Many borrowers from the former Irish Nationwide Building Society have received letters from the Irish Bank Resolution Corporation (IBRC) which has been mandated by the Government to find buyers for the loans on the books of the former Anglo Irish Bank and INBS.
If no buyer can be found, they will be transferred to the State “bad bank”, the National Assets Management Agency (Nama).
As part of the process of arranging the sale of the loans, the State-appointed special liquidators for IBRC have sought the views of the holders of the loans. Whether or not the individual views of borrowers will make any difference is not certain, especially in the case of residential mortgage loans – which, by their nature, are smaller individually than some of the other loans held by IBRC.
Borrowers main concern is on how any new owner may manage their mortgage. And, on this, there is unlikely to be much clarity until it is known who that new owner will be.
So who is likely to take over the loans? Will it be an existing lender, or one of the financial institutions trying to enter or expand their current Irish mortgage book? Or will it be a vulture fund, or other private equity group looking to maximise their return quickly.
If a financial institution buys the loans, the management of individual mortgages is likely to be close to borrowers current experience, as they will be looking to build a relationship with its new customers.
If, on the other hand, the buyer is a vulture fund or other private equity group, they have little interest in building relationships. It is simply a financial exercise and, presumably, there will be a judgment made as to whether expanding margins will only exacerbate arrears and undermine the ultimate profitability of the exercise.
Of course, rates will only be able to rise where you are currently on a variable rate mortgage. If you have a fixed rate, or a tracker, then any new owner is constrained by the terms of your mort- gage agreement and will not be able to increase the margin.
All other terms of your mortgage contract will also continue to apply, regardless of who acquires your loan.
So should borrowers make a submission to the IBRC? Certainly, making a submission is not going to harm a borrowers cause in any way and, if you have a strongly held view, you should at least make sure that it is on the record.
It is not as though any eventual owner will have access to submissions from the consultation period, so it will not affect your relationship with any new owner of your mortgage loan.
Shane Dowling principal of Direct Law, Solicitors in Skerries, advises on all areas of property, conveyancing, personal insolvency and debt management.