Upsurge in judgments and repossessions feared as 'vulture funds' close in on debtors
Published 12/06/2016 | 02:30
More than €4bn worth of court-ordered debts have been registered against 3,243 borrowers since 2010, with Danske Bank obtaining the largest value in judgments once non-bank entities such as Nama and the former Anglo Irish Bank are excluded.
Danske tops the league of banks pursuing Irish debtors in the courts.
Danske obtained almost €56m in registered judgments against 110 debtors in the first five months of the year alone according to credit agency Stubbs Gazette.
Danske was followed by Allied Irish Bank which obtained judgments valued at just over €38m against 34 debtors in the same period.
Since 2010, toxic loans agency Nama, which last week reported profits of €1.8bn in 2015, obtained just under €1bn judgments against 34 borrowers.
The agency's annual report shows that it generated €9.1bn in cash during 2015, with €8.5bn coming from asset disposals.
It has registered judgments of almost €682m against 814 borrowers since 2010.
Bank of Ireland has pursued a larger number of borrowers (957) during that time, although the value of judgments is significantly less, at some €377.42m
State-owned AIB has pursued 523 borrowers since 2010, securing judgments valued at €422.43m, followed by Ulster Bank which secured judgments valued at some €344m against 211 debtors.
James Treacy, CEO of Stubbs Gazette, said that he anticipates a "huge upsurge" in judgments and repossessions over the coming years as vulture funds move on distressed borrowers whose loans it has bought.
The so-called "vulture funds" own over 40,000 principal homes and investment properties here in Ireland.
It is understood that a fifth of mortgages sold to 'non-bank'entities are in arrears.
To date, only two judgments valued at 1.8m were secured by one such fund, Goldman Sachs, through Ennis Property Finance, one of its special purpose vehicles, according to Stubbs data.
However, this is expected to rise now that loans are being actively managed.
"The funds have a reputation for being very tough but pragmatic when it comes to doing deals," said Mr Treacy.
"Presently it would appear that their preferred approach is to negotiate deals outside the courts but that is not to say that this will not change if they are not achieving their forecasted return on investment.
"If their pre-legal strategies are not profitable I would expect to see a huge upsurge in both judgments and repossessions over the coming years."
David Hall, Director of the Irish Mortgage Holders Association, said that borrowers including professionals such as lawyers, doctors and accountants whose loans have been transferred to vulture funds have been operating under a "false sense of security" for the last 18 months.
"It will be carnage," said Mr Hall, who said dealing with vulture funds will be a "nightmare" for many borrowers.
"It's like fighting with Conor McGregor with your hands tied behind your back".
Sunday Indo Business