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Thursday 16 August 2018

Britain to sell off €969m block of 'equity release' mortgages

The UK government has fired the starting gun on the sale. Photo: PA
The UK government has fired the starting gun on the sale. Photo: PA
Donal O'Donovan

Donal O'Donovan

The UK government is to follow last week's sale of €5bn of Irish mortgages - originally issued by Bank of Scotland Ireland (BoSI) - by auctioning an £850m (€969m) block of mortgages acquired from failed lenders during the financial crisis, according to people familiar with the matter.

After the sale by Lloyds Banking Group of a portfolio of Irish home loans to a consortium led by Barclays Bank and Pimco last week, the UK government has now fired the starting gun on the sale of the mortgages.

A first round of bids for the portfolio of lifetime mortgages, a type of equity-release loan, was due on May 18, sources said, asking not to be named because the matter is confidential.

UK Asset Resolution - a government agency in charge of the country's stakes in bailed-out banks - is overseeing the sale, which is dubbed Project James, they said. Such mass sales of mortgages have become common in Ireland, but remain highly controversial.

A spokeswoman for UKAR confirmed a sale process for its equity release mortgage portfolio has begun, declining to comment further.

Under the terms of the lifetime mortgages, when the borrower dies or goes into long-term care, the property is sold and proceeds are used to redeem the loan. If the sale generates less than the amount owed, UKAR does not have the ability to recover money from the borrower or the estate.

Last month, UKAR sold a £5.3bn mortgage portfolio to a group led by Barclays and Pimco. (Additional reporting Bloomberg)

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