As anyone with a Twitter account knows, online arguments aren’t debates. They’re reading comprehension tests – tests which most people are failing. They’re also the grand validation of an old rule of communication: it doesn’t matter what you say – it matters what people hear. What you said doesn’t matter. What they think you said, often wrong and commonly idiotic, is what they respond to. But that, unbelievably frustrating, gap between what you said and what they heard isn’t random. It’s structural. And, frankly, expecting it to be otherwise in that environment isn’t optimism – it’s category error.
But that kind of miscommunication isn’t just online dysfunction. It’s a symptom of something measurable – the fact that the majority of the population of Ireland, and many other countries, are functionally illiterate. How can this be, you might ask, when Ireland is said to have “one of the highest literacy rates in the world”? Well the answer there lies in how we define literacy—and how we measure it.
Every so often, someone cites Ireland’s high literacy rate – often reported as 99% – as proof of the success of the Irish educational system, government policy, etc. But functional literacy – being able to extract meaning, compare information, and navigate real-world documents – is another matter entirely.
The most honest look at this comes from the Programme for the International Assessment of Adult Competencies (PIAAC), an OECD survey run in Ireland by the CSO. PIAAC measures what adults can actually do with text, numbers, and unfamiliar problems.
This isn’t about whether you’ve read Ulysses – a book often lauded as the greatest piece of literature ever written, but which in truth isn’t even the best thing Joyce wrote – or the level of qualification you’ve received. This is about whether adults can function in a society governed by forms, instructions, portals, and interfaces.
PIAAC categorises adult literacy into five levels, each measuring progressively more complex and independent reading skills:
In 2023, the breakdown in Ireland looked like this:
| Literacy Level | % of Irish Adults |
| Below Level 1 | 5% |
| Level 1 | 16% |
| Level 2 | 38% |
| Level 3 | 32% |
| Level 4 | 8% |
| Level 5 | 1% |
Only 1% of Irish adults reach Level 5 – the top tier of literacy. At this level, individuals can handle deeply complex materials, synthesise and evaluate information from multiple sources, and solve unfamiliar problems using abstract reasoning. These are the people best equipped to operate in high-level bureaucratic, academic, policy, or technical environments. They are extremely rare – roughly one in a hundred.
Another 8% reach Level 4. These individuals can interpret conflicting information, follow complex arguments, and work across multiple documents. They’re capable of managing complexity, but not necessarily at the highest level of abstraction or novelty.
Only 9% of Irish adults operate at Levels 4 or 5 of literacy – the threshold where advanced reasoning, abstract thinking, and deep comprehension come into play. And yet, that narrow cognitive tier is the one our world is increasingly designed for.
Over half the country is below Level 3. That means they may struggle to follow instructions, interpret a document, or fill in an online form.
We’ve built a society for the top decile and left the rest to improvise. Things that used to happen in person now happen through portals. Signatures are replaced by multi-step verification. Conversations by interfaces. The systems look modern and efficient on paper, but they weren’t built for real people.
These systems are often sleek, optimised, and, in theory, well designed, but a shocking number of them fail when they eventually meet actual people. Or worse: they succeed, but quietly make life just that little bit harder for a sizable chunk of the population who either struggle to interact with them or simply don’t interact with them because they find it either trying or embarrassing.
PIAAC research makes it clear: Level 3 is the minimum literacy threshold for effective, independent functioning in modern society. Below this point, individuals are increasingly limited in how they can navigate bureaucracy, employment, healthcare, education, and digital systems, often needing support from families members or other people known to them.
And that’s where 59% of the Irish population is – level 2 or below.
That reality sits uneasily beside a cultural reflex we all recognise – the impulse to insist that we’re all equally capable. It brings to mind Garrison Keillor’s old line about Lake Wobegon: “That’s the news from Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.”
No, not really.
There have been two PIAAC surveys carried out in Ireland in the last decade, and technically the mean score for adults in Ireland slightly improved between the 2012 and 2023 surveys – albeit not in any statistically significant way – but the actual trends we can see do not look terribly positive.
In 2012, 17% of Irish adults were at or below Level 1 in literacy. By 2023, that figure was 21%. The amount of adults at level 3 fell by 4%, a fall only partially counterbalanced by a 1% growth at level 5.
| Literacy Band | 2012 (%) | 2023 (%) |
| At or Below Level 1 | 17 | 21 |
| Level 2 | 38 | 38 |
| Level 3 | 36 | 32 |
| Level 4–5 Combined | 8 | 9 |
If you’re below Level 2, reading anything more complex than a cereal box is going to be a challenge. Not an impossible challenge, but it’s going to take an active effort. And so things like medication labels, bank letters, official forms – these become points of failure.
Some chalk this up to education. And yes, education matters. But PIAAC also functions – quite accurately – as a proxy for IQ, especially in the lower-to-moderate range. It measures how people deal with ambiguity, extract patterns, and apply reasoning. These are cognitive functions, not just academic skills.
Cognitive competence is now the foundation of independence. And if you lack it, the world isn’t designed with you in mind.
And so people who would have historically lived quite successful lives fail.
In the past, this was the problem of the individual concerned, and society made some effort to push people, or at least men, towards roles that suited their capabilities. With the rise of digital government, automation, and the welfare state, it’s rapidly become everyone’s problem.
This is most obvious in the now-ridiculed slogan “learn to code.” The idea was that anyone could upskill. But that’s not how cognition works. IQ strongly correlates with how quickly and effectively people learn new domains.
A significant amount of the population simply do not have the ability to easily retrain into complex roles. That’s not a moral failing – it’s a human limitation. A welfare or jobseeker system that ignores this will produce failure, despondency, and dependency.
Most policy work in this area focuses on outcomes: school results, literacy targets, labour force participation. Almost none of it looks at inputs: the actual cognitive distribution of the population. And why would it? Conversations about IQ – or even basic biological differences like strength between men and women – are treated as unmentionable. They make respectable people uncomfortable.
But if we want systems that “help people flourish,” as the NGO class loves to say, we have to build for who people are, not who we wish they were.
One of the quiet tragedies of modern discourse is that we obsess over particular, often relatively minor, differences – race, sex, sexual orientation – while ignoring one of the most fundamental differences that shapes every interaction, decision, and opportunity: intelligence. If we’re serious about building systems that work for everyone, we might start by doing something radical: asking average – or perhaps even slightly thick – people what they think of those systems. And then listening.
As I said above, a lower IQ isn’t a moral flaw. But we’ve built a society that makes it a liability. We’ve turned independence into a cognitive test. And we’ve made participation contingent on interpreting systems that are, for many, indecipherable.
