Fresh hope of deal for those struggling on 100pc mortgages
DEBT-ravaged householders -- many of whom borrowed every penny of the value of their homes at the peak of the boom -- have been given fresh hope of a deal after it emerged that new lenders are taking over their loans.
Bank of Scotland (Ireland) is attempting to sell its mortgage book here, in a move that will mean its 80,000 mortgage holders are more likely to get a write-off deal on their debts.
Companies that buy up mortgage and consumer loan books are more likely to agree to write off debts as they have bought the loan portfolios at a massive discount. Many of these took out 100pc mortgages.
And now it has emerged that State-owned Permanent TSB has signed a €287m deal to sell its car loans, consumer loans and some business loans. The buyer is understood to be Deutsche Bank.
Earlier this year, Australian group Pepper bought the mortgage book of GE Money and has already started writing off mortgage holders' debts.
Bank of Scotland/Halifax closed its operations here two years ago and now manages the 80,000 residential and buy-to-let mortgages from Britain.
Most of the mortgages are trackers, with many of the buy-to-let mortgages on deals that mean only the interest is being repaid.
Huge numbers of the mortgages it issued were for 100pc of the value of homes at the peak of the boom.
Those who took out 100pc mortgages are now heavily in negative equity after house prices collapsed by half.
Earlier this week, the bank sold its Irish commercial loan book at a massive discount – one-tenth of its original value.
And it emerged this week that the bank has written to residential mortgage holders telling them they were no longer protected under Central Bank rules here, particularly those that apply to those behind on their repayments.
It claimed yesterday this was an error and mortgage holders here still had protections under regulatory rules, even if they were in arrears.
Now the bank's parent, Lloyds, is understood to be trying to offload its Irish mortgage loan book. It has €8bn in mortgages, with around 22pc of the value of the mortgages in some form of arrears.
The bank closed its 44-branch banking operation in 2010 and handed back its banking licence. It still controls the mortgages but has outsourced the management of them to debt recovery and loans servicing company Certus.
Bank of Scotland has already sold its car-leasing operation to Bluestone Asset Management, a company that brokers said was more inclined to strike deals with heavily indebted consumers.
And yesterday it emerged that state-owned Permanent TSB has signed a €287m deal to sell its car loans, consumer loans and some business loans. The buyer is understood to be Deutsche Bank.
The bank has also agreed to hand over the business units that look after, or service, the loans to a new company set up by managers of the bank's former personal finance unit.
They have been given the new contract to manage the book on behalf of its new German owners.
The car loans and consumer loans are being sold to a newly created company called Consumer Auto Receivables Finance. It is understood to be controlled by global banking giant Deutsche Bank.
Finance experts said the sale of loan books to new operations offered the best hope for consumers to get deals on their debts, especially for those in trouble meeting repayments.
Karl Deeter of Irish Mortgage Brokers said Bank of Scotland was planning to sell its mortgage loan book.
Operators that buy distressed loan books at a heavy discount can then make a profit by off-loading the loans or mortgages for more than they bought them for. This was how Australian group Pepper was able to recently offer a €110,000 write-off for a family provided it sold its home. Mr Deeter said the sale of loan books offered one of the best prospects for a banking recovery.
Bank of Scotland/Halifax said it had a policy of not commenting on whether or not it was planning to sell any part of its business.
Michael Dowling of the Independent Mortgage Advisers' Federation said buyers of bundles of loans from banks here were more business-like when it came to negotiating debt write-downs with customers.
He said it was very difficult to get deals out of domestic lenders but companies that bought distressed loan books would agree a settlement where they could.
Domestically owed banks have shown a marked reluctance to agree debt deals with distressed homeowners despite the introduction of the personal insolvency legislation, which is expected early next year.