Homeowners and SMEs throughout the State are “living in fear” that their loans will be sold to vulture funds, which has raised fears of “mortgage holders being thrown to the wolves if such a sale was allowed to proceed”.
This is the view of Fianna Fáil city councillor Peter Keane who was reacting to reports which show that a number of Irish banks are set to sell large loan portfolios to vulture funds.
It is understood that AIB is seeking to sell a portfolio of distressed loans called Project Redwood, while Permanent TSB is set to sell on c20,000 non-performing loans, 12,000 of which relate to family homes. Cllr Keane point out that such funds “are accountable to nobody and are completely beyond the reach of the Central Bank”, and that in many cases, funds “refuse to engage with the borrower”.
The situation has also led to concern being expressed by People Before Profit. The party’s Galway West candidate, Joe Loughnane said the Permanent TSB decision “has raised the prospect of mass eviction for up to 14,000 households”.
“The vulture funds now reckon that the time is ripe to start selling off some of this property,” he said. “They want to use financial distress to evict mortgagors so they can sell their property at a vast profit. Last year there was a ten-fold increase in the number of High Court cases seeking evictions.”
Cllr Keane said it was known these portfolios would involve SME loans and buy-to-let investment properties, as well as non-performing loans on family homes. He accused the Government of “allowing these funds to go completely unregulated”, with many such funds” refusing to come before the Oireachtas Finance Committee” to be questioned on their approach to managing loans.
Cllr Keane said the sales of these loans should not be allowed to proceed. “It is clear that vulture funds are lining up to buy portfolios of loans from the main banks in Ireland,” he said. “Banks have shown very little willingness to work through their non-performing loan book. Instead of selling their loan book and outsourcing their dirty work to vulture funds, the banks should be providing sustainable and reasonable solutions for customers willing to cooperate with them.”
Mr Loughnane said the Government must change the tax laws to “put the vulture funds under pressure”. He called for the imposition of the full 25 per cent non-trading tax on profits; the banning of “any form of shadow banking”; and the nationalisation of any vulture fund which sought to evade new regulatory tax measures. He said such measures would make vulture funds “more amenable to letting go their Irish property”.
However there are sharp differences between Fianna Fáil and People Beffore Profit on the issue. Cllr Keane said Fianna Fáil was opposed to the banks selling their loans to unregulated vulture funds and that the party was proposing emergency legislation to regulate the process, and he accused the Government of “refusing to regulate such funds”.
Mr Loughnane said the “political establishment is “crying crocodile tears over this” and he accused Fianna Fail, along with Fine Gael, of having “created the problem in the first place”.
“Fine Gael and Fianna Fail have made sure that Ireland’s financial sector is poorly regulated and allowed to get away with paying virtually no tax,” he sid. “Vulture funds are allowed to operate as ‘Special Purpose Vehicles’ and are not even monitored by the Central Bank. They avail of specially created loopholes such as the Section 110 to avoid paying tax. As a result 15 vulture funds paid an average of just €250 each even though they held over €10 billion of assets.”