Irish Nationwide mortgage holders to lose on tracker refund

Former mortgage holders with Irish Nationwide Building Society who were denied a tracker rate over the past decade will not receive any compensation from the liquidators of IBRC as part of the Central Bank's industry-wide review.

In addition, many of the affected customers will be classified as unsecured creditors of IBRC in relation to some or all of the refunds they are due, and could have to wait some time for their repayments.

This emerged in a written answer supplied to Sinn Féin's finance spokesman Pearse Doherty by the Minister for Finance Michael Noonan.

Mr Noonan said up to 100 former Irish Nationwide mortgage holders could be affected and require redress.

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“I am advised by the special liquidators [of IBRC] that customers who are eligible for redress as part of the tracker mortgage review will be treated as unsecured creditors of IBRC in respect of any such amounts which are found to be due to them for the period beginning February 2007 up until the date of liquidation.

“Amounts due to customers for the period post appointment of the special liquidators [in February 2013] will be treated as a cost of the liquidation and will be paid in full.”

Some 12,702 residential mortgages from Irish Nationwide with a par value of €1.8 billion were sold by the liquidators – Kieran Wallace and Eamonn Richardson of KPMG – in different tranches to Lone Star, Oaktree Capital Management, Mars Capital, and Bank of Ireland. The liquidators currently have €1.9 billion in cash potentially available to creditors although there is question mark over this sum due to litigation connected with Sean Quinn and his family.

Mr Doherty said former Irish Nationwide mortgage holders should not be treated differently to customers at other banks. “It is noticeable that while redress is mentioned there is no mention of compensation which would be the case for any other bank. These families deserve the same compensation as any other family.

“Given that IBRC have sold on mortgage books it is likely that many of these families are now in debt to a vulture fund. It is possible that some are facing repossession because of the thousands of euro extra they have been charged. A simple refund does not address the real cost of this scandal.”

Unsecured creditors

Mr Doherty is also concerned that the amounts due from the pre-liquidation period will be treated in the same way as unsecured creditors. “This could imply that only a percentage will be repaid or that a long wait will be in store for them,” he said.

The Sinn Féin deputy plans to seek further clarity on the matter, including when any Irish Nationwide mortgage holders lost their homes as a result of being denied a tracker rate.

It emerged earlier this month that Irish banks in general have paid out more than €120 million in the past two years in redress and compensation to mortgage customers who were denied a tracker rate.

The Governor of the Central Bank Philip Lane told an Oireachtas finance committee that this included €78 million paid to 2,600 affected customers by the end of February. It also includes €36.8 million and €5.8 million in redress and compensation that has been paid by Permanent TSB and its former mortgage subsidiary Springboard Mortgages as part of a redress programme that the lender announced in July 2015.

In March, the Central Bank said some 9,900 customer accounts had been identified as affected as part of its tracker mortgage examination, which it launched in July 2015. Of these cases, 90 per cent of accounts have had the rates rectified with redress and compensation paid in 25 per cent of instances.

Mr Lane told the committee that lenders had “failed their customer” in denying them tracker rates.