Belfast Telegraph

Coming soon?... mortgages that insulate against negative equity

By Margaret Canning

The Republic’s ‘bad bank’ Nama could enter the Northern Ireland mortgage market to shift the repossessed houses on its books.

Nama is already piloting a scheme in Dublin and Cork called ‘deferred consideration’ where it joins a finance provider to offer home loans insulated against a 20% fall in value over five years.

Nama chairman, Frank Daly, said the agency could collaborate with lenders to offer similar loans in Northern Ireland.

He stated: “It will be offered in Northern Ireland if the pilot is successful and we will know that pretty quickly.”

Mr Daly told a briefing yesterday that Nama’s aim was to get the property market moving over the agency’s 10-year lifespan — of which two years have already passed. He added: “We are not interested in fire sales, dumping or adding to problems in the market already.”

The chairman said he had made “very good and useful” contacts with Stormont’s first ministers Peter Robinson and Martin McGuinness, and Finance Minister, Sammy Wilson.

Nama has acquired loans of £3.35bn, which were taken out by 180 developers on assets in Northern Ireland, amounting to 4% of its total portfolio.

Of the £3.35bn, £2bn related to undeveloped land, £1bn to investment land and the remainder to property and land under development. Around £40m worth of Northern Ireland property has already been sold on, although the details of those transactions have not been made public.

Nama said almost all the business plans put forward by debtors, north and south, have been assessed — but receivers are appointed to properties where Nama has not been able to reach business plans.

Receivers have been appointed over 141 sites in Northern Ireland, including plots of land, houses and commercial properties.

A handful of those were “defensive receiverships” but Mr Daly added: “In one or two cases, people came in with their hands up and said there is no future here.” He added: “If the business is just not viable we have a responsibility as this is public money so we can’t keep throwing good money after bad.”

Among properties which have become subject to receiverships are buildings formerly owned by the Co Tyrone-based Jermon group.

Houses built by developer, Sam Thompson, in Co Down, have also gone into Nama.

Loans on properties owned by Ballycastle man, Mervyn McAlister, were also swallowed up.

Mr Daly would not be drawn on the legal row between Belfast-born developer, Paddy McKillen, and Nama over its sale to the Daily Telegraph-owning Barclay brothers of £700m in loans relating to luxury London hotels Claridges, The Berkeley and Connaught.

“Our view is that it’s a legal issue between Paddy McKillen and the Barclay brothers.

“We sold that loan at a proper value. It was a transaction we are very comfortable with.”

Earlier this year, Mr McKillen won a separate legal challenge in Dublin’s Supreme Court against Nama for acquiring his loans before the agency came into being.

As it approaches its second anniversary, Mr Daly said Nama had virtually completed its first major phase of transferring loans from the banks.

Because of the fall in property values, these loans bear a reduction of around 54%.

Their nominal worth is €74bn (£62bn) but their real value is €32bn (£28.5bn).

Story so far

Nama was set up in 2009 as a ‘bad bank’ to cleanse the Irish banking system of toxic loans on property. Banks based in the Republic have transferred loans of €74bn (£62bn) to the agency, which has worked to reach business plans with the borrowers, known as debtors. Nama has appointed receivers for cases where it has not been able to reach business plans with debtors. Now Nama has dipped its toe in the mortgage market with a pilot scheme in Dublin and Cork.

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