Picture going for a dip in a swimming pool. You are enjoying the swim but get into trouble. You have done nothing wrong. You are terrified; you paddle around gasping for air. Bobbing around. Arms waving looking for help. Screaming, using all your effort to get help, to save yourself.
Mortgage arrears and being in debt is similar. You went about your business, like tens of thousands did. Banks screwed up the country. Politicians sided with banks. Citizens got shafted and spent years suffering as a result of paying banks’ gambling debts back.
Many lost their jobs, relationships ended, people became ill, and hundreds of people took their own lives.
Banks are now slowly recovering and some are making decent profits. The ECB is now focusing on regulating banks. This requires them to sort out non-performing loans. But God forbid we would admonish the banks, again, for failing to address this issue. Instead, we allow citizens to be put up for sale to vultures.
Banks and vulture-lovers will sit on the side of the pool, dry and without any problems, and shout in support of the banks, they will provide good consumer protection via the code of conduct and that you are better off in the hands of a vulture fund. This is akin to throwing our drowning debtor a punctured lifejacket.
The code of conduct is a busted flush. It regulates conduct in terms of how banks engage with customers. It does not offer any solutions, nor are lenders required to offer any solutions. Indeed, an acceptable solution is selling your home.
Some commentators have had a go at me and others who suggested that a tsunami of home repossessions lay ahead after 2012. Some of these commentators take a strange delight in lamenting that the disaster is not as disastrous as it could have been.
They forget that many things happened to stave off the tsunami. For example, the Justice Dunne decision, some seem to forget, was against the banks, as they used legislation that had been repealed; this caused a two-year delay to correct the legislation and paused repossessions.
Also relevant was the creation of various restructuring arrangements; split mortgages and reduction of interest rates. The creation of the insolvency service; legislation that had to be changed to remove the banks’ veto. Then we had the bankruptcy term reduced from 12 years to three. And then to one year.
Some 120,000 mortgages have since been restructured; what might have happened had these not been restructured. Indeed, with many failing, there is still a big risk.
Along the line, we allowed vulture funds to swoop in and buy Irish family homes. We welcomed them with a red carpet. It’s taken them a few years to get up and running, to find a regulated intermediary. Banks have had years of a head start. They now have their claws clipped and are targeting family homes again.
It used to be the case that bank lovers and briefed politicians could say, those pesky strategic defaulters deserve to be sold, forgetting banks’ failure to address the issue as a whole and refusal to write off any debt.
But with the PTSB, they had a miss-click. They put non-sinning debtors into the pot. Those who had done what was asked, engaged, given full financial and personal disclosure, accepted an offer of a restructure by PTSB, and maintained the payments as required.
Worryingly, the Department of Finance either completely misjudged the reaction to allowing the sale of families to vultures, or largely didn’t care.
Vultures act in one way: buy cheap, then suck what they can from the asset, like a vampire, by selling it at a profit. They will tell you this. They have had a Brucie bonus with property prices increasing so much over the past few years.
Some 120,000 mortgage-arrears cases have been restructured since the crash. Eighty-four per cent of these are made up of four kinds of restructure, none of which the vulture funds offer. If you run into trouble with your mortgage and engage as is required, you should be offered a restructuring option. Vulture funds don’t provide these: the only thing they know is how to seek the asset, sell it and evict the family.
Vultures are not here for the long haul. Their systems don’t go beyond a few years of engagement.
Our drowning debtor would be thrown a lifejacket by a bank if they wanted one: no guarantee it would fit, but it would stop them drowning. If we allow the vulture funds to be the lifeguards, we can’t even hope for that much.
Many tried to engage with banks, alone and through advisers. It’s curious that most of this has been forgotten. Banks had, and have, horrific systems in place to address people in debt. They’re slow to train staff to handle people in distress. They send vague letters that never have a named person on them to call back, but a call centre number, where each time a debtor calls they have to explain their situation all over again.
Banks are allowed to offer as a solution that the borrower sell their house. This ticks the box of having made an offer. What would most people do where the banks say “we have assessed you as being unsustainable and want you to sell your home, oh, and by the way, we will pursue you for the outstanding balance”? A recipe for engagement it is not.
The insolvency service has, before the Oireachtas Justice Committee, said that banks have been playing fast and loose with the insolvency legislation. Another recipe for good engagement, not.
There is a school of thought that says, “Well, if you haven’t solved your problem in ten years, when are you going to?” I can count on one hand the number of people I’ve met in eight years who have lots of money and simply don’t want to pay.
What I have met are people who are confused, have no money, have other difficulties in life, and have no clue what the right thing to do is.
There have been no state-sponsored solutions centres, and vulnerable people have been left to figure it out for themselves. The rush to use vulture funds as the solution means none of those still in difficulty can be saved. This is unnecessary.
We all know what caused this crash; we all know the great sacrifice made by all citizens. It is now time that we put effort and creativity into helping genuine people who are drowning. Let’s live in a society that throws them the lifejacket.
Vultures will release the tsunami. They will show sharpened claws. We need to wake up and protect ordinary people, small businesses and farmers, who have been, and will be, terrorised by these parasites.
There is another way. The PTSB and all bank family-home loans, especially the restructured loans, should be removed from all loan sales. There should be time given for a not-for-profit body to be established to buy the loans. This will protect them.
In order to prevent serious public unrest, a fair deal is needed for mortgage-holders in arrears, SMEs and farmers, ahead of any further feasting by vultures or vampires who have sucked the soul out of us.
David Hall is chief executive of the Irish Mortgage Holders Organisation