2018)

Was there a dip in employment in 2011. But since then I know most of my family are back in full employment for quite a few years.  And you can tell by the traffic on the roads that more people are working. So I wonder why these people have 7 years of problems.


----------



## Brendan Burgess (14 Aug 2018)

losttheplot said:


> http://www.thejournal.ie/ulster-bank-vulture-fund-4178665-Aug2018/
> 
> Demands for the Dail to be recalled. Some of the comments are hilarious.



I just read through the first few of them and they are generally  supportive of Ulster Bank. 

Brendan


----------



## Bronte (14 Aug 2018)

Burgess was on the radio this morning, Newstalk, about an hour ago speaking about this (I only got the tail end of it).


----------



## Palerider (14 Aug 2018)

The Bank need to cut their losses so for me no issues with the sale, Call them what you like and Vultures if you must but the system needs parties that buy distressed loans in bulk,  not all debtors are genuine and up to seven years arrears takes forbearance to another level.

That said the bulk purchasers still have their work cut out to get a return from a group of hardcore non payers with our Court system.


----------



## Blackrock1 (14 Aug 2018)

A lot of political opportunism at play, these loans need to be cleared out and dealt with, 7 years is ridiculous.


----------



## losttheplot (14 Aug 2018)

Brendan Burgess said:


> I just read through the first few of them and they are generally  supportive of Ulster Bank.
> 
> Brendan


The good ones are hidden in the replies. How we bailed out the banks, these people will be made homeless, fascist government and we need an election. These people were also the victims of austerity.


----------



## Palerider (14 Aug 2018)

The Irish taxpayer did not bail out Ulster Bank.


----------



## PatrickJ (14 Aug 2018)

It needs to be asked what % of the properties that are seven years in arrears have been effected by pyrite or mica.  The latter surely renders a property worthless.


----------



## AlbacoreA (14 Aug 2018)

Maybe they have a long term illness. Maybe they had to look after sick children or parents. 
I like the way we jump to the conclusion that they are all hard core non payers, non-engaging borrowers. 

Hard core non payers, non-engaging borrowers obvious are part of this. But if they have 3~4 average forbearance agreements.
There is an absence of any information of how many make regular payments even if they have missed a lot. 

Seems like the information is filtered to only telling half the story here.


----------



## AlbacoreA (14 Aug 2018)

Palerider said:


> The Bank need to cut their losses so for me no issues with the sale, Call them what you like and Vultures if you must but the system needs parties that buy distressed loans in bulk,  not all debtors are genuine and up to seven years arrears takes forbearance to another level.
> 
> That said the bulk purchasers still have their work cut out to get a return from a group of hardcore non payers with our Court system.



What if their arrears were reducing over the 7 yrs, stayed the same or increased. 

Some one else previously posted transcripts from the courts where the banks and similar were very poorly prepared for going to court, often having to return numerous times on the same case for this reason. 

I think more precision in filtering the genuine from the cynical borrowers is needed.


----------



## Blackrock1 (14 Aug 2018)

does it really matter though if its genuine or cynical, if someone is in 7 years arrears its probably not going to be resolved.


----------



## Brendan Burgess (14 Aug 2018)

Brendan Burgess said:


> Average arrears: just over 4 years
> Average amount: €61,000
> 70% of them started going into arrears 7 years ago.



Just to clarify what this means.

If I first missed a payment 12 months ago and have paid nothing since, I started going into arrears 12 months ago and I have 12 months arrears.

If I have paid half my mortgage for the last 24 months, I started going into arrears 24 months ago, but I have 12 months arrears.

Likewise, if I missed a whole 12 months of payments 7 years ago but have paid my mortgage in full ever since, but have not paid anything off the arrears, I started going into arrears 7 years ago, but I am 12 months in arrears.


I have always argued that these aren't terribly useful measures.  The lenders and the Central Bank should publish the payment records of people compared to the interest charged. In other words,  if someone has paid the interest in full on their mortgage over the last year, then that should be regarded as a profitable mortgage and should not be sold - assuming that they can't pay any more. 

