The Country is engulfed at the moment in a crisis concerning mortgage providers and tracker mortgages.
A tracker mortgage is one which ran parallel to the European Central Bank rate of interest. With Euro Zone interest rates being so low, the tracker mortgage since its inception was the most financially advantageous type of mortgage that could be taken out by a borrower.
In many instances first time borrowers sought security from the bank in having a fixed rate mortgage for the first number of years. In such circumstances the fixed rate allowed for an agreed amount to be paid per month towards the mortgage. At the conclusion of the fixed rate period, the Central Bank has confirmed that Lenders must have offered the borrower the option of availing of a tracker mortgage as opposed to a variable rate mortgage. The difference between the two rates is that over time the tracker mortgage was a cheaper option for the borrower but ended up becoming more costly for the Lender as they were not earning as much interest on the borrowing.
This issue of not providing the option of a tracker mortgage first raised its head in 2015 when Permanent tsb wrote to many of their borrowers to advise them that they had wrongly not allowed them to avail of a tracker mortgage. At the time Permanent tsb provided various different options to the affected borrowers. Some people took up the option and others refused to do so.
For those people that refused they embarked upon litigation against Permanent tsb which is now coming to fruition. Permanent tsb have already begun the process of settling those claims which were brought to the Courts by borrowers who were adversely affected by the tracker issue.
That was 2015. We are now in 2017 and it has come to light that other lenders such as AIB, Bank of Ireland and Ulster Bank were also involved in such profiteering on the back of borrowers. The crisis is only evolving and no doubt it will get worse before it gets better. There is the big question that has to be answered of how individual lenders, whom were in competition with each other, managed to make the same strategic decision not to allow borrowers to avail of the most advantageous rate. There is a large question mark over the activity of these competing banks as to whether they were acting in co-ordination or co-operation to limit the market place and to profiteer. That is an issue which will ultimately be the subject of an investigation by the Competition and Consumer Protection Commission and potentially An Garda Síochána.
For now the single biggest issue is whether or not there has been surcharging and what the borrower can do about it if they believe that they have been affected.
We, at O’Dwyer Solicitors, were involved in the first cases of this type in the Country where Permanent tsb accepted the claims that were being made by our clients and settled the cases for a sum which was substantially more than was on offer initially.
If offers are now made from either Permanent tsb, Bank of Ireland, AIB or Ulster Bank, or any other lender, there is no obligation on any borrower who has been adversely affected to take up this offer and they should immediately seek independent legal advice.
Not every person who has been adversely affected by the tracker crisis will have the same level of compensation paid to them. In the most extreme circumstances where the repayment schedule was too much to bear houses have been lost and families have been evicted. This is the most extreme circumstances. Among our own clientele we know of rural people affected who took up second jobs or sold farm animals in order to make repayments. We know of people who obtained personal loans in order to make up the shortfall in the repayments made to banks. There are a lot of horror stories out there and this is only the beginning of what could potentially be a much larger problem for the banks.
Given the attitude of the banks towards borrowers, and towards the government in trying to tackle this crisis and the Central Bank in trying to regulate the behaviour of banks, there is no guarantee that the banks will contact each and every person who has been adversely affected by their behaviour. There is no guarantee that the amount of compensation proposed will in any way be equal to the amount which is due.
It is therefore incumbent upon each mortgage holder to contact their bank in writing and request their files for review so that each borrower can individually establish whether they have been affected or not.
At O’Dwyer Solicitors we have the expertise to allow us to be able to know what to look for and to represent those people who have been adversely affected and seek recompense against the banks.
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