# "Nationwide's soft loan to Phil Hogan"



## Brendan Burgess (8 Jul 2012)

I don't get the problem with the loans to Phil Hogan in 




> His first loan from the society was a standard loan to buy his home in  Kilkenny, and both capital and interest were repaid monthly on this  €330,000 mortgage.


As the article says - this was a "standard" loan.  There is no indication that the interest rate was favourable.  We don't know when this was.



> His next foray into the property market was to borrow about €450,000 to  buy a property in Haddington Square in Dublin 4. Unusually included in  the terms of this loan was that it should be interest-only for over a  decade.


Why is this "unusual"?  Bank of Scotland gave out full-term interest only loans.  Many PTSB property investors thought that they were borrowing full-term interest only.  If this was an investment property, it makes perfectly good sense for the borrower to buy it interest-only for as long as possible.  

As the article reports, he sold it in June 2010 and presumably repaid the mortgage with the proceeds of sale?  This is one of the reasons why interest-only loans are recommended for investment properties. They can be sold to repay the borrowings. 



> It used this Irish property bubble valuation to lend him another  €430,000 to buy his Portuguese holiday home. This loan was also  interest-only for a decade.


This may be a bit unusual, but I don't know.  

If he had repaid a lot of the capital on the home loan, then this would not have been excessive borrowing. 



> The Sunday Independent understands that staff at the Nationwide could  not find the usual loan-to-earnings assessments that would be demanded  by more prudent lenders when advancing individuals more than €1m.


The same argument was used to criticise the loans to Charlie McCreevy. His salary as a TD would have been public knowledge. 

It would also depend on his other assets. If Phil Hogan had substantial other net assets, then a large interest only loan would be ok. But if the loan was given on the basis of other assets, then there should be a statement of the other assets on file. 



> The favourable treatment of special borrowers contrasts with Fingleton's  well documented treatment of ordinary people, with the society prepared  down the years to chase widows to the Supreme Court and even send one  borrower to jail.


I am more familiar than most people are with the lending practices of the Irish Nationwide.   They were a sub-prime lender. They lent money to people who could not get loans elsewhere and they charged high interest rates. 

If Fingleton gave McCreevy or any other politician favourable interest rates, then I would be concerned. But this has never been alleged and it was not in Fingeton's nature to give out cheap loans. 

Just to be clear. It seems that Phil Hogan borrowed unwisely and it seems that the Irish Nationwide lent unwisely. But there is no evidence that these were "soft" loans as alleged.


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## Brendan Burgess (9 Jul 2012)

There was another story about Fingers in the [broken link removed]

The Irish Nationwide lent a developer Louis Scully €60m 
The underlying assets are now worth €5m 
Scully is claiming that they were non-recourse
The IBRC is saying that they are full-recourse
Fingleton wrote a letter in 2010 confirming that they were non-recourse

An interesting case. 

I would imagine that the court would presume that the loans were full recourse unless there is evidence, at contract stage, that they were non-recourse.

I assume that there is no loan contract in place for this loan. If there is, I presume it is either clearly recourse or clearly non-recourse.

If there was correspondence between the Irish Nationwide and the borrower negotiating the terms of the deal and the borrower was asking for non-recourse, then he might have a case. 

I doubt if a letter from Fingleton after he left the Irish Nationwide would carry that much weight. 

The article refers to loans to Scully himself. If the loans were to a limited company, then the IBRC would only have recourse to the company unless Scully had given a personal guarantee. 

Brendan


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## flattea2 (9 Jul 2012)

I don't really get what the Sindo are trying to imply either re Phil Hogan.

The loans seem pretty straightforward to me and look similar to loans that thousands got at the time.

They don't explain what 'soft' means - they have made it up themselves. 

I don't read the Sindo anymore - its become a complete and utter rag. Tend to get the Sunday Times.


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