After the announcement of the liquidation of Irish Bank Resolution Corporation on 6th February 2013, a key question for the holders of €1.8bn of mortgages outstanding with what was Irish Nationwide Building Society was whether or not, they could buy out their mortgages from the Special Liquidator and if so, what price should they offer. We don’t presently know how many mortgage borrowers are affected but if the average outstanding mortgage is €100,000 then we’re talking about 18,000 accounts.
Sadly, this week, Minister for Finance Michael Noonan has thrown a bucket of cold water over the notion that individual mortgage borrowers can “buy” their mortgages. Minister Noonan said that whilst the Special Liquidator must seek the best price for IBRC’s assets which include mortgages, “it is unlikely that individual mortgage lots will be put up for sale as part of this process”. So it seems that defaulting debtors with large loans can buy their loans at a discount, but mortgage borrowers are excluded from this munificence.
Still though, despite what the Minister says, the Special Liquidator might be exposing himself to litigation if he were to ignore an offer for assets that exceeded alternative disposal prices. So, it might still be worth your while as an individual mortgage borrower to contact the Special Liquidator. As to what to offer, this blog can’t offer advice though when GE Money sold its sub-prime loanbook to Pepper Homes Loans, the price was understood to be around 40c in the euro. Presumably the valuation of any mortgage will depend on the amount, the status of the mortgage and whether it is in arrears, the security and the interest rate applicable to the mortgage.
This is the full parliamentary question and response with emphasis added.
Deputy Pearse Doherty: To ask the Minister for Finance if the Special Liquidator of Irish Bank Resolution Corporation will entertain approaches and offers from individual mortgage borrowers to buy out their outstanding loans; and the range of discounts on offer by the Special Liquidator to potential buyers of mortgage lending.
Minister for Finance, Michael Noonan: There is an obligation on the Special Liquidators to ensure that the assets of IBRC are sold at a price which maximises the overall return for its creditors.
As part of the role of the liquidators, the assets of IBRC will be valued independently before being sold. Any assets not sold to third parties (including loan counterparties and other financial institutions) at or above the valuation price will be sold to NAMA at the independent valuation. The Special Liquidators are still in the process of devising and implementing a sales process in respect of IBRC’s assets however it is unlikely that individual mortgage lots will be put up for sale as part of this process.
NAMA Wine Lake 