So-called vulture funds are considering more arrangements to help people in mortgage arrears than banks and other credit firms, a report that will go before Cabinet today has found.
The Central Bank report found “no evidence” that firms acting on behalf of vulture funds were not engaging with borrowers in arrears, according to a memo.
It also says there is “no material difference” in the level of home repossessions between vulture funds and normal banks.
Existing loan terms are being honoured when handled by vulture funds or credit-servicing firms acting on their behalf, and people whose “circumstances have not changed” are not being moved from their existing loan arrangements.
Minister for Finance Paschal Donohoe asked the Central Bank to review its code of conduct for how financial institutions deal with those in mortgage arrears earlier this year. It was in response to concern over the sale of loan books to so-called vulture funds.
Code of conduct
The report, expected to be published after the Cabinet meeting, says that no changes to the code of conduct are needed.
While the Central Bank does not regulate “unregulated loan owners” (vulture funds) themselves, its rules must apply to the credit-servicing firms who operate the loans for vulture funds.
The report says “no material breaches ” of the code of conduct were found but some “non-material” breaches, such not issuing letters to borrowers in time, were.
It also found instances where credit-servicing firms went beyond minimum requirements to assist borrowers, such as fast-tracking appeals and extending the time period after which borrowers can be classified as not co-operating.
It says the code of conduct is “working effectively and as intended in the context of the sale of loans” by banks for borrowers who engage with lenders.
It says vulture funds are, on average, considering more arrangements for those in arrears when compared to banks and retail credit firms, which can handle their own loans and act on behalf of vulture funds.
It adds, however, that vulture funds have a narrower “suite of arrangements” to offer borrowers.