In that kind of world, where your success depends on grasping macroeconomics, platform interfaces, and abstraction layered upon abstraction, a quite large amount of people will start to see things one of two ways:
Both paths lead to alienation and disempowerment.
We can keep pretending the system works. That everyone is equally capable. That miscommunication is a problem of tone, not comprehension. But the clear and apparent truth is that our assumptions about equality have become so delusional that they’re causing real world harm.
Literacy is not a certificate. Intelligence is not evenly distributed. And building a society that ignores both is not compassion – it’s negligence.
There’s been plenty of talk about AI displacing jobs. But for many people on the lower end of the cognitive scale, that ship already sailed. Their jobs weren’t taken by AI. They were automated away years ago – or offshored, outsourced, and replaced with online portals, QR codes, and corporate helpdesks. Those that remain seem to be relatively secure from displacement by automation or AI, at least in the short to medium term.
The fear now spreading among white-collar workers – panic over being rendered obsolete by a machine – is a taste of what other people have experienced, quietly, and without recourse, for decades. No retraining. No safety net. Just confusion, frustration, and exclusion.
Ironically, AI may be one of the few developments that could actually improve their situation. Because the core issue wasn’t that humans were replaced by machines. The core issue was that human interaction was replaced by bureaucratic process – cold, inflexible systems that made no allowance for individual comprehension, emotional nuance, or community support.
But if AI can replicate a more human interaction – adaptive, conversational, infinitely patient—it could become a bridge, not a barrier. AI could explain things more clearly than a bureaucrat. It could repeat itself without irritation. It could tailor its language to the user’s ability. It could offer 24/7 help, without shame or judgment.
For the first time in decades, it might actually be possible to build systems that meet people where they are – not where policy designers wish they were.
This same logic applies to education. One of the most promising applications of AI isn’t in replacing teachers – although there are a number of people in tech currently throwing their eye in that direction – but in supplementing them. With adaptive tutoring systems, students who struggle with traditional methods could receive personalised support, paced to their ability, endlessly patient, and capable of presenting information in multiple formats. For students who often fall behind – not due to laziness, but due to cognitive limitations – this could mean the difference between disengagement and genuine comprehension. AI could help close the gap between expectation and ability in the classroom, just as it could in public services.
Of course, the above is a – shall we say – best case scenario. Because the truth is, the other solutions proposed for these problems, to the extent they exist at all, are well-meaning but insufficient. We have plain English campaigns, simplified forms, accessibility checklists. They are laudable, but they are piecemeal -and often ineffective.
They assume that small tweaks to a system built for high-functioning users will make that system usable for everyone. But if the foundation is exclusionary, the patch is just decoration. The problem is not cosmetic – it’s structural.
A general comment thread for subscribers to discuss anything that strikes their fancy.
98 children have been born via surrogacy arrangements in Ukraine to Irish residents since January 2022, the Department of Foreign Affairs has revealed.
The information was released to Senator Sharon Keogan this week, with a Freedom of Information response revealing that 98 Emergency Travel Certificates (ETC) were issued to children born in Ukraine to surrogate mothers.
In the letter, the Department said: “Please note that the Department of Foreign Affairs and Trade has advised against all travel to Ukraine, for any purpose, since 12 February 2022. The travel advice also states that the Department strongly advises against commissioning surrogacy arrangements in Ukraine.”
Ukraine is estimated to account for more than a quarter of global surrogacies, or more than 2,000 babies a year. The largest commercial surrogacy agency in the world is located in the Ukrainian capital of Kyiv. The county’s surrogacy industry has continued to operate as normal despite the war.
32 children born as a result of surrogacy arrangements in Ukraine were issued an ETC in 2022, followed by 33 in 2023, a further 25 in 2024, and eight so far this year. Commercial surrogacy – where a woman receives a fee for giving birth – is legal in a handful of countries in the world, including in Ukraine. Following restrictions placed on surrogacy markets in Thailand, Nepal and India, global demand has been directed towards Ukraine, where there is less regulation of the process and where it is cheaper.
Prior to the war in Ukraine, it was estimated that one baby per week was born in Ukraine to Irish couples at a cost of €40,000 to €65,000 each.
Speaking in the Seanad on Wednesday, Senator Sharon Keogan said that she had sought the information for three years, as she blasted the “exploitation” of “some of the most vulnerable women on earth.”
“Since the beginning of the war in Ukraine, I’ve been making repeated Freedom of Information Requests to the Department of Foreign Affairs. After three years, I have learned that from January 2022 until today, 98 emergency travel certificates have been issued to children born in Ukraine as a result of surrogacy arrangements,” Senator Keogan said.
“Despite assurances from the Government that new legislation would enforce ethical standards and curb exploitative practices on commercial surrogacy, some of the most vulnerable women on earth – Ukrainian women – are still being taken advantage of at the same rate as before. While we do not know the specifics, common sense dictates that some of these cases in war-torn, corrupt, and impoverished countries can hardly be anything other than exploitation,” the Senator added.
“How can this be anything other than a case of women being forced to rent out their wombs in desperation as bombs are falling around them? That is, if commercial surrogacy can ever be non-exploitative and unethical in the first place. We certainly don’t think it is in Ireland – we ban commercial surrogacy in Ireland, we protect Irish women from being exploited, and protect people from exploiting them.
“But then we think it is fine for our people to rent the wombs of women in other countries – in war-ravaged countries. It is beyond me how our Government can find this even remotely acceptable, and allow this outrageous exploitation to continue.’
Speaking to the Irish Independent recently, a legal advisor at BioTexCom, the world’s largest surrogacy agency located in Ukraine, said that it was “logistics rather than safety concerns” clients were concerned with.
“When we speak to couples they are much more concerned about the fact that it takes two days to get here at the moment rather than the missiles and drones flying all over Kyiv,” Denis Herman, a legal adviser to the agency told the newspaper this month.
Last July, new surrogacy legislation was signed into law in Ireland – the (Assisted Human Reproduction) Act 2024 – which was criticised as “basically legalising the buying of babies.”
Previously under Irish law, babies born through surrogacy were not automatically recognised as the children of the women who were raising them. While commercial surrogacy remains illegal in Ireland, the law does not prevent Irish adults from paying a woman to be their surrogate in a country where the practice is legal.
The Irish Human Rights and Equality Commission (IHREC) previously warned that the commercial surrogacy industry in many countries is rife with human rights abuses.
On Monday morning, the High Court set a date for another hearing on whether the company contracted to build and manage an IPAS centre on the site of the former Crown Paints factory off the Malahide Road in Coolock will be approved to proceed.
In the light of the conflicting applications, Justice David Holland directed the participants in the case over to Justice Richard Humphreys, who set a date for July 17 and 18 at which time the defendants can seek again for the case to be struck out while the plaintiffs can put the case for an injunction.
