Legal loophole that stops banks seizing houses 'too good to be true', says expert
IT is a promise that sounds too good to be true – claims of a legal loophole that will allow desperate borrowers to stop the banks seizing their homes and other assets.
And last week in a small meeting room behind a bar in a Kilkenny hotel, 13 people with large debts who expressed an interest in joining the so-called "Kilkenny Trust" heard that more than €1bn of assets linked to more than 1,000 people have so far been transferred to a new legal entity to stop them being seized by creditor banks and financial institutions.
It was one of two meetings held in the same premises, with more meetings of other potential clients scheduled for Thursday.
It is claimed that as many as 20 people a day are joining the trust.
Details of the meetings are being spread simply by word of mouth, and the trust is growing in spite of warnings by financial experts that distressed borrowers should seek legal advice before entering the arrangement.
One of the men behind the scheme, Co Kilkenny-based David Walsh, declined to divulge how the trust actually works when contacted by the Sunday Independent yesterday.
However, he insisted the scheme was working and protecting people who fear their property will be taken by the banks.
Mr Walsh also insisted that the trust was "private", and said he could not give details about clients' personal business.
"It is a private trust held in private. Some of the stuff that has been written is simply wrong," he said.
He added that he could not divulge how the trust worked, and said that newspapers that questioned the scheme were being dictated to by the banks.
Mr Walsh said: "The trust is working, but it is a private trust.
"We are talking about individuals' personal details, and I cannot talk about that."
Homeowners with crippling mortgage arrears and business owners facing the loss of shops and other property have all been lured by the promise that they can save their assets by using a legal loophole.
But Karl Deeter of Irish Mortgage Brokers, who attended a trust meeting at the request of a client, said he was "deeply sceptical" that the scheme could work.
And he expressed worries that vulnerable distressed borrowers could end up even deeper in a legal mire.
"My view is that if someone tells you something is too good to be true, then it is too good to be true," he told the Sunday Independent.
"I went down with a client of mine who was seeking my opinion. There was a presentation in which they said they already had over €1bn in this trust and more than 1,000 people signed up. It was held in the back room of a bar in a hotel in Kilkenny. It was one of two meetings on Wednesday.
"We were sitting around a big table. I asked them, but they refused to reveal exactly how the process works. I was, and am, sceptical.
"Several of the people in the room disclosed they were clients of Start Mortgages and they were clearly not financially literate."
Irish Mortgage Holders Association co-founder David Hall also urged people to seek legal advice before becoming involved with the trust.
He has already raised his concerns about the scheme with the Central Bank.
In correspondence with him, the bank stated: "The activity described does not appear to involve the provision of a financial service regulated by the Central Bank, relating as it does to proposed activity of a borrower (or their advisers) rather than a regulated lender."