Brendan


----------



## AlbacoreA (14 Aug 2018)

Blackrock1 said:


> does it really matter though if its genuine or cynical, if someone is in 7 years arrears its probably not going to be resolved.



They could have got from 50k in arrears and now 5k in arrears.
They might have 5k in arrears and paying it back at a very slow rate. 
They might have never paid anything and have arrears of 100k.

All the above might inherit something, or have other property, that could clear the debt. How are we to know. 
They might have string of other properties all in arrears. 

I'm not making a judgement call on if they should be moved or not. 
Some people have had their mortgage moved from the bank (not this one) to somewhere else when they've never been arrears at all.
I don't think we can take any figures from a bank, or the Garda for that matter, at face value. They've been found to be unreliable too often.  

These figures seem shaped for media consumption, not critical analysis.


----------



## Brendan Burgess (14 Aug 2018)

AlbacoreA said:


> Some people have had their mortgage moved from the bank (not this one) to somewhere else when they've never been arrears at all.



So what? 

Bank of Scotland and Danske closed down their operation in Ireland and sold their mortgages to the highest bidder. 

People who were never in arrears were not negatively impacted. Their contract remains the exact same. 

In fact, there is potential upside in that the new owner might do a deal for the early repayment of a tracker.

Brendan


----------



## AlbacoreA (14 Aug 2018)

I meant other banks have said they were only moving non performing mortgages when that wasn't the case.
There's just a lack of transparency. That's either just sloppy or just done deliberately. Perhaps both.

Are there existing clauses in a contact that allow the lender to makes changes, that are unlikely to be auctioned by a bank, but perhaps are more likely with other lenders.


----------



## Brendan Burgess (14 Aug 2018)

Hi Albacore

The mortgage contract allows the lender to sell the mortgage. 

If a performing mortgage is sold, the borrower has nothing at all to worry about.  The contract still applies.  For example, if they have a tracker mortgage, they keep it.

There is a lot of scaremongering going on.  The only people who need to worry are those who haven't engaged and who haven't paid anything, and it's about time that they began to worry.

Brendan


----------



## AlbacoreA (14 Aug 2018)

I'm not explaining myself, well, I mean that the contract itself might have clauses in it, that can be used in an unfair manner. 
Not that they have been used in ireland in this way, thus far, and I'm not aware of any successful case in Ireland. But a different lender might have a different viewpoint on it. 

https://www.lawsociety.ie/News/News/Stories/price-variation-clauses--an-unfair-term/#.W3LqVc5KiUk
[broken link removed]

That said a lot (perhaps not all) of the mortgages being transferred are probably never going to come out of arrears. 
But if you had one that wasn't in arrears then you can see why those people might be concerned. Even if in reality its unlikely any of their fears would be realised.


----------



## Palerider (14 Aug 2018)

Persons not in arrears have nothing to be concerned about if their mortgage is sold, they may even benefit.

Persons in arrears should be concerned.

This Bank like any Bank is not a registered charity, some people think they are.

We should not expect them to open up to anybody with confidential information on a person by person basis.

Banks have spent millions staffing up new sections to try and cope with the arrears problems, all in a highly regulated environment and with little success through the judicial process at recovering the sums owing from the worst cases. 

Prior to 2008 no such section of a Bank existed in this country, yes there were Recoveries sections but nothing like the staff scale up that has been required to deal with mortgages arrears, enough is enough, like any business they need capital, they are fed up of the costs incurred, the regulation and deliberate defaulters, Vulture funds help the Banks recapitalise somewhat so they can draw a line under what is in our country a mess.
 They provide a stop loss on the continued draw on their reserves and will have fresh capital to provide loans to good payers, small business owners, the self employed, farmers, etc etc, access to capital is not a bottomless pit, new money buys new goods.

I'm a tad old fashioned, If I borrow money I pay it back, if that takes three minimum wage jobs, no holidays and tight balancing of the books then so be it, my home is my castle and I will work my backside off to keep it.

There will be hardships cases which can be dealt with on a case by case basis but one only has to see the increase in traffic on all roads nationally, the help wanted signs in windows and the increase in recruitment and jobs advertising to understand that our economy is booming. In many cases the hardcore defaulters are continuing their lifestyle hoping somebody will bail them out, the gig is up for them and rightly so.