That in itself represents a considerable victory for the plaintiffs as the opposing parties – Townbe Unlimited who are the contractors for the centre, Dublin City Council and the Chief State Solicitor’s Office – had again sought for the case to be struck out.
Their basis for strike out is that the plaintiff’s case is frivolous – solely based on the arrogant assumption and claim that it was “bound to fail”.
Some observers of the progress of the case since last October, when Justice Holland dismissed the plaintiff’s initial case, believe that the attitude of Townbe and the state may have irritated the Court.
It follows on from a ruling on February 24 by Justice Holland which effectively allowed the plaintiffs to resubmit their affidavits but also to give the state, DCC and Townbe another chance to request a strike out. He has now rejected that strike out, and it will be up to the defendants to submit a proper argument for such an outcome in July, something which it would appear they have not deigned to do so far.
My impression is that they failed to take seriously the objections on various grounds – most especially that any exemption does not cover work to remove dangerous asbestos from the site – and appeared to almost arrogantly assume that the Court would throw out the case for the plaintiffs following Justice Holland’s initial refusal to grant them an injunction against the IPAS centre last October.
Justice Holland told the plaintiffs on Monday that they will not be liable for the costs of the defendants. Again, that was something which it might have been felt was hanging over the plaintiffs and acted as a potential dissuader to them continuing to pursue the matter – as Justice Holland clearly believes they have the right to.
The main case put by the plaintiffs, as contained in the affidavit submitted by Alan Croghan, is that they are objecting on the grounds that the former ‘Crown Paint Production Plant’ is not a ‘Light Industrial Building’ and that as a ‘Pre-63’ building it cannot be defaced in any way.
That raises the issue regarding the asbestos that was mixed in with the cement when Dublin Corporation, now Dublin City Council, approved the building of the paint production plant in 1960 and which was completed in 1961. The foundation, floors, internal walls and external walls have asbestos mixed-in with the cement.
The roof, which Townbe have claimed they have an exemption to remove 51% of, has asbestos in the ceiling, the insulation and in the roof tiles. There is asbestos in every fire door and there is also a high reading of ‘pH’ levels and ammonia. There are also nine ‘Pre-63’ lead pipes two metres underground that are now covered over with cement. One of the pipes burst in 1990 causing flooding below and above ground.
The plaintiffs therefore argue that the building is dangerous, and that it cannot be designated as a ‘light industrial building’ which can be exempted from normal planning guidelines and restrictions. They claim that as it is the building is not fit for human habitation and that the asbestos needs to be completely removed by experts in that field and not in the causal manner suggested by Townbe.
The point made by the plaintiffs is that the designation of the site means that it is not covered as are a ‘light industrial building’ and ‘special building’ under the exempted development regulations cited by Townbe with the support of Dublin City Council and the state as represented by the Chief State Solicitor’s office.
One of the plaintiffs also refers in their affidavit to the “questionable actions of the former high-ranking RUC Officer; Mr. Alan Mains who is employed by Mr. Paul Collins.” The plaintiff claims that Mains – whose role I referred to earlier this year – has been engaged with an NGO in attempting to create the impression of community consultation and approval.
Given that Paul Collins of Townbe Unlimited had notified the City Council that his company was planning to begin work on the Crown Paints site in May 2024 by the time the case returns to court on July 18 their plans will have been held up for more than a year.
On Monday, Justice Holland noted the statement by Bernard Dunleavy representing Townbe that not only have his clients been unable to gain entry to the site due to the presence of protestors, but that they are unlikely to be able to commence any work on the site “in the near future.”
In my view, that represents a considerable achievement on the part of those opposed to the proposal for an IPAS centre who have faced a concerted campaign to discredit them backed by the full resources of the state.
As it stands, the Coolock case along with that initiated by Westmeath County Council’s refusal to grant an exemption to the contractors for a proposed new IPAS centre at Lissywollen, represent an ongoing obstacle to state plans to fast track the new centres that they need in order to facilitate the ongoing arrival of large numbers of applicants for asylum – mostly, as we have seen, without grounds.
Britain’s controversial Bill to legalise assisted suicide has been thrown into doubt after its Labour MP sponsor, Kim Leadbeater, agreed to postpone implementing the law until after the next election.
It would mean that any introduction of assisted suicide legislation in England and Wales wouldn’t happen until 2029, with fears voiced by some supportive MPs that the Private Members Bill could be abandoned altogether.
Ms Leadbeater, the architect of the Private Members Bill, is thought to have agreed to delay the Bill after civil servants responsible for drafting amendments told her the legislation was unworkable, The Telegraph reports. Ms Leadbeater has proposed pushing back the deadline for implementation from two years to four.
Prior to her decision to delay it, it is understood that the Government expressed concerns about the timeline for implementing assisted dying, as reported by the BBC.
“I cannot pretend that I’m not disappointed about extending the commencement period,” Ms Leadbeater told MPs on the committee.
It comes amid repeated warnings that the law would overburden both the NHS and the judiciary, prompting speculation that a new Government may abandon plans to establish any assisted suicide regime. The Bill passed by 55 votes in November, with 330 MPs backing it, and 275 opposed – and has since been the subject of scrutiny at a Committee of MPs selected by Leadbeater to examine the legislation line-by-line.
Britain’s Health Secretary Wes Streeting, an opponent of the Bill who warned of its impact on the NHS, claimed that the Labour MP had backed down after Ministers told her that the law could not be delivered in two years.
Mr Streeting told a Guardian event: “It would have been really easy for her to say ‘hang on a minute, four years, that’s twice as long as two years, and will this ever happen.’ Instead what she’s done is work constructively with ministers, listened to the arguments about how long it would take to implement, and she’s shown willingness to compromise.”
The Committee scrutinising the draft Bill finished its work in the early hours of Wednesday morning, with Ms Leadbeater’s proposal to delay its roll out in England accepted. The future of the legislation also looks uncertain in Wales, as this week MPs on the Bill’s committee voted 12 to 11 in favour of MP Sarah Olney’s amendment to require Senedd approval before any changes take effect in Wales.
It follows Senedd members rejecting a motion calling for a law change last October. Ms Olney previously said with regard to Wales: “We should respect that choice and not impose it on them, in whole or in part, without their consent.”
Ms Olney told the committee that it was a concern that doctors involved in the assisted suicide process would be paid for their assessments.
“The concern is that people motivated by a profit incentive would be incentivised to push that at the expense of options for the patient that don’t attract the same level of reward. That’s the issue. It’s not a binary decision in the way that most treatments are,” Olney told Leadbeater.
On Tuesday, the Committee’s rejection of an amendment to require proxies and witnesses to have mental capacity was rejected, sparking debate online. Ms leadbeater argued that it would be impractical to check for mental capacity, and that their role would be “functional.”
