Dealing with vulture funds on farm loans.

Muleman

Hi all, wondering if anyone here has had dealings with funds and managed to negotiate a write down. Currently find myself in that situation but not making any headway in making a deal. They are insisting on full amount. Major problem is the level of security they hold vs the level of debt.

TIA

GrasstoMilk

Muleman wrote: »

Hi all, wondering if anyone here has had dealings with funds and managed to negotiate a write down. Currently find myself in that situation but not making any headway in making a deal. They are insisting on full amount. Major problem is the level of security they hold vs the level of debt.

TIA

I'm
Afraid you won't get any sort of write down. These vulture funds are completely faceless and hold no morals. Simply just there to make a quick buck.

If you have a bank to take you on do your best to try get them to as close as you can to the current interest rate on the loan and see can you get all that excess security back again. Might be a chance to tack on some more money to the loan if you have a project in the pipeline

Willfarman

GrasstoMilk wrote: »

I'm
Afraid you won't get any sort of write down. These vulture funds are completely faceless and hold no morals. Simply just there to make a quick buck.

If you have a bank to take you on do your best to try get them to as close as you can to the current interest rate on the loan and see can you get all that excess security back again. Might be a chance to tack on some more money to the loan if you have a project in the pipeline

They have faces all right.
It would seem that unlike banks who you are always best to communicate and liaise with to best of your ability in troubled times to do so with these vulture funds they only see you as low hanging fruit. The more contrary awkward and crazy you come across the better the deal and sometimes it seems the write off is an unofficial that isn't worth persueing that cowboy.

Buford T. Justice XIX

Muleman wrote: »

Hi all, wondering if anyone here has had dealings with funds and managed to negotiate a write down. Currently find myself in that situation but not making any headway in making a deal. They are insisting on full amount. Major problem is the level of security they hold vs the level of debt.

TIA

Your best bet would be to talk to someone who has experience in dealing with those funds. Contact your local IFA/ICMSA/ICSA office or whatever organisation you might be a member of and they will help you get in touch with someone who can help you negotiate with them. They will have officials in each county who deal with problems like this regularly.

kowtow

Muleman wrote: »

Hi all, wondering if anyone here has had dealings with funds and managed to negotiate a write down. Currently find myself in that situation but not making any headway in making a deal. They are insisting on full amount. Major problem is the level of security they hold vs the level of debt.

TIA

If they are truly over collateralised (they hold too much security) then any write down is going to be valued only in terms of the costs and time they save in executing and realizing their securities.

A genuine and substantiated offer, by you, of payment might - and you need to take specific advice on this - at least make the legal process slower and more expensive from their point of view.

There was an ex-parte injunction granted to a farmer the other day frustrating the actions of a receiver and - if the judges comments were accurately reported - I thought they were enlightening. The farmer had paid or made an offer to pay - I think - E370K of a debt of E425K.

Water John

Kowtow, had seen those figures. The question is, what write down were they sold at by Ulster Bank?

kowtow

Water John wrote:

Kowtow, had seen those figures. The question is, what write down were they sold at by Ulster Bank?

I'd have thought they bought the book at between 20 and 40 cents on the dollar.

Unfortunate and eye watering as that might seem it has nothing to do with any write off they might accept. They collect as much as they can legally and cost effectively just as insurers pay as little as they can legally and cost effectively.

You'd be surprised at how many total losses and faulty securities these funds suffer. What the press don't tell you is that they have to buy whole portfolios and the individual loans are not exposed in the data room... and not every loan will have sufficient security.

Certainly we are over indulging funds with tax breaks and certainly irish banks are wet behind the ears but the whole thing is a little more complex than sometimes presented.

If you can make a decent offer then pitch it hard and try and hit them on some solid legal grounds alongside it.

You have to make your offer the most profitable option on the table.

patsy_mccabe

Annoys me the way these vulture funds are portrayed in our leftist media. They have to act within the law just like everyone else.

freedominacup

patsy_mccabe wrote: »

Annoys me the way these vulture funds are portrayed in our leftist media. They have to act within the law just like everyone else.

This is true but the rest of us don't get laws written facilitating us to operate anyway that suits us.

Bass Reeves

I am going to play devil Advocate here. Why should any fund or bank give a discount on a loan. If you borrow you pay back. I had substantial borrowing's that are now well in control luckily. But it was tough at times from 2008-2012. Even thought I paid back all the money and never defaulted on a payment it is now virtually impossible to ever again borrow 50-705 of my original loans.

New banking rules have tightened credit rules and banks now themselves are reluctant to lend unless pay back capacity is substantial. As well interest rates are 50-70% higher than the rest of the EU. The reasons the banks sold the loans to vulture funds is because of the fiasco in Cork last year. AFAIK and I may be wrong funds can only insist on immediate repayment if payments were missed at some stage of the repayment process.

