Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697804162830.pdf (Ireland)
Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach Correspondence Item No: 2019/1025 Submission to the Oireachtas Finance Committee on the No Consent, No Sale Bill From Brendan Burgess – Founder of the Consumer Forum – Askaboutmoney.com 27th March 2019  Irish mortgage holders are the best protected in the world  Irish mortgage holders pay the highest rates in the eurozone  This is not a coincidence – the first leads inexorably to the second  We need to reduce mortgage rates, not increase them  We need to reduce protections for mortgage defaulters, not increase them.
Irish borrowers are the best protected in the World and don’t need any more protection The protections for Irish defaulters are extensive already:  A Code of Conduct on Mortgage Arrears which ties the hands of the banks  An effective ban on repossessions which allows borrowers to stay in their homes for up to 10 years without making any payment  A unique Personal Insolvency process which allows the court to write down the mortgage amount and reduce the interest rate  And, after all that, a Mortgage to Rent Scheme, which allows the borrower to stay in their home at enormous expense to the lenders and to the Irish taxpayer These protections are excessive.
They discourage borrowers from addressing their problems at an early stage, because the borrowers know that the lenders can’t take any effective action.

It would be better for borrowers if they knew that they faced a real risk of losing their home, because they would then prioritise their mortgage.

And now this Bill proposes to tie the hands of the lenders even further.
This bill is yet another message to potential entrants to the Irish mortgage market: Keep Out This bill says to any lender considering entering the market – once you enter the Irish market, you must stay here forever.

You can stop writing business but you can’t sell the existing mortgage book.

Any new business venture is risky.

Lending money is particularly risky.

Lending money in Ireland even more risky.


No company would set up a business if they are obliged to stay in that market forever irrespective of how the business is going and irrespective of the company’s own financial position.

But that is what this bill is telling them – if you set up in Ireland, you will be stuck here forever, irrespective of how badly it goes.

We need to persuade new lenders to enter the Irish market not dissuade them.
If you want to proceed with this bill, it should not apply to new lenders coming into the market I am totally opposed to this bill.

But if the Oireachtas decides to approve it, it should be amended to apply to mortgages in existence at the time the bill is passed.

The No Veto PIA legislation applies only to mortgages which were in arrears on or before the 1 January 2015.
This would let potential entrants to the market know that they would not be affected by the bill and could leave Ireland if it does not work out for them.

This bill could be the nail that breaks the camel’s back for some existing lenders Ulster Bank and KBC review their operations in Ireland from time to time.

Fortunately, so far, they have decided to stay.

They are the only two lenders who don’t engage in cash-back trickery.

They have some of the cheapest fixed rates in the market.
At the next review, this Bill if passed, would be a negative towards staying in the Irish market.

It would not be enough on its own, but when added to all the other difficulties in the Irish market, it might just push one of them out.

Are the customers of vulture funds treated any worse than the customers of active Irish lenders?

This bill is based on the premise that Irish lenders are paragons of virtue in their treatment of defaulting borrowers and vulture funds just want to repossess everyone’s home.
The Central Bank has found that there is no difference in outcomes.

I understand that MABS says that the Vulture Funds are very difficult to deal with.

The truth lies somewhere in between, but much closer to the Central Bank position.

In my experience, you cannot say: Existing banks are always good and vulture funds are always bad.

By and large, the Irish banks will restructure a mortgage wherever it is possible.
But occasionally, they will act unreasonably and seek an order for possession but the courts will protect those borrowers.

And it’s the same for the vulture funds.

By and large they will restructure a mortgage wherever possible and from time to time, they will act unreasonably.

And in those cases, the courts will protect the borrower.

Tanager is a good example of unacceptable behaviour by a vulture fund.
They used to tell customers that they did not offer arrears capitalisation as one of their solutions.

Arrears capitalisation is the most basic of all solutions.

Without it, a loan can’t be properly restructured.

So they may as well have said that they didn’t restructure mortgages.

But they got nowhere with that policy as the courts protected these borrowers.

They are now restructuring mortgages in the same way that other lenders do.
Some customers have got deals from vulture funds which they would not have got from active banks.

Tanager gave substantial discounts to customers who could switch their mortgage to another lender.

An effective ban on Bank of Scotland selling their mortgages to Tanager would have prevented these customers from benefitting from these deals.

Borrowers with unsustainable mortgages can do much better deals with vulture funds.
The vulture funds are prepared to write off mortgage shortfalls where borrowers are in negative equity.

In cases of positive equity, they will sometimes give discounts to borrowers who sell up.
The vulture funds have done proportionately more Mortgage to Rents than the mainstream banks BoI EBS PTSB KBC AIB Ulster Active Banks 80 67 18 16 11 3 Pepper Start Shoreline Others Non-banks 133 61 30 26 Total banks Arrears over 720 days 67% 195 (43% of total) Total “vultures” 250 (57% of total) 33% Vulture funds are much more effective in getting MTRs over the line.

The banks have 67% of the PDH’s over 2 years in arrears, but have done only 43% of the Mortgage to Rents.
If you want to discourage the banks from selling loans to vulture, make it easier for lenders to repossess houses where the borrowers are paying nothing It’s disgraceful that someone can pay nothing for 10 years and remain in their home.

Everybody should be paying something towards their accommodation costs.

A person in receipt of social welfare who lives in social housing is required to pay around 15% of their income in rent.

But we have no such requirement for a mortgage holder.
Where someone is paying nothing, they should lose the protection of the CCMA and the courts.

If this were to happen, then the lenders would probably not need to sell mortgages to vulture funds.

The potential big losers from the sale of their mortgages to vultures, are the non-tracker mortgage holders who could face arbitrary interest rate increases Performing tracker mortgage holders don’t have anything to worry about.
But non-tracker mortgage holders who can’t switch to another lender should be very nervous.

Irish borrowers are already paying about €200 a month more than they should be in mortgage interest.

There is nothing at all to stop the purchaser of a loan from hiking up the mortgage rate to 10%.

And there is nothing at all that the borrower or the Minister for Finance or the Central Bank can do about it.
The Department of Finance and Central Bank know about this and yet oppose all efforts to control mortgage rates.

This would be an area worth pursuing for the Oireachtas: - legislation to allow some independent authority to set the mortgage rates for lenders who are no longer active in the Irish market.

ptsb split mortgages should not have been sold It was a disgrace that the Central Bank forced ptsb to sell their performing split mortgages.

But this horse has well and truly bolted.


There is nothing that can be done for the ptsb borrowers now that they have been sold.

The ptsb situation was unique and no other lender will be forced to sell performing split mortgages.
Some suggested priorities for our legislators  Do everything possible to bring down mortgage rates for the 300,000 non-tracker borrowers o Abolish the cash-back and other confusing incentives o Force the banks to offer existing customers the same deals as new customers o Lobby the Central Bank to change the capital rules to make it easier for new lenders to enter the market  Provide support to borrowers who are in genuine distress through a Mortgage Assistance Payment o We give huge help to renters who can’t afford their rent but no help at all to borrowers who are struggling with their mortgages o Do what they do in the UK – pay the mortgage interest but provide it as a loan secured on the property which will be repaid when the home is sold.
 Make it easier for lenders to take early action where borrowers are paying nothing o This will help bring down mortgage rates for all customers o It will also help some struggling borrowers as it will force them to face up their problems earlier