Some critics of the Bill claim that it is bad for the image of the Labour Party, including Rachael Maskell, a Labour MP who has opposed the Bill. Ms Maskell said it was her view that the delay could damage the party electorally, stating: “We can see how divisive it is – it would be incredibly bad for Labour to manage this at the same time as an election.
“When people hear the detail of the Bill, they are horrified. This is bad for politics and the poor people who may be victims of this process. I am really fearful about where this is going to place us.”
Among the dozens of amendments tabled to the Bill by Ms Leadbeater, one of the most controversial was the removal of the High Court safeguard. Over 60 MPs specifically cited the High Court safeguard as being a key reason why they voted for the Bill at second reading, with its proposed removal causing alarm. The committee heard that it would be “impossible” for the High Court to rule over every case, as previously proposed.
The committee has heard extensive evidence from medical and legal experts warning that legalised assisted suicide risks undermining end-of-life care and poses a serious risk to the most vulnerable.
A spokesman for Leadbeater said: “Kim hopes and believes the service can be delivered more quickly if it becomes law later this year.” He insisted that assisted suicide could still happen, and that 2029 was a “backstop.”
The phrase “vulture fund” is very evocative, conjuring as it does the image of that much-maligned carrion bird of the African continent, picking over the corpse of some unfortunate animal. Vultures do not (generally) earn their keep by hunting and capturing their own prey – their entire life cycle is enabled by the misfortune of others. Somebody has to die, so that the vultures might live.
When you apply that term to financial institutions, as critics of these funds do, you are deliberately conjuring up a particular image of greedy financiers who are profiting from the misery of somebody else. As Theo McDonald writes this morning, those “somebodies else” are usually distressed mortgage holders, who suddenly find their mortgages owned by such funds, and typically find themselves paying higher interest rates than they would with a traditional commercial bank.
That this annoys and upsets people is natural, especially when those who are shareholders in the “vulture funds” are clearly profiting from the mortgage distress of Irish homeowners. There is an instinct – again natural – that makes people want to say “this should be banned”.
The problem with people who make such a case, however, is that they are rarely able to identify an alternative solution to the problem, or even to specify openly what the problem is. So let’s start from there.
The problem which gives rise to “vulture funds” is that some people cannot, could not, or (in more cases than we admit) will not or would not pay their mortgages. This is why those mortgages became “distressed” in the first place: People borrowed money and were either incapable or unwilling to repay it. The banks that owned those mortgages therefore had underperforming or non-performing assets.
But there’s also another problem, which is that a homeowner who does not repay their loans becomes a poor credit prospect. People are less willing to lend to poor credit prospects at low interest rates. It is a risk, obviously, to advance money to somebody who has previously not repaid their loans. That risk must be priced in. Hence, the interest rates offered to such homeowners tend to be higher.
In a normal situation with no vulture funds, when a person is unable or unwilling to repay their mortgage, the practice is for the bank to repossess the home and sell it on the open market, thus recouping their costs. The downside to this is that the process of repossession and sale makes the homeowner or borrower homeless – a solution that we would all surely prefer to avoid if it were to happen on a large scale. Ireland in particular has a historic aversion to “evictions”, even when those evictions happen because a loan is not being repaid.
Further, somebody evicted from their home in such circumstances is unlikely to get another mortgage to buy another home for a long time. It’s a bad situation all around.
A “vulture fund” provides a solution to this problem for all parties. They will buy the loans (often at a steep discount) from the banks. So, for example, they might pay €100,000 to acquire a mortgage with €200,000 of outstanding debt. The bank gets more money than it otherwise would for an underperforming asset, and the vulture fund acquires a potential profit. Meanwhile, the borrower usually gets to stay in their home. Because the vulture fund has acquired their mortgage for less than it was worth, they may also get a write-off of a portion of their debt, or an extension of the life of their loan, to make the loan more repayable.
In return, however, they must pay a higher interest rate than they would were they still with a commercial bank. They must pay a higher interest rate because they are higher-risk borrowers, and the vulture fund has acquired (usually by borrowing) money that it essentially uses to keep them in their homes.
This last point is the central issue that opponents of vulture funds almost never address: That the people who are the “victims” of such funds are in fact high-risk borrowers who have in many cases defaulted on their loans. Their debts are not theoretical: They borrowed money, and if they cannot repay it, somebody must take that loss.
So who should that somebody be?
The market has provided a solution, which is vulture funds. The state, by contrast, has provided no solution, presumably because all of the state funded solutions would be unpopular and constitute moral hazard.
For example, the state could decide to subsidise mortgage lending to high-risk individuals. This is what the United States did for years through its two state-owned lenders, Fannie Mae and Freddie Mac. The result was an orgy of high-risk, low-reward lending that provoked the 2008 banking crash and all the misery that followed.
But even if this was limited in scope – let us imagine that the state simply stepped in to help people currently with mortgages owned by vulture funds – the moral hazard would be real. The state would essentially be taking money from people who did pay their mortgages and giving it to people who did not. We would be transferring a loss on those mortgages from the banks to Irish taxpayers, many of whom don’t even have a home of their own.
Another thing the state could do would be to regulate: For example it could try to cap the interest rates charged by vulture funds. But this would simply collapse the entire business model of those funds, since there would and could be no accompanying cap on the cost of their own borrowing. If a vulture fund is borrowing money at 5% interest rates to acquire distressed mortgages where their interest rates are capped at 4%, then the vulture fund has no reason to exist as it would simply lose money. The market is providing money to these funds solely because they can make a return on it. If you take that return away, the market has no reason to be involved. The financial markets are not a charity.
So if not the vulture funds, then who? It is a basic question, yet one that opponents of such funds rarely answer in any detail.
The bottom line is this: Somebody has to pay for the fact that these people did not, could not, or would not pay their mortgages. Unpleasant as vulture funds might be, the cost of that problem is currently borne by the funds, the banks, and the distressed mortgage holders.
Any solution to this “problem” necessarily involves transferring the costs of that problem to somebody else, and with the very real risk of sending a message in the process that paying one’s mortgage is optional and that the state will save you if you somehow stop doing so.
There is a reason, in short, that Theo’s article, fine though it is, is so long on problems and so short by comparison on proposed solutions. Indeed, he ends with a generic plea that the Government should “clip the wings” of these funds.
What else does he suggest? Well, essentially what I set out above: He wants to go after the profitability of the funds by making them pay more tax. Fine at an emotional level, but in practice this will either mean that the costs are passed onto the homeowner (as all businesses do) or that the funds will simply leave, leaving us with the original problem. He also suggests some legal amendments to make it easier for distressed mortgage holders to extend the term of their loans, or get more forbearance when failing to make repayments. The problem here, again, is moral hazard: Many of these people have already managed to stay in their homes despite their inability or unwillingness to pay. At what point do you not just say “fine, you bought a house you can’t pay for, hand it over?”
