Vulture Funds Exposed in High Court

Recent High Court ruling reveals what dogs in the street know

The business model of vulture funds is coming under major scrutiny after a revealing court ruling indicated that credit servicing firms – who act on behalf of such funds – may not be the legal owners of debt (allegedly) sold to them. 

The Irish Independent has reported that credit servicer Start Mortgages was not granted possession of land in Kildare by High Court Judge Garrett Simons.

According to the report: ‘A loan to the couple was originally issued by Bank of Scotland (Ireland), but Start Mortgage claimed it now owns the (charges) and that the debts secured on them is owed to it.’ 

Judge Simons said that Start, “failed to establish the first essential proof for the application, namely, that they are the registered owner of the charge.

“It is simply not possible for this court to determine, from reading these heavily redacted documents, whether Start Mortgages has, in fact, taken a valid transfer of the debt outstanding in respect of the loan originally advanced by the governor and company of the Bank of Scotland.”

The Irish Times previously reported that Start Mortgages, the loan-servicing company owned by US private-equity giant Lone Star, had completed the transfer of €2 billion of mortgages – over 10,000 customers – that had been on its books to rival Mars Capital Ireland, after it left the market last year, increasing its portfolio to more than €10 billion. Pepper Advantage, the largest loan-servicing player on the Irish market, manages over €20 billion of loan assets on behalf of clients, including mortgages owned by foreign investment funds to active nonbank lenders and mainstream banks.

The refusal was ruled after Start provided heavily redacted documentation ‘proving’ they are the legal owners of the land in question. 

This ruling is very significant. 

For years, activists, politicians and journalists have repeated what the dogs in the street know – these firms have no right to (take) indebted mortgage holders to court as they are mere ‘servicer providers’ (and) not legal owners of such portfolios. 

One such advocate is former Master of the High Court and “debtors’ champion” Edmund Honohan, who afforded leniency to homeowners’ whose mortgages were sold to foreign vulture funds. 

Master Honohan grabbed national attention when the President of the High Court Peter Kelly transferred the final judgment of debt enforcement hearings from the Master (Honohan) to judges of the High Court in January 2019. 

His tireless work on behalf of homeowners who have been left to the mercy of these faceless vulture funds is slowly but surely being vindicated following this court ruling. 

According to the Irish Independent article Honohan repeated his claim that service providers such as Start, Mars and Pepper are engaging in “legal fiction” as they affirm before the courts ‘to be the beneficial and legal owners of charges on homeowners’ land folios.’ 

Speaking to Theo’s Newsletter an experienced SC mentioned that, “The bottom line is that all of this uncertainty stems from the fact that the mortgages in question, tens of billions worth of them, had been securitised and the true ownership now rests with a US Bondholder (mortgage-backed securities) which means, in plain english, neither the Loan Originator (bank), the alleged Loan Purchaser (vulture fund) nor the Loan Servicer (Pepper, Start, Mars etc) are in fact the Legal & Beneficial owners of the Charges (as registered at Tailte Éireann) which are being wrongly accepted as “conclusive evidence” in our Courts.” 



The implications of this High Court admission will hopefully offer some clarity on the pernicious role of these credit services, acting on behalf of vulture funds going forward.


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