This article was originally published by The Business Post.
Vulture funds are not charities, nor are they custodians of any moral compass. They are not interested in the commercial engine of Ireland Inc or the housing crisis. They care about themselves. They were welcomed here with open arms and have settled in nicely, promoted and supported by many vulture lovers. They have ice in their veins and not blood.
They also own a lot of loans in Ireland – Central Bank figures show that they own nearly 50,000 loans for family homes and investment properties in Ireland and they have bought billions of loans of SMEs, sole traders and farmers on top of this.
Simply painting them as the devil and ignoring them is a poor strategy as they move quickly, decisively and at times devastatingly, if not handled properly.
From the outset, please understand that as horrible and unpalatable as it might be, I will be giving you some advice gathered from our own experience and that of commercial debt negotiators in dealing with vulture funds. I am not selling you anything and will not be fluffing up the truth.
Vulture funds should never have been allowed into Ireland and most certainly should never have been allowed near any family homes.
Shouting about that, while therapeutic, will not change the position you are now in if your loan is owned by such a fund.
There are some basics involved in dealing with a vulture fund and trying to resolve your indebtedness.
On the positive side, they will move fast to agree a write-off of debt, but this involves the loss of the asset, unless you can refinance the loan elsewhere and settle with the vulture fund.
Once you get a letter stating your loan has been sold, it’s time to move. Get busy helping yourself. There is a lot of pub and golf club advice around. To be blunt here, anybody telling you that you don’t owe the money or that you don’t have to have any contract with the vulture fund is selling you snake oil.
Engaging in this only delays matters and may make your position worse. Get professional experienced advice quickly.
1. If you are not in arrears and a vulture fund owns your loan, you should review your paperwork – including the letter informing you of the purchase of your loan by the vulture fund. This is essential to avoid any technical defaults with a current loan and identify any security issues.
2. Get professional experienced advice when dealing with vulture funds and/or their servicing agents. They move much faster than banks and you need to be organised and ready. From the time you receive the letter notifying you of the sale, it’s time to engage and seek help.
3. Talking to a vulture fund is not alone going to resolve the issue. A happy clappy helpful person on the phone does not mean matters are not progressing along a formal enforcement route. You are on a conveyor belt which moves at a faster pace than the bank who used to own your loan. Don’t be complacent in casual chats thinking you are all friends, you are not. Banks have had customers in a holding pattern for several years while they tried (and largely failed) to deal with the issue. Vultures are different. They act and thinking that you’re being left alone is fallacy.
4. Apply to refinance your loan. A positive to dealing with a vulture fund is they will allow you buy the loan around market value and will settle with you on any residual. They can move as fast in settling as they do in attacking.
5. Don’t expect a vulture fund to restructure your loan. You might have had some forbearance from the bank over the past number of years but vultures don’t do restructuring. They do “give us our asset back”. It’s likely in the absence of refinancing and moving the asset, you are going to lose it.
6. An adviser or a personal insolvency practitioner will advise as to the suitability of an insolvency arrangement and indeed bankruptcy.
Some vulture funds like to be more aggressive than others regarding any residual debt. In all cases, try to agree all matters at the same time. Don’t agree to sell and let’s see how things go regarding the residual debt.
Vulture funds love lump sums to settle any residual debt over long-term payments. They will try to feast on your carcass, but you will see them and feel them. You are more likely to get debt written off for reasonable lump sums when dealing with a vulture fund.
Telling a vulture fund they bought your loan for 30 per cent and they should act accordingly is like telling a five-year-old that money does not grow on trees. They don’t care.
I will never defend vulture funds and the fact they were given the red carpet treatment. I’m no vulture lover but it’s essential to engage with them and get matters resolved. Life will move on.
I know many of you are afraid, this is understandable, hence my direct tone.
A vulture fund sees assets and money. They don’t see the homeowner, family, small business or farmer. They discriminate equally. Please don’t waste valuable time and energy outside the process, get engaged, get help and get on with it.
David Hall is chief executive of the Irish Mortgage Holders Organisation