The final point in Theo’s article that I’d address is the one that has always bothered me the most: The legal chicanery route of suggesting that people can stay in their homes without repaying loans because Vulture funds don’t have the correct legal title to the properties, which remains with the banks. There are some eminent lawyers (he quotes them) who agree that this kind of approach might conceivably be legally feasible. The problem? It’s entirely immoral. If you borrow money, you should pay it back. And if you cannot pay it back (and I speak from experience here) you should be prepared to negotiate and also face the consequences of that.
Vulture funds provide people with one route out of the mess they find themselves in. We do not have to like them to acknowledge that they are much better than some of the alternatives.
Ireland is often held up as the poster boy for mortgage delinquency following the legacy of the aftermath of the housing bubble bursting. The latest figures from the Central Bank indicate that over 20,000 homes are in arrears in mortgage repayments for over 90 days – with over 17,000 in arrears of over a year.
Context is important: during the Celtic Tiger as many readers will remember, Irish people were incentivised and encouraged to take out loans by the banks, not just 100% – and 110% – mortgages, but additional loans for cars, holidays and more.
In addition, as highlighted in recent research, many of those households now in difficulties found that their supposedly non-performing mortgages were transferred over to vulture funds when the criteria for a non-performing loan was expanded by the European Banking Authority.
Indeed, some people whose mortgages were transferred were making full payments with their commercial bank.
According to the Oireachtas research, some 6,000 Irish customers who were meeting the terms of their mortgage agreement had their loans sold to a vulture fund due to the new definition.
That has led to Irish mortgage holders now being tied down to loans – and sky-high interest rates – managed by non-banks including vulture funds who often impose excessive costs on customers making repayments difficult.
In theory, a failure to pay mortgage costs could lead to high rates for homeowners across the board – and those who take out mortgages should obviously be expected to make repayments.
But the experience of many Irish customers is that they have become prisoners of vulture funds, subject to sky-high interest rates and unable to move to other lenders to avail of lower repayments.
VULTURE FUNDS GOT LOANS AT DISCOUNT
In fact, the vulture funds were able to buy Irish mortgages at knock-down rates or at a discount as is the case for most Asset Management Companies (AMCs) with NAMA playing that role in the Irish case with the taxpayer picking up the bill for the discount received by the vulture funds.
Indeed, when the fund bought the mortgage loan at a discounted price they were still entitled to chase the mortgage holder – the homeowner – for the full amount owed.
In truth, if homeowners are unable to meet repayments given the exorbitant interest rates charged by the vulture funds, and are forced to sell their homes, then the fund will not only have bought the loan at a discount but will profit handsomely from the forced sale as the high interest rates set by the fund will increase the proceeds accruing to the fund.
In many ways, NAMA facilitated the entry of vulture funds into the market charging excessive mortgage costs due to their unorthodox funding strategies.
As the former head of the Irish AMC Brendan MacDonagh said in 2015, “NAMA’s market activity and deleveraging has contributed to the strong inflows of foreign capital” aka foreign investment funds.
So how do these funds operate, why did their credit service vehicles have charitable status enabling them to avoid tax for so long, and what should the government consider as a possible solution for the thousands now trapped in the clutches of vulture funds.
WHAT ARE VULTURE FUNDS?
Vulture funds and their metaphorical counterpart cuckoo funds are funds outside the regular banking system. The latter buys up properties in bulk meant for first-time buyers but instead generates a high-yield for investment funds, while the former purchases distressed assets – non-performing loans – from banks.
These entities have risen exponentially since the onset of the banking crisis of 2008 when so-called toxic loans compounded the main pillar banks and required saving in the form of these opaque entities who swooped in on residential and commercial property assets alike.
Many homeowners found that the bank they thought their mortgage was owned by was in fact transferred over to a faceless structure known as a credit servicer which acts as middlemen in evictions and enforcing debt obligations, but often operates under the radar.
The housing crash of 2007-08 and the response to that crisis contextualises the current dilemma of an entire generation priced out of the housing market along with mortgage holders beholden to vulture funds and non-bank entities.
The steps taken by the Irish government to revalue property prices after the sudden plunge in residential and commercial values simply continued the policy of financializing the housing market with little regard to the systemic issues that caused the crisis in the first place. The invitation of vulture funds, the gifting of public land to private entities, the cessation of domestic bank lending, and selling of property assets to private equity firms via NAMA, all contributed to unaffordable housing and the creation of a new class of absentee so-called credit servicers masquerading as mortgage owners.
THE 2008 CRASH
Following the Global Financial Crash (GFC) in 2008, Ireland was hit particularly hard. Property prices had been rising by close to 10pc per year. Bank lending rose from 60pc of GNP in 1997 to 200pc in 2008 with a resultant surge in housing supply of circa 30,000 in 1995 to close to 90,000 units in 2006. Construction accounted for just over 10pc of employment and 15pc of total tax revenue from property taxes.
But by 2009, house prices fell by over 20% and almost 50% from their peak in 2007. The edifice that the late stage Celtic Tiger economy was reliant on was hanging by a thread with property – once the cornerstone of the public finances – now proving its Achilles Heel. As a major source of tax revenue and economic growth, falling property values proved deleterious for the wider economy which required swift intervention.
The State responded in part by bailing out the banks that had recklessly lent to developers with a €64bn banking guarantee on their deposits. The State also bailed out reckless developers by getting the banks to sell over €70bn worth of commercial and residential loans off their balance sheets to a government-backed ‘bad bank’ called the National Asset Management Agency (NAMA).
Indeed, as mentioned by Niamh Uí Bhriain, citing a paper written by senior parliamentary researcher Barry Creighton, the broadening of what constitutes a ‘non performing’ loan by the European Banking Authority (EBA) heaped even further pressure on Irish banks to dispose of ‘toxic’ loans.
From 2014-16, NAMA sold over €50bn worth of distressed loans to investment funds. Irish loans accounted for over one-third of all distressed loan sales in Europe in both 2013 and 2014 with Dublin at the epicentre of these transactions. According to the United Nations, over 90pc of these loans were sold to US hedge funds, private equity and/or vulture funds.
Leading financial firms bought these properties when they were cheap, taking advantage of the tax-free incentives offered by the Irish State. NAMA’s role was to package these distressed loans into multimillion- dollar portfolios containing a mixture of commercial, residential and retail, to sell to investors.
