Fianna Fáil Spokesperson on Finance Michael McGrath TD has said the arrears rate among family home mortgages owned by sub-prime lenders and so called ‘vulture funds’ is alarming and new solutions must be used to tackle this.
Deputy McGrath was commenting following the publication today by the Central Bank of the mortgage arrears statistics for quarter 3 of 2016.
“While I welcome the continued reduction in the overall percentage of mortgages in arrears, it has to be said that the most common restructuring options used by banks involve the mortgage holder paying more by way of interest on their mortgage over its full life.”
“For example, the two most popular forms of restructuring – arrears capitalisation (31% of restructure types) and term extension (13% of restructure types) – involve the mortgage holder ultimately paying more money to the bank,” added the Cork South Central TD.
“However, one of the most alarming aspects of today’s figures lies in the arrears rate among mortgages held by sub-prime lenders (36% of their mortgages area in arrears for over 90 days) and ‘vulture funds’ (50% of their mortgages are in arrears for over 90 days). The typical restructure options used by banks are not being used to the same effect among sub-prime lenders and ‘vulture funds’ and you would have to fear for mortgage holders in this situation.”
“’Vulture funds’ now own about 10,000 family home mortgages with a total value of €1.9bn. Of the total mortgage book of €1.9bn, mortgages worth some €1.3bn are in arrears. This underlines the scale of this problem. These funds are generally not directly regulated by the Central Bank. The borrower’s contact is with an intermediary who does not make the final decision regarding a restructure proposal or whether to commence repossession proceedings.”
“The government needs to move promptly to bring these funds fully within the ambit of regulation and to ensure that a broad suite of restructure options are put in place,” concluded McGrath.