'Vulture Funds' can now be probed by Central Bank under new law

Fianna Fáil Deputy Spokesperson on Finance and Local TD, Frank O’Rourke, has welcomed the passage, in Seanad Éireann, of the Fianna Fáil Private Members’ Bill to regulate so called ‘vulture funds’.

The Private Members’ Bill has now passed through both Houses of the Oireachtas and was sent to the President to be signed into law.

The Bill will come into effect during January.

A so-called Vulture Fund is a fund which invests in companies or properties which are performing poorly and may therefore be undervalued.

The European Central Bank has recently been putting more pressure on Irish banks to reduce the number of non-performing loans they have on their books.

In many cases, banks are happy to sell large portfolios of non-performing mortgages to so-called Vulture Funds, and generally at a significant discount when compared to the original value of the loans.

According to an RTE investigation, there are around 14,000 mortgages where the borrower has been in default for five years or more.

Critics of Vulture Funds say they are not interested in negotiating with borrowers to help them restructure their loans so that they're sustainable, rather they simply want to get their hands on the discounted asset they've bought... the mortgage holder's home.

Mr O'Rourke said: “Now this Bill is signed into law, ‘vulture funds’ can be directly inspected and investigated by the Central Bank.

"The regulator will also, if necessary, be able to take enforcement action against these funds. Up until now, these Vulture Funds were not regulated and were untouchable.”

“The Central Bank will now, for the first time, be able to have direct contact with these funds and apply strict regulation directly to them.

We have seen an acceleration in the trend of banks selling off their loans to ‘vulture funds’ in recent months. Permanent TSB, Ulster Bank and AIB – to name just a few retail banks – have progressed loan sales in recent months. Significantly, Bank of Ireland has not ruled out loan sales into the future. Mortgages, business and farm loans are now being sold on in very significant numbers.”

“The passage of this Bill is an important step forward. However, Fianna Fáil believes that further reforms are needed to tackle the tens of thousands of legacy mortgage arrears cases. The current process sees nearly half of all personal insolvency arrangements failing.

"As a result, it has been judges who have prevented large scale repossessions rather than the government. The bank veto needs to be removed and fair and sustainable loan solutions need to be put in place. We also have the unacceptable high level of variable mortgage rates, double the EU average.  There needs to be action in relation to this as well.” concluded Deputy O’Rourke,