CHARITABLE STATUS OF SPVs
These funds, collectively known as private credit entities, established what are known as Special Purpose Vehicles (SPVs) allowing them to claim charitable status and avoid Irish tax such as VAT or other duties.
SPVs were established under the Irish Taxes and Consolidation Act 1997 as vehicles set up by companies that hold non-Irish assets and declare themselves ‘tax neutral’. While initially set up to allow for a flow of international funds into the International Financial Services Centre (IFSC), this allowed firms to acquire billions in distressed assets.
In 2012, investment funds used these pre-existing structural arrangements to warehouse their Irish property assets in the IFSC which is currently the third-largest shadow banking centre in the world. Any private fund could register a Section 110 company if it was resident in Ireland and had qualifying assets of at least €10m ranging from shares to bonds.
This enabled funds to invest almost €6bn in equity and debt and avoid €20bn in Irish taxes.
While this specific loophole was closed in 2016, then Independent TD Stephen Donnelly claimed accountancy firms were still advising property managers on how to ”get around” the amendment. Indeed, a report by the Oireachtas budgetary committee found the attempt to close the loophole as ineffective.
With the transfer of such large tranches of loans over a period, many of those whose mortgages switched from a bank to a non-bank entity or vulture fund without their consent – or in some cases their knowledge – found they had little to no security over interest terms among other things.
Hundreds of thousands of households now realised that the bank they thought their mortgage was tied to had been allegedly purchased by a so-called credit service provider acting on behalf of a vulture fund.
While the names of vulture funds like Cerberus or Lone Star feature prominently in debates and discussions on the topic, the servicers receive minimal attention. The set up of these credit servicing entities vary but the most active in the Irish market include Start Mortgages, Pepper Finance, and Mars Capital.
WHAT IS A CREDIT SERVICE PROVIDER?
But what exactly is a credit servicer and what role do they play in the deeply politically and socially unpopular vulture fund phenomenon?
As mentioned, when a bank wishes to dispose of toxic loans off their balance sheet they will turn to US private equity companies who in turn will set up an SPV.
The sale of the loans is normally done via a true sale in which the seller transfers the asset to the SPV which becomes entitled to the cash flows generated by the asset. A true sale enables the asset to become ‘bankruptcy remote’ so that if the original bank goes bankrupt the assets cannot be seized. However, because the SPV is unable to service the mortgage, a servicing agreement is done with the original bank with the transfer of legal rights of that loan given to a credit servicer allowing them to initiate a court hearing even though the courts are left in the dark regarding the true sale.
According to the Master of the High Court and ‘debtors’ champion’ Edmond Honohan, (thus described on account of his leniency for those who fell into arrears), this allows the credit servicer to deceive the courts.
He argues that: “These companies are little more than cash collectors. The banks / vulture funds sell the portfolio to an SPV, the vulture fund then goes bankruptcy remote, they have sold the assets, the SPV having securitised the loans gives the collecting agent (Vulture Fund) the legal title to manage the mortgage account and sue where necessary.”
Master Honohan, who grabbed national attention when the President of the High Court Peter Kelly transferred the final judgment of debt enforcement hearings from the Master to Judges of the High Court in January 2019, added that: “When the likes of Mars Capital take you to court, they do so as the owners of the loan; they conceal the fact that they are not the owners; just the collection agent for the true owner. Likewise, if there is already litigation by the likes of the EBS, Mars buys the litigation and applies to the Court to have the paperwork changed to their name”.
To dig a bit deeper let’s examine the history and dealings of the three main credit servicers and the vulture funds they work for.
Start Mortgages
Let’s take one example of a vulture fund named Lone Star.
Lone Star is a private equity firm based in the US State of Texas. The firm invests in global real estate, equity, credit and other financial assets through a number of private equity funds. When the Irish government sought to lure investment funds into the country, then Minister Michael Noonan held several meetings with Lone Star Capital from 2013-2014.
Often, the firm will utilise their private equity arm to ‘purchase’ loans from a bank. Lone Star would become the largest buyer of loans from the successor of the defunct Anglo Irish Bank the Irish Bank Resolution Corporation (IBRC). The Texas fund thus acquired billions in Irish assets including an over €1bn portfolio of 4,000 non-performing Irish mortgage loans from U.K. lender Lloyds in 2014 which were taken out by customers of Bank of Scotland in Ireland, before the institution shut its branches in 2010, under the Halifax brand from 2006. More recently, in 2018, the fund purchased several loans from the now-exited Irish Ulster Bank.
As mentioned, when these loans are purchased, Lone Star, or any fund, will hire a ‘credit servicer’ that will act on behalf of the fund in terms of debt collection. In the case of Lone Star, the credit-servicer is Start Mortgages.
Start was formed by four former General Electric (GE) Capital employees David Ingram, Paul Murphy, Dermot Nutley and Niall Corish in 2004. GE Capital is the financial services arm of the American multinational conglomerate General Electric which specialises in the financing of loans and mortgages to businesses and households alike.
In 2004, the consumer director of Irish Financial and Stability Regulatory Authority (IFSRA) – the precursor of the Irish Fiscal Advisory Council (IFAC) – prescribed Start as a “Credit Institution” which enabled it to issue loans.
Start invested heavily in what would become infamous in the aftermath of the US housing bubble, as shown in the blockbuster film The Big Short, the subprime mortgage market during the housing bonanza’s height. By 2007, this lucrative and volatile lending was worth around €1bn and rising in Ireland having provided mortgages for over 6,000 customers. With 100 workers, Start sold its product through brokers.
In 2007, The Irish Independent reported that in early 2006, Start had closed two mortgage-backed securitisations – at €370m in April 2006 and the second closed €525m the following November – with both described as “non-conforming residential mortgages in Ireland” which means mortgagors that do not qualify for such loans from banks and building societies i.e. Subprime.
However, once house prices fell and the facade of the Celtic Tiger was revealed, Start Mortgages role changed fundamentally. Having provided customers with loans they couldn’t afford, Start reoriented itself from a provider of loans to a servicer of loans.
In 2009, following the housing crash, it no longer provided any new loans, however, it maintained its license as a retail credit firm involved in the servicing of loans. As such, Start would engage in evictions as homeowners struggled to pay off their loans.
Start’s subsidiary company was initially the Kensington Group who were the biggest providers of non-conforming loans in Britain having pioneered the practice in the 1990s.
For its part, Kensington securitised over £10b in residential mortgages as part of its Residential Mortgage Securities (RMS) programme launched in 1996 as well as the inaugural Money Partners Securities (MPS) deal with the latter partly owned by Kensington.
In 2010, the Anglo-South African wealth management company Investec acquired Start through Kensington. Following the purchase, Ingram, Nutley and Cornish stepped down from the board and received a €1m ‘golden handshake’ payment.
