Dr. Martha O'Hagan-Luff:

I thank the Deputy for the question and will do my best to answer it without knowing what is about to happen in the future with any level of certainty. I will try therefore to predict what might be the possible scenarios. The timeframe is short-term. They will try to buy loan portfolios at a discounted price and that will be up to the banks to negotiate and they will try to make back a profit over a set period. The Deputy mentioned forced repossessions. It is not my understanding that these funds will have an easier ride of forced repossessions through our legal system than the banks currently have. Unless something dramatically changes in the legal system, I do not predict that will be an easy route for them. If one takes a very pragmatic approach, one could ask why would they go down that route if it is just more time and money from their perspective.

What I would predict is that - Mr. Hall probably will disagree with me and he is a much greater presence at the coalface than I have - where one has a property in negative equity with the banks with a mortgage of €400,000 and the property is worth €300,000, one would have very little incentive to voluntarily surrender that property now because that person is still on the hook for the €100,000. The person would be better off waiting and hoping that the price rose in order that one would not be in less negative equity. Whereas if one is dealing with a vulture fund, one knows it has a short time horizon. The banks have that contagion idea, which makes it very difficult for them to do a deal with one mortgage holder - although that they have done some deals - without offering deals to everybody. The funds, however, will have more flexibility to engage because there will not be that same contagion risk and they will be under more pressure to get deals done more quickly. In addition, they will have bought these loans at a discount and consequently will be happy, as long as they get some uplift. If they get their 10% or 12% return or whatever it is, they will be happy. It will be in their commercial interest to make a deal.