----------



## AlbacoreA (14 Aug 2018)

I was just pointing the ambiguity in some of the information. I didn't realise its taboo to question the banks (again).  I hope it works out better this time around.


----------



## newtothis (6 Sep 2018)

Brendan Burgess said:


> If a performing mortgage is sold, the borrower has nothing at all to worry about.  The contract still applies.  For example, if they have a tracker mortgage, they keep it.
> 
> There is a lot of scaremongering going on.  The only people who need to worry are those who haven't engaged and who haven't paid anything, and it's about time that they began to worry.



It's just naïve to say that because none of the terms of the contract have changed you've nothing to worry about. It matters a lot who the other party to the contract is.


----------



## Carrot/stick (8 Sep 2018)

What's to stop a vulture fund simply raising the interest rate on a performing svr mortgage? People are absolutely right to be concerned about these sales. Whether performing or not.


----------



## Bronte (9 Sep 2018)

Carrot/stick said:


> What's to stop a vulture fund simply raising the interest rate on a performing svr mortgage? People are absolutely right to be concerned about these sales. Whether performing or not.


You can move bank in that scenario.

Could you give us examples of your scenario?


----------



## Bronte (9 Sep 2018)

AlbacoreA said:


> Maybe they have a long term illness. Maybe they had to look after sick children or parents.
> I like the way we jump to the conclusion that they are all hard core non payers, non-engaging borrowers.
> 
> Hard core non payers, non-engaging borrowers obvious are part of this. But if they have 3~4 average forbearance agreements.
> ...


Are you suggesting that if you have a long term illness or have to take care of ill relatives that means a bank should not be entitied to have you pay your mortgage?


----------



## Carrot/stick (9 Sep 2018)

Quite simply they just want to make more fom the loan book and decide to simply raise the interest rate? Someone could have prioritised their mortgage over an unsecured debt and would not be in a position to change lender. I'm no financial guru by the way.


----------



## Brendan Burgess (9 Sep 2018)

Carrot/stick said:


> What's to stop a vulture fund simply raising the interest rate on a performing svr mortgage?



HI CS

Nothing at all. 

In practice, this has not happened, so far. 

Which is why I do support having some form of control over mortgage rates.

Brendan


----------



## Carrot/stick (9 Sep 2018)

Bronte said:


> Are you suggesting that if you have a long term illness or have to take care of ill relatives that means a bank should not be entitied to have you pay your mortgage?


Absolutely not, that's what "marp" is for. It is non engagement that is the problem not illness in such a situation.


----------



## Carrot/stick (9 Sep 2018)

Palerider said:


> Persons not in arrears have nothing to be concerned about if their mortgage is sold, they may even benefit.
> 
> Persons in arrears should be concerned.
> 
> ...


If your talking about vulture funds saying "this bank like any bank is not a registered charity" you might want to look again I think they might actually be registered the same/similar to charities(I stand to be corrected on this and would like to know what they are registered as).  I do however agree with the bulk of what you said palerider.


----------



## Bronte (10 Sep 2018)

Carrot/stick said:


> What's to stop a vulture fund simply raising the interest rate on a performing svr mortgage? People are absolutely right to be concerned about these sales. Whether performing or not.



The same thing applies to normal banks. So what?


----------



## Bronte (10 Sep 2018)

Carrot/stick said:


> Quite simply they just want to make more fom the loan book and decide to simply raise the interest rate? Someone could have prioritised their mortgage over an unsecured debt and would not be in a position to change lender. I'm no financial guru by the way.



Again, can you give an example of such a scenario?


----------



## Bronte (10 Sep 2018)

Carrot/stick said:


> What's to stop a vulture fund simply raising the interest rate on a performing svr mortgage? People are absolutely right to be concerned about these sales. Whether performing or not.



Go on, give us a real example of why people who abide by their mortgage contracts should be worried?  You keep hinting at scary possibilities but you have yet to give us a concrete example of one.


----------



## Brendan Burgess (10 Sep 2018)

Bronte said:


> The same thing applies to normal banks. So what?



