Oireachtas Finance Committee – 17th May 2018
Opening Address to the Committee by David Hall, CEO Irish Mortgage Holders Organisation
Chairman, Deputies and Senators thank you for the invitation to give evidence before you today in relation to loan sales.
It may seem strange to say it is a pleasure to be here. But it is for one key reason. No other committee in this house recognizes more clearly that it is the duty of Irish politicians to speak truth to power.
No other Committee is more clearly engaged in the key duty of Irish politicians to keep the people safe. And that is what I wish to speak of here today I would like to acknowledge and remind us all the many people who are in arrears that are watching this today. A particular hello to my bank and vulture friends and their spokespersons.
The Irish Mortgage Holders organisation is one of two registered national charities that advocates for and helps people who are in debt. We negotiate with creditors informally and formally via the insolvency service as we have an in house Personal Insolvency Practitioner registered with them.
We also provide a FREE bankruptcy service after all other options have been exhausted. A quarter of all those adjudicated a bankrupt last year were clients of ours. Since our foundation in 2012 we have helped 8000 families with 90% staying in their home. I am speaking to you today with significant front-line experience of the actual challenges and not from any observer’s seat.
Thousands of citizens mental health has and is suffering from the effects of being tortured by banks, creditors and a system that has protected banks, big corporations and developers but abandoned ordinary citizens. I am very proud of the work done by the IMHO team and Board to date. But despite all of that work I have to say I genuinely fear we have entered a dangerous stage in the mortgage arrears story.
We have seen this moment coming.
Recognising that many people left behind in mortgage arrears would lose their home myself and my fellow Directors established ICare Housing; an approved housing body set up to specifically to facilitate mortgage to rent. AIB, to their credit, fully supported us in establishing and have approved us for funding to buy homes. Much to our surprise and perhaps theirs, they took a leap of faith.
Many more will be needed The involvement of a debtor advocate charity to help people via the Irish Mortgage Holders Organisation has been of great help. We have 536 families in our pipeline and expect to buy the first 99 homes over the next few months. This change has transformed and possibly even saved lives and the combination of an approved housing body and debtors charity has been very positive. I have included a copy of the enhanced Mortgage to rent process and details of the pipeline to you ahead of today.
We work closely with all other debtor support organisations, MABS, FLAC, Phoenix Project, Step Change, The Insolvency Service and Personal Insolvency Practitioners. We are proud to be part of this exceptional family.
I am delighted to be addressing this committee as I believe it is the strongest voice those in mortgage arrears have in this Oireachtas. This committee has seen first-hand the deception of banks and is probably the only forum in the state where bankers are, with regularity, seen by the public to be held to account. This important work needs to be continued by the committee with the same vigor that it has been pursued to date.
There has been much commentary from various quarters around loan sales to vulture funds. Many have commented on how vulture funds are good to deal with and the fact they do deals. Giving the impression they are warm and cuddly. This is rubbish. Vulture funds are a cancer in our society. They have one thing on their agenda and that is feasting on the carcasses of those who suffered because of the gambling by banks. Ordinary citizens whose lives collapsed when the crash hit. Ordinary citizens who lost jobs. Ordinary citizens who became ill. Ordinary citizens who lost relationships. Ordinary citizens who lost their lives. One of the greatest affronts to those citizens crucified by the recession was the government’s willingness to sell them out to vultures.
Not only those in arrears but also those that had performing loans. When someone goes into mortgage arrears their bank assesses them against their waterfall of restructuring solutions. They include capitalisation of arrears, term extensions, reduction in interest rate, split mortgages and voluntary sale for loss (silent repossessions).
This waterfall allows for banks, albeit preferring their own bank first to offer solutions that cost them the least possible. They merely allow for the customer to pay what’s owed in a different way. The fact that 119,000 restructures have taken place is welcome but let’s not forget most benefit the banks. Many of these restructures are unstable as has been shown by the central bank confirming 15,000 have failed.