That same year, Judge Peter Kelly granted an application for the Irish Central Bank to fast-track a challenge to the State’s entitlement to grant Start’s entitlement to issue loans following a homeowner’s action against his eviction. At the time, well over 200 actions for repossession were before the Master of the High Court with a further 71 added to the High Court’s list with 115 being granted and 89 evictions carried out.
The homeowner, named Robert Gunn, had sought to challenge Start’s repossessing of his home in Co Kerry. Having obtained the mortgage of €210,000 from Start in 2007, following the downturn in 2008 he lost his job and fell into arrears.
With a view to repossessing the property with intent to sell, Gunn claimed Start was never legally authorised in the first place to initiate the loan to him because it is not a state-regulated entity. As previously noted, the IFSRA provided Start with its loan servicing remit, but Gunn argued only the Irish Central Bank has the authority to do so. He claimed that passing this authorisation to the regulatory authority was in violation of the provisions of the 1942 Central Bank Act.
In 2011, the presiding Judge overseeing the verdict, Ms Justice Elizabeth Dunne, ruled that the 2009 Land and Conveyancing Reform Act had failed to preserve the terms of older legislation from the 1960s regarding the transfer of property rights.
According to the Irish Times: “Ms Justice Dunne ruled that borrowers who went into arrears before December 1st, 2009, and received demand letters from lenders before that date, could still be repossessed under the old legislation”. However, borrowers who took out a loan before that December date and went into arrears following it could not be repossessed under the old legislation.
In 2014, Investec sold Start’s portfolio of over €500m worth of loans to Lone Star vulture fund including over 3,000 mortgages as part of the private equity company’s “bid for loan portfolios worldwide”. This was approved by the Competition and Consumer Protection Commission (CCPC) after concluding “that the transaction would not have an adverse impact on competition in the relevant markets.”
Many of those whose mortgages are managed by Start face excessive mortgage costs. Indeed, in 2022 the firm announced variable rate hikes from 3.9% to 5% despite the vulture funds financing the purchase of the loans for as low as 1% with no fixed rate mortgage options available.
In 2022, Start announced it was exiting the Irish market.
Pepper Finance
Another credit servicer who engages in the work of vulture funds is Pepper Finance.
Pepper’s foundations speak to the very risky nature of these credit servicers bearing all the hallmarks of the last property bubble. Founded in Australia in 2000 as Pepper Money, the servicer was originally operated by Merrill Lynch a key player in the US subprime mortgage market. Pepper entered the Irish market in 2012 as a servicer of residential and commercial mortgages via Pepper Advantage.
In 2014, it took on 14,000 loans from Danske Bank following the Danish lender’s exit.
In 2017, it was sold to the mega US private equity firm Kohlberg Kravis Roberts or KKR for over $600m. In 2018, the State-backed non-bank lender Finance Ireland acquired €200m of Irish residential mortgages including close to 900 performing mortgages from Pepper.
In 2018, it reportedly had close to 400 staff in Ireland and up to €16b of assets under management (AUM) but by 2022 this rose to an additional 100 extra staff and €20b in assets. It currently manages over €30bn worth of assets with over 600 staff based in Dublin and Shannon. According to its website Pepper “service loans and mortgages which includes processing loan payments.”
Pepper is also quick to brandish its ‘woke’ credentials. On its website the company brags about their commitment to Diversity and Inclusion (DI) mentioning that they ‘are proud of their diverse and inclusive culture’ which includes “a diverse workforce” which brings them the ‘benefit’ of “different ideas, abilities and backgrounds” with an emphasis on “gender diversity” and closing the supposed ‘gender pay gap’.
Yet no amount of ‘woke washing’ hides the impact their financing mechanisms have on customers locked into their mortgage rates. Given its status as a non-bank, meaning it does not fund itself via customer deposits but rather via debt capital markets, customers are more vulnerable to excessive rate hikes. Indeed, in 2023, Minister Michael McGrath wrote to the governor of the Central Bank Gabriel Makhlouf expressing concern about the scale of rate rise being forced on homeowners by credit servicers.
One example, previously highlighted by Dr Matt Treacy, of a couple who faced high mortgage costs shows how vulnerable homeowners are to excessive repayments when their mortgage is serviced by these credit vehicles. Cork couple Darren Hennessy and Emer Barrett, whose mortgage was sold from their bank PermanentTSB (PTSB) to Pepper Finance, saw their mortgage rate spike to 8.5pc with an annual hike of over €7,000. Had their loan stayed with the originating bank they would have been offered a much lower rate of 4.3pc.
The couple claimed the hike was “unfair” and “out of proportion”. Having taken out the 35-year mortgage in 2005 the loan was transferred to the credit servicer in 2019 with a variable rate kicking soon thereafter.
Currently, no vulture fund offers a fixed rate.
The couple claimed the high rate was done in order to obtain “the maximum amount it can extract from its consumer base with a view to making a profit”.
In 2022, Pepper was responsible for 10pc of repossessions with ‘ownership’ of 80,000 private mortgages in the State.
Mars Capital
The final credit servicer in the triumvirate of vulture fund middlemen includes Mars Finance, known as Mars Capital in Ireland
Mars is part of a conglomerate of European asset managers with over €90bn in AUM known as the Arrow Global Group Limited.
Mars Capital Finance Limited was established in 2008 to administer mortgages purchased from British lenders.
In 2015, it entered the Irish market as a Regulated Credit Servicing Firm with authorisation by the Irish Central Bank enabling it to service loans secured against properties. It currently has 200 employees.
In 2017, the U.K.- based specialist in distressed investing that entered the Irish market following the GFC Arrow Group purchased Mars having backing from Oaktree. Oaktree is a capital management company which following the GFC invested in distressed property with the hope of earning profit partnering with the Irish State and the National Pension Reserve in providing over €100m to the company’s so-called Opportunities Fund V11 which bought distressed assets both commercial and residential at low prices. Oaktree was just one of many purchasers of distressed residential, commercial and retail debt sold to them by NAMA facilitated by government-backed tax dodging schemes.
In 2014, the bank PTSB sold its so-called Springboard subprime mortgage portfolio to Mars consisting of over €400m of around 2,200 mortgages.
According to the Irish Times, that same year, Oaktree through its affiliate Mars acquired several residential mortgages from IBRC in a transaction backed by funds managed by Oaktree Capital in the United States. Indeed, before the successful bid, Oaktree’s managing director Alex Forrester requested a meeting with the then Secretary General at the Department of Finance John Moran. Moran had previously served as CEO for Zurich Capital Markets which was fined $16m for aiding and abetting hedge funds in illegal activity. As a board member, Moran ‘lobbied for, and achieved, a significant change to Irish banking rules, which for the first time allowed a bank to operate within an insurance group and to engage in very lucrative hedge fund lending in Dublin.‘ He is currently the Mayor of Limerick.
