Nope, you'll find they paid 95. If they put in 30% equity, they can currently borrow the balance at negative rates currently. The blended rate is a lot less than 3%, but they'll be making a return of over 10% on the money they put at risk themselves.
Pepper has bought Dankse's performing mortgage book
- Thread starter MrEarl
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If you happened to be massively in arrears, maybe you could negotiate, but they have no reason to offer a discount on a performing Mortgage, tracker or otherwise.
That's what Dilosk initially did when they bought the ICS portfolio, because they had no other way to fund it.
GS/Pimco have other resources, and this isn't their first rodeo. They've set up a funding vehicle. They'll wrap the entire portfolio into a securitised / covered bond type structure, and issue junior and senior debt secured against the portfolio. They'll have their own equity at risk covering about 10%, depending on the LTV of the portfolio. Their own funds might buy the junior debt because they're desperate for anything with a positive yield for cash at the moment.
They'll easily sell the senior debt at a negative rate in the current environment because it'll be a AAA rated bond.
That's how the world really works when you're backed by a fund with over 1 trillion under management, rather than a start-up with a poor credit rating.
I don't dispute your logic at all, but I was surprised to see you didn't give mention to the cost of managing the portfolio. Pepper won't be in this for nothing as we all know and even if they have agreed some sort of arrangement where they share in any upside, they'll still want ongoing fees.
I'm still surprised that the funds in question would be interested in this deal at 10% or thereabouts, I'd have expected them to be looking for mid teens in terms of their return, but perhaps 10%-ish is all they can get in the market at the moment and they have plenty of money available to invest.
The opportunity to lend new money on this loan book brings an obvious opportunity to increase the return, so when I see Pepper described as the Lender and we know they want to grow a loan book of their own, I continue to wonder about the potential for new advances (top up loans, with repricing of existing debt included as part of any deal).
Indeed, and I had included outsource fees in my post on this a few weeks ago.
https://www.askaboutmoney.com/threa...uy-danskes-mortgage-book.205377/#post-1533965
Just simplified above as there's a disbelief from some people that money can be earned on this.
I didn't say how much more than 10% could be made, but for context GS as a group earned just over 11% on their equity based in quarter ended June.
If they've a average margin of more than 1.2% over ECB on this book, that return quickly becomes >20%
This sale might be good news for people in your position. The loan sale deed would have included a disclosure about tracker issues, and which party is liable for any costs of redress.
The purchaser will want to know ASAP what it is they've bought, so they'll want rates corrected. They'll also need the redress amounts calculated. It's possible that they'll hold part of the purchase funds in escrow until it's resolved so they're not left short. As a minimum purchaser and seller will have agreed who's legally responsible for what, and from what date.
I know that's the way it works. Either way they will be fully indemnified by the reps and warranties. Should be interesting warranty bundles!
I'm really anxious to see if any other people are in the same boat as me (sorry for repeating myself). Danske have behaved deplorably and it's really frustrating that the government are only concerned about the big 5 lenders and we can't get any meaningful updates from Danske or the CBI.
I'm really anxious to see if any other people are in the same boat as me (sorry for repeating myself). Danske have behaved deplorably and it's really frustrating that the government are only concerned about the big 5 lenders and we can't get any meaningful updates from Danske or the CBI.
I found Danske good when they were in Ireland. I had no issues on things like credit card charge backs after my credit card was defrauded, no issues getting a fee refunded on share trading, no issue getting a bank draft released early into my account before it had fully cleared and so on. I though they were good to deal with.
But things may have changed since they no longer have a presence here.
But things may have changed since they no longer have a presence here.
Gordon Gekko
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I have a Danske “LTV Mortgage” at ECB +0.5% and received the letter regarding the imminent changes.
For what it’s worth, I’m not concerned at all; as I understand it, this is a transaction that’s based on a financial engineering angle rather than any planned skulduggery.
For what it’s worth, I’m not concerned at all; as I understand it, this is a transaction that’s based on a financial engineering angle rather than any planned skulduggery.
Got a letter today from Danske headed: IMPORTANT INFORMATION REGARDING THE SALE OF YOUR ACCOUNT(S). No mention in the rest of the letter about the account being sold (or not) just a statement to say 'All obligations remain due and owing to Danske Bank' and information regarding new contact details for Pepper. Typical Danske.
Strange - I didn’t get any letter. Danske will send what is called a “goodbye” letter when the sale closes (15th Dec I think) the Best Goldman will send a “hello” letter a few days later providing borrower with new contact details. They shouldn’t be sending any correspondence in between.
Anyone have any sense as to how we will be treated by our new lords and masters? Hopefully it will be the kick up the ass everyone on a SVR needs to heed Brendan’s advice and refinance where possible.
Pepper have the most expensive SVR rates on the market so not sure it augurs well, and they don’t provide fixed rate products! Will be interesting to see how this pans out for the SVR borrowers.
Anyone have any sense as to how we will be treated by our new lords and masters? Hopefully it will be the kick up the ass everyone on a SVR needs to heed Brendan’s advice and refinance where possible.
Pepper have the most expensive SVR rates on the market so not sure it augurs well, and they don’t provide fixed rate products! Will be interesting to see how this pans out for the SVR borrowers.
Another letter today saying that the last letter contained incorrect information and clarifying that the account had not been sold. It says that the heading should have stated the 'Servicing' of your account rather than Sale.
Got a letter today from Pepper, advising about changes on how they apply the TRS.
Going forward, they will offset the TRS against monthly mortgage repayments, rather than pay it to us separately after we make our mortgage repayment. I'm good with that. However, as part of a system change, they won't be giving any credit for the March 2018 TRS payment, until December 2018 (seems odd that they need nine months to put this right ?).
Pepper have also kindly advised on the front page of their letter that "your mortgage payment will remain static from March onwards (subject to the Year End Process, set out below)....". I'm surprised they didn't provide for the possibility of a future interest rate rise there.
Going forward, they will offset the TRS against monthly mortgage repayments, rather than pay it to us separately after we make our mortgage repayment. I'm good with that. However, as part of a system change, they won't be giving any credit for the March 2018 TRS payment, until December 2018 (seems odd that they need nine months to put this right ?).
Pepper have also kindly advised on the front page of their letter that "your mortgage payment will remain static from March onwards (subject to the Year End Process, set out below)....". I'm surprised they didn't provide for the possibility of a future interest rate rise there.
Slightly confusing alright but does it make any material difference as there won't be a month without TRS being refunded or applied?
They are taking circa 9 months free credit on all customers TRS payments for the month of March.
That's a material difference (obviously more for them, than for each individual customer)
