Loans Reclassified as NPL

[Paul@Rooden]

Has anyone taken out a complaint with the FSPO against an Irish Bank regarding the arbitrary reclassification of their loans - from performing to non-performing which appears solely for the purpose of offloading the loans to a foreign fund

 

[RedOnion]

No bank would 'choose' to make your loan non-performing. Doing so has a direct P&L and capital impact in the bank. Similarly, a sale to a fund would be at below par value, so if it was performing,vwhy would a bank want to sell it?
If your loan contract allows for the loan to be sold, being non-performing is not a pre requisite.
How do you know your loan was classified as non-performing?

 

[Paul@Rooden]

If a loan is interest only on a tracker with 15 years remaining then the value of that loan is diminished. If the loan is 100k then the 'cash in' value would be about 50k. If the value of the asset is lets say 80k then there would be a potential for two parties to make a deal...bank/fund.
If the bank clearly states that only non-performing loans are sold then the bank would be looking at any loans that could possibly,but arbitrarily, be re classified in order for them to meet certain central bank criteria.
If it is clearly stated in correspondence that the loans were reclassified that covers that element.

 

[Brendan Burgess]

Hi Paul

If you have a performing loan on a tracker, then you have nothing to lose by having it sold on. The terms and conditions remain the same.

It doesn't matter if the bank describes it as an NPL or as a pink loan or whatever.

In fact, it might be to your advantage having it sold on. The banks do not offer discounts for early repayment of tracker mortgages and they are very unlikely to ever do so. While the funds don't offer discounts either, it's possible that they might do so at some stage.

Brendan