What is critical and despite vulture lovers’ statements is that vulture funds don’t restructure loans.
They buy to obtain the asset and sell it and profit. If you want to lose your home and possible have a debt written off then vultures are for you. If you want somewhere to live , well that’s an issue. They have no interest in our housing crisis. No interest in any of the stories of those affected. No interest in the people you in this Committee represent in your constituency clinics and in here. Each of you as practicing politicians have seen this first hand. Anyone engaged in helping people in mortgage arrears knows this. Those on the side-lines profiting from engaging with vultures will blindly support them.
Those gurus who claim vultures adhere to contractual terms need to understand nowhere in any contract does it require the loan owner to offer any restructuring. Also, when in arrears those with the mortgage have broken the contract by going into arrears leaving them exposed. While banks are horrible, they must out of a mix of legal, fiscal and social necessity – and for reasons of PR, provide some solutions.
Vultures are by contrast a social evil. I could stay here all day giving examples of how nasty Vultures are but respectfully the point has been missed.
Vultures are a symptom of the failure of Government.
A failure of The Department of Housing
A failure of The Department of Finance.
A failure of The Central Bank
A failure of The Banks.
Across all of these self-interested groups there has been a collective intended or unintended incompetence and or conspiracy to ignore the fact that the majority of people can’t pay. Banks, Government and Bank Lovers have allowed a narrative to develop – and in some cases have assiduously fostered such a narrative – that those in arrears who have not been resolved are messers, strategic defaulters and non-engagers.
This is not true.
The majority of those in Long term arrears which stands at 31,5000 households can’t pay. I have yet to find someone of sane mind voluntarily turn up to be executed yet some believe they should turn up in a repossession court. Some read details from banks lawyers about when the last payment was made but none read that the borrower can pay, never has this been uttered. I have circulated a data set which shows the actual issues that face people in long term arrears. It is I believe the first time such a set of figures has been presented.
I now believe that 17,000 people (mortgage holders) which affects nearly 80,000 people a Croke park full of Citizens will have their homes repossessed. This is because the banks have been complicit in hiding the human crisis and destruction that is ahead. They have hidden the fact that thousands of families simply can’t restructure their loans, can’t afford the payments needed for an Insolvency Arrangement and are not eligible for Mortgage to Rent.
This is a human crisis which has not been seen before and this is the actual issue rather than the Vultures. The Banks currently selling loans to Vultures are being dishonest. They are cowards by not informing this committee of the severe challenges that exists with customers. Customers who have engaged and supplied their financial information but where the bank cannot restructure their loans. They also know that many others, who they vilify for “not-engaging”, simply have no money to engage with.
They are outsourcing their dirty work and the vultures will respond enthusiastically by repossessing homes.
I believe banks have taken another gamble that it’s better to take the back lash of selling family home loans to vultures rather than the chaos that will ensue if they repossess the numbers of their customers who can’t pay. Some naively say vultures have not shown any aggression, lets not forget bank have a six year head start on vultures and vultures are watching the value of their portfolio increase month on month without having to evict anyone.
This will not be so forever.
The Tsunami is coming unless something radical is done. The data circulated of 600 actual cases shows the challenges for people who have no money to pay, or not enough money to come close to the minimum payment required to restructure. Hidden behind this is ill health, separation, continued loss of employment and the passing of time.
Unless steps are taken to establish a NAMA type organisation or to ensure a debt for equity solution is imposed to take over these loans in all of the lenders along with an immediate review of the social housing qualification criteria we will be walking blindfolded into a massive social crisis.
This situation is now so grave, while bashing banks and vulture funds is therapeutic it actually misses the key issue that 17,000 families will be evicted unless an alternative is sorted.
Look at the current homelessness list.
That is where we are destined to be in two years’ time. Even Pontius Pilate, a figure I believe the Chairman has a dislike for would admit that is not a case study in keeping the people safe.