Email The vultures swooped down on distressed householders in this country in their droves, but they are slowly realising they will not be making the big financial killing they expected. In fact, the invasion of the funds into this country has turned out to be less of a feeding frenzy by vultures and instead is looking more like a dead duck.
Certainly, the vultures made a packet out of commercial property, but the situation with the purchase of distressed residential mortgage books is proving a lot more problematic for them.
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This is despite vulture funds that came in here being facilitated through «preferential tax laws», according to a United Nations Special Rapporteur report on housing.
Vulture funds, or private equity firms and pension funds which buy up distressed loans at big discounts, have invested heavily in this market in the wake of the property market collapse more than a decade ago that saw thousands of homeowners get into deep arrears.
They were responding to the fact that banks are anxious to get bad debts off their books.
Vulture funds buy the properties with the intention of taking charge of the assets.
Previous governments were happy to see the vultures playing a role in sorting out our mortgages mess. Former finance minister Michael Noonan was accused of «rolling out the red carpet» for vulture funds buying up mortgages and other distressed assets after figures obtained by this newspaper showed that officials in the Department of Finance met with private equity vulture firms 65 times in 2013 and 2014.
But a number of recent developments have meant the massive punt the vultures took on this country is rapidly turning into a beaten docket.
The big problem for the vultures has been trying to get repossession orders in the courts. Judges are reluctant to hand over possession to a fund, while the Land and Conveyancing Law Reform (Amendment) Act 2019 has strengthened the hand of homeowners fighting repossession.
Some 6,000 repossession cases have been lodged in the courts lately by vultures, but very few actual repossession orders are being granted.
This has meant that non-payers do not feel under pressure to meet their mortgage payments, while there is also reluctance among others to do a deal with the new owner of their loan.
Complicating the situation for vultures is the fact the personal insolvency regime is gaining a lot more traction. This involves court-approved debt write-offs for distressed mortgage holders.
And the message that vultures will do debt restructuring deals — something strenuously disputed by mortgage campaigner David Hall — has convinced some of the 27,000 mortgage account holders in deep arrears that there is no pressure to re-start paying their loans, even though some have the capacity to do so.
All of this means the punts by the vulture fund are coming unstuck.
It partly explains what seemed like a U-turn by the Central Bank lately when its deputy governor Ed Sibley encouraged banks to do restructuring deals rather than rushing to sell off non-performing loans. The Central Bank knows the mass sale of non-performing loans has turned sour.
The upshot is that vultures that bought distressed mortgage books are now anxious to offload them, even at a loss. One debt advocate has been approached by two vulture funds lately offering loan books for sale.
Vultures are also attempting to push up the interest rates on those parts of their loan books that are performing.
Expect to see more interest rate rises, and more sales of portfolios at a loss.
What it all points to is that for vultures, the buying of Irish distressed mortgage books has provided slim pickings rather than the gorging on fat carcasses they expected.
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