Joan Burton (Dublin West, Labour) | Oireachtas source

I thank the witnesses from Permanent TSB and Pepper for attending the meeting. It has been a great source of frustration for Members of the Oireachtas that there has been little or no accountability in respect of so-called investment funds and how they treat mortgage owners. This is a key question in terms of the transfer Permanent TSB is undertaking. I want to start with the case of a constituent with whom I have been dealing for quite a number of years in respect of her Permanent TSB mortgage. I have been on to Permanent TSB numerous times over the years about this mortgage. It is a rather sad case. It is a family with three children. One of the children has a severe disability involving autism, dyspraxia and severe anxiety disorder. While both parents work in the public service, one of them has been subject to severe health issues arising from the stress of the mortgage. There is a restructured loan agreement currently in place. She has adhered to all the elements of the agreement and on a couple of occasions has exceeded them in order to try to clear it if possible. Permanent TSB has miscalculated her arrears. She has been with Abhaile and MABS, which have given her advice around the miscalculations, but she has never been able to get satisfaction on that. Most appallingly, which was the point at which I became involved as a Minister, Permanent TSB sought to include the child's domiciliary care allowance in the calculation of the payments the family would make. As Minister, I got the banks generally to stand back from that kind of draconian action towards families with disabled children. It was a particular low point. The day before yesterday, the family received a letter from Pepper, like the other 6,000 families, advising that Pepper was purchasing its loan from Permanent TSB. Clearly, the family is in enormous distress. Their son with a disability is now 13 years old.

He suffers constantly from anxiety and this has an impact within the family. The mother is frankly frightened about how Pepper will handle this. Permanent TSB has made a very succinct presentation but a lot of questions about the management underlie it. We all have concerns about how split mortgages will be dealt with by investment funds. While I understand that Permanent TSB is a financial corporation, this is oriented towards an investment fund model, notwithstanding indications given previously by the Minister for Finance. I have the family's consent to speak with Permanent TSB and Pepper about the split mortgage.

When Pepper bought Permanent TSB's split mortgages, was the total amount of the warehoused sections of the loans discounted from the price of the loans sold? We have some summary figures, but it is not clear how the warehoused elements of the split mortgages were valued and whether they were discounted. Either organisation or both might be in a position to answer that. It is a key question. In respect of the warehoused sections of mortgages, is Pepper seeking to write these off or to recover them in full? I assume, on the basis of its presentation, that it is going to seek to recover them in full and will not write them off, even though it may have got those sections of the loans at a heavily discounted value. Perhaps a discount of even 100% applied; I do not know. As with the loans of many of the families involved, this family's loan is one in respect of which an agreement was reached. Other members of the committee have correspondence from people who are meeting their terms and conditions but whose mortgages are being sold over their heads. The key question is when and how often does Pepper propose to review the mortgages? Will reviews include reverting to the warehoused elements of the split loans and charging in full for that. We need to know how Pepper is going to treat this because that is what is going to keep a lot of people awake at night. Pepper referred to a relatively short period of ten years regarding work-outs and so on. It could provide a bit more information on that.

On the investors benefiting from the securitisation income stream, we have a note suggesting that the portfolio is generating cash equivalent to more than 3% of the asset security. Will the investor benefiting from the securitisation income stream have any role in the management of the loan portfolio or is that entirely a matter for Pepper? Will Permanent TSB indicate whether this is a final sale from the bank's point of view once the six-month period is concluded? Thereafter, will it have washed its hands of this or will it remain as an investor in the investment fund and as a potential beneficiary of the securitisation stream of income as it arises?