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Much like the first swallow indicating the arrival of Spring the move by the US Vulture Fund, Tanager, to discount its mortgage loan book by 40% to facilitate quick sales or re-mortgages may very well be the first sign of the Vulture Funds departure to foreign fields.

Behaviour of Vulture Funds across the globe has been that they come in to make a quick profit and then get out as quick as possible. It would seem that this time may be at hand. Tanager, the US Vulture Fund that bought over 2,000 loans that were in arrears from Bank of Scotland Ireland, are looking to take flight. Tanager recently got a bloody nose from the Courts. The Circuit Court in Dublin found the paperwork prior to the sale to them was defective. The repossession proceedings that they were bringing were struck out. That combined with the general difficulties being encountered by them has resulted in them engineering a tactical U-turn. Better to try and entice borrowers to re-mortgage or sell the property themselves than go down the route of Court proceedings. Essentially they have offered a 40% discount on the current mortgage value. They will try to entice you to re-mortgage at 60% of the current mortgage value or alternatively sell the property and remit 60% of the mortgage value to them.

However, you would be advised to proceed with caution! You should get legal and/or financial advice. Re-mortgaging could end up costing more because you will be re-mortgaging at a much higher interest rate. If you are on a tracker rate, the current mortgage rates could be 4 times the tracker rate that you are paying.

Selling the property may be an option if there is sufficient equity for you to realise but this would probably only arise in a buy to let/investment scenario.

The reality is that either way Tanager will be getting more than it paid for the loan. It may very well be a good idea for people to take up their offer but they should do so only having got advice in relation to it. It sounds very good but the best advice would be to go wearily and get advice.

If you are thinking about refinancing there will be obvious difficulties in getting another Bank to advance the loan. Also, the interest cost will in all likelihood be significantly more and you will need to weigh up the increased interest cost of the new loan as against the 40% discount that Tanager are offering. However, refinance will be a limited option given the sluggishness and general difficulties in the mortgage market at the moment and particularly where the person applying for the mortgage is most likely already in arrears or stretched financially.

I do not want to be unduly pessimistic about the news of the “flight of the vulture fund”. This is the first one to indicate a likely exit from the market. The reality is that more funds shall be exiting. It may very well be that the vulture funds will be easier to deal with in negotiating settlements when they are exiting the market. For the moment wait and see and proceed cautiously. Most importantly get advice.