Vulture fund mortgage customers see an exit

| By Aidan Quirke

This week a judge in Tullamore has done more for the Irish mortgage market than any government minister has in 5 years. Judge Mary O’Malley Costello put Pepper Asset Management Service under notice with the approval of a 25 years, 2.5% fixed rate mortgage as part of a personal insolvency plan.

The judgement is a lifeline to distressed mortgage holders with asset management companies, especially as they are on variable rates of up 8%. These companies are making a huge profit on the back of mortgage holders, so much so, Pepper refused to divulge any commercial information in court. This was a critical part of the Judges judgment; she sought mortgage costs from Pepper, but none were forthcoming.

Upwards of 60,000 mortgages are held by asset management companies and so called vulture funds who bought loan books at a discount while pushing up interest rates on these loans.

In my own case, I was trapped by the system and with a mortgage that never under performed. I initially had a mortgage with EBS, moved to National Irish Bank to get a better rate. Subsequently NIB was bought by Danske who after several years exited the retail banking sector and hired Pepper Asset Management Services to manage the mortgage. Dankse Bank eventually sold their loan book to Capita Finance who after a few years then sold the loan book to Pepper. It was a game of mortgage table tennis that I had absolutely no control over. A few attempts at moving were not successful due to negative equity and only in the past year did I secure a fixed rate mortgage.

There are many like me who were caught out by buying at the peak of the property market in 2007 and have faced over a decade of negative equity, locking them in with their mortgage provider. This judgement now paves the way for customers of these funds to force better deals and fixed rate deals that will make their loans more affordable.

It took a judge in a district court to make these companies accountable. It says much more about the state of our government and their effectiveness.