Sir, – The plans by Ulster Bank to sell off ¤875 million of troubled mortgages raises some very fundamental questions as to the morality, legality and rights of banks to carry out such a course of action.
These “troubled mortgages” arose through bad lending by Ulster Bank. In granting these loans, the bank held an unequal power over the borrower in that the bank had access to credit managers, in-house economists, risk managers and a series of asset-quality procedures. All failed and the bank made serious errors. The borrower had no such array of expertise. In effect, it was an unequal contract. Bad lending is the result of bad management by the lender rather than unwise borrowing by the borrower.
The bank should publish for each loan the amount it is expecting to realise from the proposed sale and give each borrower 12 months to match that price. Either the borrower can then sell the underlying property and redeem the loan at the discounted price, or the borrower may be able to raise a new mortgage from family or the market and then continue to live in the property. A much more reasonable and moral outcome than what is proposed.
The proposed purchaser of the portfolio of loans is likely to be a fund and thereby not subject to the existing customer protection procedures operated under Central Bank supervision. Funds have no loyalty to customers because they are unlikely to seek additional business by way of current accounts, foreign exchange, etc, from the customers. They will act “tough and rough” and seek judgments through the courts, without consideration of the wellbeing of the borrowers. It is a replay of the 19th-century evictions. – Yours, etc,
DAVID McCABE,
Blackrock, Co Dublin.