Wednesday 19 December 2018

Thousands of PTSB borrowers will see home loans transferred to Pepper

Michael McGrath, Fianna Fáil spokesperson on finance. Photo: Gareth Chaney, Collins
Michael McGrath, Fianna Fáil spokesperson on finance. Photo: Gareth Chaney, Collins

Donal O'Donovan and Kevin Doyle

Thousands of borrowers will see their mortgage debts shifted from Permanent TSB to be managed by Pepper, despite engaging with the bailed-out bank on their arrears.

It breaks the long-standing practice among almost all lenders that borrowers who engaged with their bank after falling into arrears during the crash would have their cases dealt with internally by their own lender.

However, the Permanent TSB along with other banks has come under intense pressure from regulators at the European Central Bank (ECB) to slash its stock of impaired loans.

Permanent TSB said it has agreed a complex deal to shift €1.3bn of mortgages into a so-called securitisation structure - taking the debts off the bank's balance sheet.

That's despite the borrowers having previously agreed restructuring deals with the largely State-owned bank.

All told, about 6,272 borrowers are affected. Almost all of the debt is secured on the borrowers' primary homes.

It includes thousands of so called split mortgages - where the borrower and bank agreed that part of the debt would be serviced and the rest parked for an agreed period.

Pepper and Permanent TSB both said the terms of any restructuring agreed between customers and Permanent TSB will be unchanged after the deal.

The Central Bank bank said consumer protection codes and regulations will continue to apply as before.

But the mass handover of homeloans whose borrowers engaged with their lender after getting into arrears is sure to be highly controversial.

The bank had already stripped the same loans out of an earlier loan sale, in response to a political backlash. Under the new deal announced by Permanent TSB the loans will be managed by Pepper after a transfer date pencilled in for around six months from now.

Fianna Fáil's finance spokesman Michael McGrath said customers must not become the victims in PTSB's change of strategy.

He said the bank's move is "undoubtedly better" than an outright sale to a so-called 'vulture fund' but "important questions need to be answered as to how exactly this will work for the affected borrowers".

Mr McGrath is to seek an assurance that the investor benefiting from the securitisation income stream will have "no role whatsoever in the management of the loan portfolio". And Pepper has agreed to appear before the Oireachtas Finance Committee to explain how this portfolio will be managed.

Sinn Féin accused the Government of being "complicit" in the sale due to its failure to introduce legislation in the area. "There is simply no willingness from Fine Gael or Fianna Fáil to stop these sales including the sale of family home loans," SF TD Pearse Doherty said. "Banks should be made to work through their individual loan."

Irish Independent

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