Caught declaring false bankruptcy

Last year marked one of the busiest years for the Insolvency Service of Ireland due to the large number of cases they examined in relation to bankruptcy. With at least 210 cases seeming somewhat suspicious, this independent statutory body had to dig deeply into financial and asset related records of every bankrupt person. 

In order to be eligible for bankruptcy declaration in Ireland, you must fulfill three main requirements. The first one is that your debts must exceed your assets by €20,000. Assets are both financial and physical; some examples include stocks, pension funds, receivables, homes, cars, exc. 

Many of the issues that the Insolvency Service of Ireland has seen in relation to this part of bankruptcy declaration is that many people who are declaring bankruptcy are attempting to keep some of the assets that are most important to them by illegally transferring the ownership to a family member or close friend. 

The asset cannot be leveraged by the bankrupter in the repayment of loans if it is not under their name, which is why this it is now being …

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WLR FM speak to Irish Mortgage Brokers about funds buying mortgage loans.

We were happy to take part with Maria on WLR FM about the loans that were being sold by Ulsterbank. We wanted to make the point that restructured loans that were making their payments were not going to be transferred and that many of these loans were many years in arrears (on the residential loans it is often 7 years behind). This indicates the loans are not sustainable, and that concluding the loans is probably a better outcome for all parties than the continued situation where the banks and borrowers are both in total denial. After a decade of this crisis it has come to the point where people have to accept that some homes will be lost but that sometimes those homes are empty, other times the person will get debt writedowns and that’s a good outcome too.

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When Vulture Funds Buy Mortgages

As vulture funds have been seen as taking over the market, the next question is, what do we do next? What happens after a vulture fund takes over your mortgage?

These funds first entered the Irish market at the end of the financial crisis and since, have remained a consistent factor in the mortgage game. Though many years have now passed since they were first introduced, there is still much uncertainty that remains with what exactly these funds are.

Vulture funds essentially entail the many forms of private equity firms and pension funds that exist with the goal of investing across many asset classes such as debt. Debt often acting in the form of mortgage arrears.

The question many are wondering is why? Why are these vulture funds deciding to buy the mortgages that are in arrears?

Due to post-financial crisis events, there was an extremely high number of mortgages that were in arrears as a direct effect, and many that will be in long-term arrears as well.

Because banks are generally not willing to write down any debt of …

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Buy-To-Let Homes in Arrears

Why have recent reports been showing an increase in the number of mortgages being in arrears? More specifically the interest-only mortgages? And furthermore specifically, those on buy-to-let homes?

Interest only mortgages are typically mortgages that are seen to be taken by investors searching for a more affordable option to the standard mortgage scheme.

So, why has it been found that those who hold interest-only mortgages are more likely to be in arrears today?

In a recent study by the Central Bank, it was found that this is the case for investors on an interest-only mortgage deal for buy-to-let homes.

The surplus in interest-only mortgages that we are seeing today was initiated by buyers of high end and expensive properties during the last housing boom.

It is predicted now, that we will see a strong increase in the amount of homeowner to go into arrears as nearly a third of the interest-only mortgages have plans to make the switch to paying a traditional capital and interest mortgage from present 2018 to 2022.

It is not of a …

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RTE: So a fund bought your mortgage, what’s next?

Aengus Cox in RTE did a piece on funds who buy loan and there are sound clips and a written report on it here.

We made the point that “quite often do deals that the banks won’t do and that’s the frustrating thing – there’s massive write-down being done by these funds, and to me that’s a very positive development. They’re putting an end date – an end point – in situations that the banks have not had the courage or capacity to do. And sometimes finalising something is actually part of the solution. Now it might not end the way the person wants but this is an adult world where outcomes are based on decisions and consequences, not on what you want.”

The piece does a very good and fair job of looking at all sides of the argument, those of debt advocates, the funds themselves and market participants.

 

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Bank of Ireland restructures their equity

Over the weekend, Bank of Ireland went through some major changes to their structure.

This is needed to avoid a future bail out. Fitch, one of the world’s top three credit ratings firm, said the Irish banking system had around 15 percent of non-performing loans. This is about three times the average amount of the European Union countries.

Despite this, Fitch still gave Ireland a rating of A because of the potential economic growth. They gave Ireland this rating on Friday because the economy is supposed to grow 3.5 percent this year which makes Ireland one of the top growers from the EU area for the third consecutive year.

Even with this high rating, Fitch warns Irish banks that this massive amount of problem loans is weighing the country’s rating down.

Bank of Ireland responds by restructuring their equity to protect Ireland if a crisis occurs. This new system protects the Irish bank accounts and minimizes taxpayer bailout.

How it works?

Bank of Ireland will issue two types of equity: senior and junior. This puts the liability of crisis to …

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Generation X still suffering the consequences of the housing crash

A mortgage lender offers 100 percent mortgage and a little extra for furnishing the home, why not take it? This before the housing crash seemed like a fool-proof idea. House prices were continuously rising and real estate looked like a safe investment.

Then the housing market crashed. House prices dramatically dropped while unemployment rate was rising. Suddenly Generation X now has negative equity on a home. They’re owing more on a home than it’s actually worth. What do you do?

Generation Xers, classified being born between 1965 through 1984, had a majority out of a job or have had a huge pay cut and having negative equity on a home. Massive tax cuts and the expense of childcare has taken over the disposable income.

Living in a generation of spending culture, during the time of economic growth they did not think to save for retirement. Now …

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Eoghan Murphy wanting to expand mortgage-to-rent

Minister for Housing wants to decrease rules on mortgage-to-rent (MTR) scheme to help expand the programme. Relaxing the criteria will dramatically increase the number of MTR homes.

The goal of the scheme to allow an option for people who can’t qualify for social housing.

How it works?

A group of investors will buy trouble mortgages and will let the houses to the tenants as a form of social housing.

The aim of the programme was to aid around 250 homes a year. Currently, the statistics have shown that from 2012 to the end of March only 240 have went through the programme. This is out of 3,672 applications submitted.

The reason?

This scheme can take up to an 18 month turnaround which is too long for a lot of investors.

To help out the scheme currently, a homeowner can surrender their home to the lender which goes to the Housing Agency. They can offer them an approved housing bodies (AHBs). Then AHBs buys the home and lets it to the borrower as social housing.

The revised version of MTR.

It …

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Central Bank of Ireland: Keeping the countercyclical capital buffer at zero?

In reference to Irish Central Bank maintains countercyclical capital buffer at zero by Peter Hamilton on 27 June 2017 in the Irish Times.

The Central Bank of Ireland decided to keep its countercyclical capital buffer at zero. Only if the current credit conditions remain restrained.

What is a countercyclical capital buffer?

A countercyclical capital buffer (CCyB) is a quarterly decided rate that applies to banks and investment firms. It’s a capital requirement designed to help banks save during the good months to prepare for the bad months. The CCyB will increase if the credit growth is excessive then is released during a period of systematic stress.

Currently, the Central Bank of Ireland said it will remain at zero.

Bank of England, on the other hand, has raised its buffer from zero to 0.5 percent. This leaves bank having to raise an altogether buffer of 11.4 billion euros in 18 months. The Bank of England is also planning on raising the buffer to 1 percent by the end of the year.

The Financial Policy Committee (FPC) of the Bank of England …

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