Monday January 24 2011
THE loans of almost 50 lenders are in jeopardy following legal actions by distressed homeowners who are challenging the authority of subprime lender Start Mortgages to lend into the Irish market.
The Central Bank has warned that the legal position of the credit institutions is under threat if the two homeowners fighting possession of their homes succeed.
The homeowners are claiming that Start is not legally authorised to make loans because it is not regulated by the State as required.
One of the borrowers, Robert Gunn, claims only the Central Bank has the power to prescribe any entity as a "credit institution" and the assumed delegation of that power to the consumer director of the Irish Financial Services Regulatory Authority is unconstitutional. The credit institutions potentially affected include the subsidiaries of major banks as well as subprime mortgage companies, car finance lenders and credit institutions that provide lease finance to borrowers.
The list has been circulated by the Central Bank of Ireland, which is being sued by Mr Gunn, who claims Start cannot repossess his home because it had no legal right to give him a loan in the first place.
Mr Gunn got a mortgage of €210,000 from Start Mortgages secured against his home at Lyre, Lisselton, Co Kerry, in 2007. Start began possession proceedings after he fell into arrears when he lost his job in 2008.
The case is set to be heard in March but Start, a notice party to the proceedings which are affecting hundreds of possession actions in the courts, is this week expected to ask the High Court to lift a stay on proceeding against Mr Gunn because of its affect on other cases.
- Dearbhail McDonald Legal Editor
Monday, January 24, 2011
Start Mortgages challenge puts 50 lenders' legal position in jeopardy
Developer Quinlan sells Ballsbridge house for €7m
Monday January 24 2011
Developer Derek Quinlan has finally signed a contract to sell his property at 6 Shrewsbury Road, Ballsbridge, Dublin, with a family buying it for around €7m.
Mr Quinlan, who is now living in Switzerland, has had the property for sale for several months and despite several media reports that it had been sold, the contract for sale was only concluded last week.
Mr Quinlan will, on paper, make a killing on the sale as he bought the property in the mid-'90s for just €1.9m.
The proceeds will be used to pay off a mortgage with Bank of Scotland (Ireland) and to pay down other debts with that lender. Very little, if any, of the money is likely to be paying down NAMA debt, which is being tackled separately by Mr Quinlan.
The buyers are described as "low profile'', in a break with tradition for the area where many buyers of homes are embassies.
Mr Quinlan has other properties on Shrewsbury Road which could also be sold off. He also has property at the Merrion Hotel, which is believed to be leased out.
The Shrewsbury Road house is a large five-bedroom semi-detached property with a swimming pool in the garden. While the €7m price tag is very steep for the residential housing market, it is well below the asking price for houses on the road over recent years.
As recently as 2009, one home on the road was priced at €25m. Derrymore, the name of the house, is not the largest on the road, which only has 22 homes, but it does contain office space and a wine cellar.
Mr Quinlan travels back regularly to Dublin and is co-operating fully with NAMA, where he has signed up to an asset disposal programme.
- Emmet Oliver Deputy Business Editor
Irish Independent
Uncertainty hangs over Section 23 tax relief | The Post
Uncertainty hangs over Section 23 tax relief
23 January 2011The controversial proposal to end tax relief on Section 23 properties is likely to be scrapped in its current form, according to tax and property specialists.However, the Green Party has insisted that the reliefs must be ended this year in some form this year and have said amendments will be introduced to the bill.
It remains to be seen how the uncertainty over Green participation in government will influence the passage of the bill.
In last Friday’s Finance Bill, finance minister Brian Lenihan said an economic impact assessment would be carried out to examine the effect of the move.
This means the tax relief changes would have been deferred for at least one year.
However, it is understood that the stipulation that any removal of reliefs cannot come into effect until the year after the review will be removed, at the Greens’ insistence.
In theory, this means the measure could come into effect this year, but in practice this still looks unlikely, as introducing such a restriction in the middle of the year would be complicated.
The move would have affected people who bought properties using Section 23 tax breaks, which allowed them to reduce their tax bill on income from investment properties.
The change was expected to achieve €60 million in extra taxes.
Ernst & Young tax partner John Heffernan said he believed the proposal could not be ‘‘binned altogether’’.
‘‘The original proposals would have pushed more investors to bankruptcy and added to the problems of the banks.
