Thursday 22 March 2018

Banks ramp up client probes to claw back debts

Transfer of assets to families under scrutiny


BANKS seeking to recover debts have begun gathering customer information, with the number of judgement and land registry searches and collation of so-called 'soft information' now running at unprecedented levels.

Clients of the country's banks and building societies are coming in for ever-increasing levels of scrutiny.

Such is the determination amongst financial institutions to maximise the recovery of loans that a number of them have significantly ramped up the practice of trawling through records held at the Land Registry and Registry of Deeds to establish the extent of their customers' property assets.

Professional law searchers have been engaged to carry out investigations in an effort to ascertain how many properties their customers own, and whether or not those properties have any mortgages attached to them.

In cases where properties are mortgage-free, or where mortgages have been satisfied, financial institutions, and indeed any creditor seeking repayment of a debt owed to them ultimately has it within their discretion to apply for a judgement mortgage through the courts.

Valid for 12 years from the date that they are registered, judgement mortgages must be paid off with interest, and statutory costs, if the debtor sells the property or refinances the mortgage on it at any time during that period.

While judgement mortgages are generally seen as a last resort, they can be registered against any property owned by the debtor, whether that property is owned solely, with a spouse or any other third party.

Attempts by individuals with mortgage-free or unencumbered property assets to transfer ownership to members of their immediate family (typically their children) are also being investigated and could -- in certain cases -- be stymied by financial institutions seeking repayment of monies owed to them.

Indeed, the Sunday Independent has already been contacted by one Dublin couple who recently made inquiries at the Land Registry on the procedure for transferring two mortgage-free apartments into the ownership of their children.

According to them, they were told by a Land Registry official that their bank had already made inquiries in relation to those properties.

Such asset transfers can be fraught with difficulty depending on the individual's circumstances.

In cases where the person disposing of a property has a debt for which they are being pursued by a bank or other creditor, the transaction can be deemed to be void by the courts on the basis that it is a 'fraudulent conveyance', aimed at enabling the individual to avoid the imposition of a judgement mortgage.

The growing practice of tracing the assets of indebted bank customers through the registry records, while unpalatable, will hardly be surprising given the national obsession with property acquisition over the past decade.

Asked for a comment on the practice, an AIB spokeswoman insisted that its investigation of customers' property assets was being confined to those whose loans were being transferred to Nama.

Efforts to contact a Bank of Ireland spokesperson yesterday for comment proved unsuccessful.

The latest intensification of the debt recovery process by the country's banks and building societies comes just months after the Dutch-owned ACC Bank was revealed, by the Sunday Independent, to have paid €1.7m in fees, including Vat, to Dublin-based law firm Matheson Ormsby Prentice to pursue outstanding loans to property developers and other business people around the country.

Sunday Independent

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