The tracker mortgage dishonor and scandal is back in the news and press reports. The ultimate question is Why? The Central Bank came up with a statement that 25% of clients knocked out by the scandal had been given reimbursements. It is important to note that the number of individuals affected by this problem has increased by 23% to 130000 which will further inflate.
Irregularities caused the issue
These mortgage holders were affected because of all the people, 60% did not get their tracker accounts when it was required and 40% did not get an accurate margin on the loans of their property and assets. This impacted the people greatly. This was because there was a massive monetary load on the people but at the same time, the bank informed that 23 homes were re-claimed as with 79 buy-to-let properties.
Tracker rates became expensive after 2007
Most of the mortgage creditors who functioned in the Republic over the last 20 years tried to move people away from tracker mortgages following the expose. Throughout this period, lending became tremendously expensive for Irish Banks. They could not get cash on charges that they presented to tracker holders for their mortgages. Authorized ECB rate is just 0.05%, hence an individual on a tracker pays an interest rate between 0.8% to 1.3% on their property loan.
The scandal started in 2007
This scandal began 10 years ago when the banks understood that they had not properly calculated the math when they wrote all these tracker mortgages to state their share in the market. Up till 2015, banks created an image that they were pushing people off trackers for a genuine reason but in 2015 this story became a pinnacle when PTSB lost a case. The case implied the urgent examination by the Central Bank of further evaluated failures by both PTSB and its secondary organization which was connected to tracker mortgage rates and decisions.
Banks are not talking to the homeowners affected
PTSB results helped the Central Bank to focus on the practices of other banks. An introductory and pilot examination of the matter concluded that the problem was huge. The scandal increased but last December the Central Bank concluded that at least 8200 homeowners were not given tracker mortgage by their creditor. As of today, the banks still have not talked to people whose lives they have impacted. It is predicted that everything will be sorted out by 2018.
Reimbursements will be given by lenders
The Central Bank is currently in contact with all the investors to examine the impact of the activities. The process is pretty much slow because it must be investigated effectively. The Bank cannot force lenders to give an absolute level of reimbursement because that power is only implied after August 2013. The bank was not able to recognize customers who wrongly moved off trackers. What the Central Bank aims is extremely important; they want all the investors to introduce their reimbursement plans before the end of the year.
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