Sub-prime firm makes profit despite downturn
The company behind sub-prime lender Stepstone Mortgages posted an operating profit according to its latest accounts despite the downturn in the Irish property market and the collapse of its ultimate owner, Lehman Brothers.
Filed accounts for SM Funding show an operating profit of almost €400,000 with interest received of €8.5m. The company made a small net loss of €44,914. Lehmans went into chapter 11 bankruptcy protection on September 15, 2008.
Despite this the directors of the Irish company, which provides the main Stepstone company with financing, said it could remain a "going concern".
Stepstone Mortgage Funding Ltd hit the headlines before Christmas when it was granted a repossession order against a couple who lost their jobs when Waterford Crystal closed.
The court heard the couple, whose son has special needs, had written to the lender to renegotiate their terms when they were laid off, but the company did not respond.
Counsel for Stepstone accepted a letter had been received by the company's customer service department and was not passed on to the relevant section or replied to.
Sub-prime lenders, who charge higher interest rates than what are called prime lenders, tend to take more repossession actions than mainstream lenders. The sub-prime lenders are not covered by a code of conduct on repossessions agreed by members of the Irish Banker's Federation (IBF).
Repossessions and mortgage arrears are becoming a significant issue for the banking system.
The IBF has commissioned two senior ex-bankers to develop proposals to deal with the growing arrears problem. Former KBC Homeloans chief executive Tom Foley and former Bank of Scotland (Ireland) head of executive projects Jim Rourke are expected to deliver reports within weeks on how the banks can develop common approaches to the problem.