There are a number of properties in Nama whose loans are only being serviced because investors can divert earnings from Section 23 and don’t have to pay tax on these.
As time goes on, the amount earned from the tax reliefs will reduce," said Heffernan.
Martin Phelan, head of tax advisory at law firm William Fry, said the government had shelved the legislation until at least 2012, but that ‘‘it may never happen’’.
He said the legislation could be enacted in its current form, but the next government might not sign the ministerial order.
Kersten Mehl, president of the Irish Auctioneers and Valuers Institute (IAVI), said it was probably a political decision, rather than an economic one, to leave it up to the next government.
Mehl said that if the proposed measures were implemented, thousands of investors would have faced bankruptcy.
‘‘It would have led to a surge in distressed sales, an increase in the number of properties on the market and prices would have fallen further," he said.
‘‘Investors would not be able to make the repayments and that would have had a knock on effect on mortgage repayments and jobs. It would lead to a whole avalanche of properties on top of the properties already there."
Liam Clancy, chief executive of real estate firm Capel Abbey Property, said the government’s decision to carry out a full assessment showed that ‘‘the massive financial losses and implications for investors were recognised’’.
‘‘Hopefully the effects will be analysed and the next government will act in a responsible way," he said.
Monday, January 17, 2011
The Post | Mortgage rates 'set to increase'
There is bad news for thousands of homeowners across the country today.According to reports, Permanent TSB is planning to increase its variable rate.
The hike of ½%, which will be annnounced later this month, will bring its variable rate to 4%.
This is likely to lead to other institutions following suit, according to Karl Deeiter, operations manager with Irish Mortgage Brokers.
"In the past it has tended that one institutional move, and then all of the others follow within a short amount of time," he said.
"I’m not saying that we’ll see everyone else move by the end of January, but certainly by the end of the first quarter of the year I would be surprised if all of the other banks haven’t increased their rates in line with the move Permanent TSB will make."
Ireland's NAMA eyes 3 local property deals in Q1 | Reuters
DUBLIN |
(Reuters) - Ireland's "bad bank" expects to sell three domestic commercial property assets with a value of around 200 million euros (167 million pounds) before the end of March, its chief executive said on Thursday.DUBLIN
Ireland's National Asset Management Agency (NAMA) was set up in 2009 to purge the domestic banking sector of risky commercial property loans.
Any commercial property sales in Ireland will be keenly awaited as investors seek a floor for a market that has been in freefall since 2008, plunging the country into crisis and forcing the government to seek an EU/IMF bailout last year.
"We'd be quite confident that we have two, but probably three major transactions that would be announced to the market by the end of Q1," Brendan McDonagh told reporters.
"It's important to get transactions going in the market," he said, adding that NAMA would not lose any money on the deals.
NAMA approved the sale of close to 2 billion euros of its property assets in 2010, which were largely UK-based deals.
NAMA has spent around 30 billion euros buying loans with a nominal value of 71 billion euros. The haircut of 58 percent has left gaping holes on banks' balance sheets and sent the national debt soaring.
NAMA will acquire a further 16 billion euros of loans from Allied Irish Banks (ALBK.I) and Bank of Ireland (BKIR.I) by the end of March as agreed under the bailout deal.
McDonagh said the Minister for Finance Brian Lenihan would decide what discount to apply to those loans.
Ireland's financial regulator and the police are looking into allegations that the country's banks provided false information about their loans to NAMA to try and cushion their losses.
McDonagh told a parliamentary committee on Thursday that he had met with the police but he said it was not up to NAMA to decide whether the banks had lied.
"I am not the person to determine whether the information they presented was correct or not, or the reason for it," he said, adding that NAMA had conducted a rigorous due diligence of the loans it had purchased.
"I believe that our cautious approach has been fully vindicated."
Ireland's two-largest lenders -- Bank of Ireland (BKIR.I) and Allied Irish Banks (ALBK.I) -- said in the autumn of 2009, before the legislation creating NAMA was enacted, that they expected to face a discount of less than 30 percent on their loans.
Bank of Ireland has since had a discount of 42 percent applied to its loans and AIB has had a discount of 54 percent.
McDonagh said if a discount of 30 percent had applied across the sector, NAMA would be deeply in the red.
"We would be already, day one, 20 billion euros under water," he said.
(Reporting by Carmel Crimmins; editing by Patrick Graham, Sharon Lindores)