As other point out just because a fund buys at 50c/euro will not mean that they can give everyone a write down of 30% and walk away with a huge profit. Some loans will be a total loss or preform worst than that. In reality if banks sold collateralized at even a 20% discount there is something wrong with the present system. It means that banks consider the public pressure not worth the hassle of recovering bad debt.

Willfarman

It's not just public pressure. It's the fact that the banks negated to do a character assessment of these hard nuts and the vulture funds haven't the motivation to take them on. But rather focus on the low hanging fruit. The people with some backbone and descency that actually engage with them.

I do agree with you though Bass to be fair if reckless borrowing doesn't have consequences then how does society function.

patsy_mccabe

And any write down on a loan is ultimately paid for by the rest of us.

Buford T. Justice XIX

patsy_mccabe wrote: »

And any write down on a loan is ultimately paid for by the rest of us.

That's already done, Patsy, when they sold on the loan. The question now is how the OP can extract himself from the company holding his loan with the minimum pain to himself.

yellow50HX

dont have knowledge of dealing with these companies but can they only foreclose on a loan if it is not being repaid as per the agreement. no expert but surely if the terms of the loan are still being adhered to then they cant force repayment???? or am i just niave?

if they are looking for full payment of the loan then surely they must come up with a refinancing package or allow you to come up another loan to buy them out.

the banks have got a rap on the knuckles recently for when they forced people off trackers as it no longer suited their business plans, surely its the same with other loans?

coolshannagh28

AFAIK the Vulture funds are doing good deals on ie buy to lets where the assets sold on with cooperation and a settlement agreed , the PTSB move to write off residual debt for landlords has put pressure in this area.The government is keen to free up property for sale and Varadker wants to distance himself from Noonan Kenny, another advantage .I would suspect that in a business or farm scenario it would be more complicated as funds want quick profits but delaying, strong legal argument with a reasonable offer and ongoing political pressure could secure a deal

jimmycrackcorm

freedominacup wrote:

This is true but the rest of us don't get laws written facilitating us to operate anyway that suits us.

True but I'd like to know why the op should be entitled to a writedown on his loan when I don't seem to be for my mortgage just because I can pay and am paying it.

Gawddawggonnit

Borrower and lender share responsibility...equally.

If ever (probably never) the whole truth comes out about the banks and how they broke a country, there would be a revolution.
I'm always amazed at how the people carried on about water charges and didn't give a toss about the bankocracy that is Ireland.

Vulture funds do exactly what they do...and remember it was the Irish government that begged them to come in with beautiful tax breaks etc.

kowtow

coolshannagh28 wrote: »

AFAIK the Vulture funds are doing good deals on ie buy to lets where the assets sold on with cooperation and a settlement agreed , the PTSB move to write off residual debt for landlords has put pressure in this area.The government is keen to free up property for sale and Varadker wants to distance himself from Noonan Kenny, another advantage .I would suspect that in a business or farm scenario it would be more complicated as funds want quick profits but delaying, strong legal argument with a reasonable offer and ongoing political pressure could secure a deal

Buy to Lets are an interesting example. The equity a borrower holds in a property is basically valued in the same was as a put option (the right to sell a share at a certain price). If he holds no equity, or is underwater, in effect his option and his interest in the property is worthless and he is willing to hand over the keys. It might be possible to pursue him via the idiotic personal guarantees which were all the rage in Ireland but leaving that aside the property is worthless to him and therefore he is in a strong position when offering to settle the debt. The fund will discount to him all else being equal.

It's notable that almost all commercial property - which at professional levels never involves personal guarantees - is segregated into multiple special purpose companies. Funds 'owning' such properties think nothing of handing them back to the banks funding them if they fall into negative equity and the banks are perfectly aware of that when they fund such structures without even cross guarantees. I've lost count of how many times buildings like Canary Wharf (itself the home of many banks) have been in and out of receivership and had their debt restructured.

In Ireland lenders are able to play on the stigma of debt and bankruptcy, in particular insisting on wide ranging and nonsensical personal guarantees.

My own feeling is that the night we bailed out the banks we should have simultaneously legislated to void all personal guarantees over 50K - after all, we were replacing them with the Nation's own blanket indemnity which will be funded by generations to come. Had we done so the banks would have worked through the debt books much quicker and there might not have been such rich pickings for the vultures.

Buford T. Justice XIX

jimmycrackcorm wrote: »

True but I'd like to know why the op should be entitled to a writedown on his loan when I don't seem to be for my mortgage just because I can pay and am paying it.

Because unforseen circumstances can disrupt the repayment schedule. Like the recent case in Cork where an outbreak of TB sucked any prospect of securing enough cash flow and profit to be able to maintain repayments, there are multiple reasons why a restructuring of any loan can be sought.

As was pointed out already, the loss to the bank is already realised when they sold the loan onwards. All that remains is for each borrower to seek the best prospect they can achieve from the fund now holding their loan.

If circumstances mean the fund makes a loss or a huge one on this portfolio of loans, I for one won't be shedding any tears for them.