Hi Bronte

In theory, there is nothing to stop AIB raising their mortgage rates to 10%.  But if they do, they will lose all the mortgages which can move which is probably about 80% of them. 

If Tanager increases the rate to 10% in the morning, the majority of their borrowers could do nothing about it. 

Obviously, those on trackers are not affected. But those on non-tracker mortgages are vulnerable. 

Brendan


----------



## Bronte (10 Sep 2018)

If any bank raised it's rates like that people would be unable to repay their loans, property would collapse in value and the banks would go bust again. 

It would be chaos.  Is it likely that a vulture fund would hike mortgage rates, have they done it anywhere else.


----------



## RedOnion (10 Sep 2018)

Brendan Burgess said:


> But those on non-tracker mortgages are vulnerable


But are they?

Taking this UB sale specifically for a moment. Are the mortgage contracts not tied to a UB variable interest rate? Irrespective of the fact they've sold to a 3rd party, are they not still tied to the UB rate as long as it's available? I haven't looked at UB contracts, so I might be wrong on this.

It's different in the case of a entity selling their residual book and winding up, as the reference rate ceases to exist.

I try not to generalise, but in the vast majority of non performaning loan sales, it doesn't matter from the purchasers point of view if they charge 0% or 10%. All they will ever hope to get back is the value of the collateral, less legal costs.


----------



## RETIRED2017 (10 Sep 2018)

Bronte said:


> If any bank raised it's rates like that people would be unable to repay their loans, property would collapse in value and the banks would go bust again.
> 
> It would be chaos.  Is it likely that a vulture fund would hike mortgage rates, have they done it anywhere else.



The aim of the vulture funds is to sell on the mortgages that are preforming some already would be classified as preforming by the central bank if they were bought back by the same banks the day after the are sold ,
Some are being sold that do not meet central bank requirements as performing , If the same bank bought the same loan back the following day from the so called vulture funds they would be preforming loans according to central bank ,


----------



## newtothis (10 Sep 2018)

Bronte said:


> If any bank raised it's rates like that people would be unable to repay their loans, property would collapse in value and the banks would go bust again.



You've just highlighted a reason the vulture funds are different from the regular banks. A "normal" mortgage provider has to exist in the real-world economy. They rely on a stream of new business and customers to exist. Could AIB raise their interest rate to 10% in the morning? I doubt there's anything in their contract that would prevent it (unless it's a tracker). Would they do it? I'd suggest the answer is "no": they exist in a competitive and regulated market.

It's naïve to think contracts protect you and it’s irrelevant who the other party to the contract is, especially one that is one-sided such as a mortgage contract (if you don’t think it’s one-sided, I’d suggest you check yours to see if the borrower as well as the lender has the right to re-assign).

As yourself the question: would you be equally happy to sign any given contract with Donald Trump as you would with Pope Francis?



Bronte said:


> Is it likely that a vulture fund would hike mortgage rates, have they done it anywhere else.



Vulture funds business model is to get a fast return on their investment. Why wouldn’t they jack up rates, both to increase their short-term income and provoke people to move lender, thus giving them an immediate return? Have they done this? I’ve no idea, but I wouldn’t want to be waiting to find out!


----------



## Carrot/stick (10 Sep 2018)

Bronte said:


> Go on, give us a real example of why people who abide by their mortgage contracts should be worried?  You keep hinting at scary possibilities but you have yet to give us a concrete example of one.


Ahh that is a real example, it doesn't have to be super complicated and it is an entirely plausible situation.


----------



## Itchy (21 Mar 2019)

Brendan Burgess said:


> *About Cerberus aka Promontoria (Pluto) Ltd *
> 
> ·        Have already bought mortgages from Ulster Bank, Danske and Stepstone
> 
> ...



Are there any regulatory requirements that Cerberus/Promontoria/Link have to meet in order to service/own mortgage debts? Do they have to be regulated by the Central Bank or meet investment firm regulations? What obligations do Ulster Bank still have even if the loan was performing?

EDIT: Answer here: https://www.citizensinformation.ie/...er_protection_codes_and_mortgages.html#l78608


----------

