Greg Daly
A leading homelessness campaigner has expressed reservations about the proposal for the State to set up a so-called ‘friendly vulture fund’ to aid people experiencing mortgage distress.
Such a charitable organisation that would buy distressed loans from hard-pressed homeowners and allow them to stay in their homes would be a key step in tackling Ireland’s housing crisis according to the chairman of the Oireachtas Finance Committee has said.
Maintaining that such a “friendly vulture fund” should be a registered charity, John McGuinness TD told The Irish Catholic that “the Government’s input would be that they would provide the guarantee to the bank, and that once those bonds were provided, the return would be either that the agency would collect rents, instead of a mortgage or that it would collect a mortgage payment that would be equivalent to the draw-down from the bank.”
The effects of this on beleaguered homeowners would be immense, the Fianna Fáil TD said, as “it would mean that they would stay in their own home and would be paying according to their own means”.
However, Focus Ireland’s Mike Allen told The Irish Catholic the term “friendly vulture fund” highlighted the challenge Mr McGuinness’s proposal would face.
Explaining that vulture funds operate by purchasing assets at the lowest possible price and then maximising profits, he said that “what’s envisaged is that somebody will put money into a fund which will not be used ruthlessly to extract profit”.
Mr Allen said that he was “unsure of who would put money into such a fund”, as “what isn’t there is what would be the attraction for people to buy those bonds and how are those bonds to be repaid, since the purpose is to buy distressed debt and not to squeeze the profits out of that debt”.
Speaking ahead of his formal presentation of the idea to the Fianna Fáil parliamentary party, however, Mr McGuinness said the idea has broad support. “Someone has to do something, and the thing that it does is eliminate the legal costs of chasing people, bringing them before the courts, clogging up the courts, ruining people’s lives, bringing about schemes that would give them free legal aid,” he said, concluding: “None of that is needed if we take the giant step of dealing with the Bank of Ireland and AIB and any other bank that sees this as part of their corporate social responsibility.”