Central Bank praises vulture funds for embracing fast-track debt deals for older mortgage holders

[ClubMan]

Funds praised for embracing fast-track debt deals for older mortgage holders

VULTURE funds that own distressed mortgages have been encouraged to follow the lead of two funds that are approving large numbers fast-track debt deals.

www.independent.ie

So...

1. The CB are finally realising that interest only into retirement and for lifetime if necessary is NOT unsustainable and is a legitimate solution in some cases?
2. Maybe they'll eventually allow regular non vulture fund lenders to employ such solutions?

 

[Raging Bull]

Such solutions where there was positive equity was already a feature of guidance issued by the CB to them in 2014 !!

But they all as a group would not let mortgages go past 70. As a PIP I have two such arrangements one to 85 and the other to 90 but not with a mainstream bank.

 

[ClubMan]

guidance issued by the CB to them

To whom? Vulture funds specifically? All lenders?

But they all as a group would not let mortgages go past 70. As a PIP I have two such arrangements one to 85 and the other to 90 but not with a mainstream bank.

I thought that this was because the CB would not allow it or at least frowned upon it?

 

[Raging Bull]

Have a read its quite clear this was permissible on page 11,12...instead these banks sold these loans most likely at a loss with the taxpayer picking up the tab as they get tax write off on losses...the funds come in..restructure sensibly and make money

If there was a will it could have been done

https://www.centralbank.ie/docs/default-source/news-and-media/press-releases/2015/April/internal-guideline---sustainable-mortgage-arrears-solutions.pdf?sfvrsn=0

 

[ClubMan]

Thanks @Raging Bull - so it was the (mainstream) lenders rather than the CB that stood in the way of deploying solutions such as interest only into retirement or for life?

 

[Raging Bull]

Yes but having said that house prices have risen a lot since 2014. Maybe a case looked at in 2016 was unsustainable at no equity whereas now it could be...…….All I ever heard in court was the Central bank said we cant do it...which when you read the document is not the case

 

[Brendan Burgess]

Hi Raging Bull

While that document is interesting, banks are not as free to extend loans as you suggest.

And my understanding is that if they do offer this solution, the loan will be classified as a Non Performing Loan and therefore they will have to provide additional capital against it which means in practice that they cannot do it.

The funds are not subject to these capital requirements and so have an advantage over the banks. They can buy the loans from the banks and keep them for the long term.

Brendan