Dublin: Central Bank policies that leave mortgage borrowers vulnerable to the exploitation of vulture funds are under fire. It is alleged that the central bank is throwing home loan borrowers to the wolves.
Vulture Funds took over 100,000 mortgages that were widely criticised for charging very high interest rates through sales of banks and share transfers. Mortgages are mostly acquired by American companies or American subsidiaries of Chinese companies for ease of handling and profitability. Such acquisitions do not necessitate the intermediary’s consent or knowledge. Vulture funds charge the “highest rate” on mortgages in the country and do not allow borrowers to switch to lower fixed rates. Borrowers must therefore pay up to 7% in interest. Companies like Start and Pepper make loans, but vultures decide interest rates.
The Central Bank and the Finance Department have repeatedly told the mortgage holders that the original mortgage terms and conditions will be maintained.
They also stated that the option to sign up for fixed rates would remain available. It was also expected to keep more appealing rates, such as regulated loan-to-value rates, but this did not occur. Instead, Vulture was creating an opportunity for institutions to charge exorbitant interest.
Some people have complained that the mortgage rate has risen to 7.09 percent. There is also concern that this could lead to massive mortgage arrears. Mortgage holders claim that their monthly payments have risen from €200 to €700.
Brendan Burgess, a consumer advocate, said there was no justification for charging such high interest rates. They are buying at unprecedented interest rates. He also stated that the interest rate is many times higher than the rate set by the European Central Bank.
There have been calls in the past for regulation of vulture funds that buy mortgages. Brendan Burgess alleged that all the mortgage holders who bought the mortgages are kept as prisoners.
Despite such criticisms, the central bank is yet to respond.
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