Irshadgul News report,
Repossession orders have been made for an investment fund in cases where less than €6,000 was owed on the mortgage, and where the mortgage was still being paid with €11,000 owed, an Oireachtas committee has been told.
The Money Advice and Budgeting Service (Mabs) criticized the “power imbalance” between individuals and institutions with “an army of lawyers at their disposal” and said that in these cases the key constituent mortgage holder was not present in court.
MABS Social Policy and Research Executive Dr. Amy Lajoie told the Oireachtas Committee on Reform on Finance, Public Expenditure and Investment Funds that so-called vulture funds are playing an increasing role in Ireland’s financial sector lending directly to individuals.
Dr. Lajoie said non-bank lenders are also expected to increase their share of mortgage lending from 3 percent in 2018 to 13 percent in 2021, and they own more than half of home mortgages outstanding.
“As of September 2022, non-banking entities have more than 56% of all home mortgages in arrears, up from 43 percent in March 2021 and 37 percent in March 2019,” she said.
Sinn Féin TD Mairead Farrell described the increase as “truly shocking”.
Mabs also raised concerns over loan transparency and communication, chain of loan ownership, and interest rate hikes, with some customers facing increases of over 6% over the past six months, and a lack of public accountability.
Dermot Sreenan, business manager for Mabs, said they were experiencing an “increasing number of people accessing our services”.
“It’s all hands on deck,” he said.
The shrinking of the retail banking market and the exit of banks means that the non-banking unit market will grow further, he said.
“We’re also concerned about interest rates rising because we think it’s going to drag more people into default and push them into the process of mortgage arrears protocol,” he said.
Also addressing the committee, Elise Barry, chief executive of the Free Legal Advice Center (FLAC), criticized recent consumer protection acts that largely facilitated the growth of the loan sales industry.
Sinn Fein finance spokesman Piers Doherty said the sale of such loans to funds with short-term goals was a “recipe for disaster”.
Dr Lajoie said the latest Central Bank data showed 17 authorized retail credit firms and 26 “transitional” firms in this category, as well as 18 credit servicing firms and a further three “transitional” firms.
View FLAC CE @eilis_barry and senior policy analyst Paul Joyce addressed the joint Oireachtas committee
Finance, public expenditure and the Taoiseach on the subject of non-banks/vulture funds https://t.co/3nfbXpPO15
— FLAC (@flacireland) March 8, 2023
Paul Joyce, senior policy analyst at Flack, said these firms are essentially given regulatory status in order to do their business.
“Debt sales are now endemic in the financial system,” he said.
He said firms making the “transition” would continue to operate while awaiting authorisation.
Mr Joyce said Flack was “very upset” by the lack of progress in the review of the Personal Insolvency Act, which is due to expire at the end of 2017.
He said rent arrears were another “big problem”.
“There is no data published by the Central Bank on a quarterly basis on the number of outstanding loans of all types,” he added.
Mr Srinan said that 25 per cent of the customers who responded to the recent survey were in the rental market and 45 per cent of them saw an increase in the cost of housing in the last six months.
Rising costs, let’s tackle them together!
Household bills, grocery stores, heating and fuel costs? The list seems endless!
For more information on how to manage and budget your costs, visit https://t.co/k1db6UbfRQ.#let’s work together pic.twitter.com/xdncwRllAo
– MABS – The Money Advice & Budgeting Service (@MABSinfo) March 3, 2023
“We’re hoping when [eviction] With the moratorium ending at the end of this month, our services are seeing a huge increase,” he said.
Committee chairman John McGuinness said “hundreds” of meetings had taken place between the Vulture Fund and the Department of Finance.
He asked whether there is an imbalance in how willing the department is to listen to mobs and flak.
“I would suggest that there has been a decline in consulting in the years since the global financial crash,” Mr Joyce said.
He said that the flack “doesn’t get the same ear” it once had in the past and that it was “hard to believe” that the legislator’s actions were protecting consumer interests.
Mr Joyce said it was almost as if debt sales were now a “proven act”.
He said that this has been facilitated by the global financial crisis and indiscriminate lending by the Central Bank.
Mr Joyce criticized the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022, which he said allows a hire purchase agreement by a retail credit firm to charge 23% APR.
“It is really beyond belief how this is going to be allowed to happen,” Mr Joyce said.
He also warned of the possibility that Ireland was about to go into “some sort of mini-credit bubble and a series of debt problems”.
Bernard Durkan, vice-chairman of the committee, said there have been incidents of “intimidation” of borrowers by lending institutions.
Ms Farrell said the methods of some vulture funds “horrify people” and it “has a huge impact on people’s lives”.
Mr Srinan said the recent pressure on a Mobs client linked to a vulture fund was “terrible”.
Varadkar hits out at ‘demonisation’ of landlords
Mabbs national development officer Ger O’Brien said there was a sense of “distress and despair” for clients and that the process was also having a “corrosive effect” on Mabbs advisors.
“It’s so intense,” he said.
He said some consultants have had to leave because they are “taking the caseload home”.