Like other credit servicers, Mars services the mortgages once sold to an investment fund. Indeed, when Allied Irish Banks (AIB) sold a portfolio of 4,000 mortgages to the US investment fund Apollo for a discount of €400m Mars serviced the loans.
Last year, Start transferred €2bn of mortgages to Mars after the former announced its exit from the market impacting over 10,000 customers thus increasing Mars’ AUM to more than €10b.
EXAMPLES OF MORTGAGE HOLDERS IMPACTED
News reports and legal cases give an insight into individual cases impacted by the transfer of a mortgage to vulture funds.
One RTÉ report focused on “a hard-pressed homeowner” Jimmy Byrne, who appeared before an Oireachtas committee in 2032. “He and his wife bought a house in 2006, which they re-mortgaged the following year with PTSB, bringing the loan to €350,000. Following the financial collapse, they got a split mortgage and warehoused €197,000,” the report said.
They have reduced that amount by two thirds, leaving €66,000 now warehoused, and have been making “full payments on the remaining €273,000”. Despite this, Mr Byrne told the Joint Committee on Finance, “someone in PTSB judged that as a non-preforming loan”.
“By the time we received notification it was already a done deal,” he recounted. Mr Byrne said the vulture fund, Pepper, took over the mortgage, and refused to fix the interest rate.
He and his wife are currently paying 7.5% interest on their repayments. This does not include the latest interest rate hike.
Similarly, Anthony Joyce Solicitors, in a post last week, say the “stories we hear from clients paint a grim picture of how these funds operate”.
“[T]wo of our clients purchased their family home in Dublin in 2014, never imagining they’d face a financial crisis years later, not because of missed payments, but because their mortgage was sold off without their consent. Originally, they were paying a manageable 3.5% interest rate. But after their loan was transferred to a vulture fund, that rate skyrocketed to 9% overnight. With three children and rising living costs, they are now paying thousands more per year, money that should be going toward their family’s future.
Another client, a self-employed entrepreneur in Galway, ran into financial difficulty during the pandemic, leading to temporary mortgage arrears. He worked hard to stabilise his income, and today, his finances are solid. But when his mortgage was sold to a vulture fund, he found himself locked into an 8.5% interest rate, far above what traditional bank customers pay. Worse still, he’s been told he cannot switch lenders due to the nature of his loan, leaving him financially trapped.
THE ROLE OF THE LAND REGISTRY
But while the role of vulture funds and credit servicers are often highlighted and scrutinised when examining the post-crash housing market, the role of the Land Registry known as Tailte Éireann is often not considered or placed under the microscope to the same degree.
Indeed, Tailte Éireann is a critical aspect of how vulture funds are allowed to use credit servicers to carry out evictions and debt enforcement when they wish to sell or flip a property they have purchased.
According to Edmond Honohan, Tailte Éireann enables credit servicers to access folios on land registry even though they are not the official owners but, as mentioned, mere “cash collectors”. He says “Land Registry is allowing the vulture funds onto the folio given they have ‘legal title’ and the Central Bank of Ireland makes no inquiries as to the true owner of the Mortgage Portfolio.”
In several cases where credit servicers have sought an eviction enforcement they have presented heavily redacted documentation ‘proving’ they are the ‘owners’ of the title via land registry.
In a recent case involving the repossession of land in Kildare the presiding Judge Garrett Simons refused to grant possession of the land to Start Mortgages as they, “failed to establish the first essential proof for the application, namely, that they are the registered owner of the charge.”
Judge Simons directly called out the practice of presenting redacted documentation before the courts: “It is simply not possible for this court to determine, from reading these heavily redacted documents [my emphasis] whether Start Mortgages has, in fact, taken a valid transfer of the debt outstanding in respect of the loan originally advanced by the governor and company of the Bank of Scotland.”
When reporting on the case, The Irish Independent quoted Master Honohan who repeated his claim that service providers such as Start, Mars and Pepper are engaging in “legal fiction” as they claim before the courts ‘to be the beneficial and legal owners of charges on homeowners’ land folios.’
Speaking to an experienced Senior Counsel, who wished to remain anonymous, at the time they mentioned to me that the true owners of these loans are, in fact, overseas bondholders and not the credit servicers: “The bottom line is that all of this uncertainty stems from the fact that the mortgages in question, tens of billions worth of them, had been securitised and the true ownership now rests with a US Bondholder (mortgage- backed securities) which means, in plain English, neither the Loan Originator (bank), the alleged Loan Purchaser (vulture fund) nor the Loan Servicer (Pepper, Start, Mars etc) are in fact the Legal & Beneficial owners of the Charges (as registered at Tailte Éireann) which are being wrongly accepted as “conclusive evidence” in our Courts.”
SOLUTIONS
The problems facing homeowners are myriad, but solutions – including allowing freedom to move the loan to another entity; changes and deferrals; and tackling tax avoidance in relation to servicers – must be examined.
Following the publication before members of the Oireachtas of this writer’s report on these dynamics and others titled the McDonald Report, I made a number of recommendations including ways to tackle credit servicers head on.
Citing the report before a hearing on the Finance Bill, TD Mattie McGrath put forward an amendment to reclassify SPVs as “investment undertakings” which would allow for “credit servicers to deduct tax at source and serve as local agents for SPVs in their interactions with Irish Revenue” and would “prevent these entities from evading tax responsibilities”.
McGrath added that: “Vulture funds often use credit services to avoid paying taxes by operating through these intermediaries. They can shift profits offshore to minimise their tax liabilities. This deprives our country of much-needed revenue that could be used for badly needed public services.
“The ordinary people of Ireland, for whom the men of 1916, 1921, 1922 and 1923 fought in order to have democracy in Ireland, have been abandoned. People’s lives are being lost,” he said before then finance minister Jack Chambers.
While this amendment was defeated, the Irish government’s feeble attempts to discourage investment funds via stamp duty on bulk purchases and other methods is water off a duck’s back for such cash-strapped funds.
However, by addressing the nub of the issue which is tackling credit intermediaries, the State would go a long way in righting the wrongs of the attempts to recapitalise Irish banks post-crash.
MOVING THE LOAN
A recent attempt by a new entity named Núa Money, the brokerage start-up backed by the Allen beef barons of Wexford, launched what it now calls Núa Freedom to allow ‘vulture prisoners’ trapped by excessive rates of interest to move.
Núa’s product allows customers to transition without the criteria that they have to be making full capital and interest payments for two years beforehand as most mainstream lenders require before taking on vulture mortgages.
Núa, which received its license from the Irish Central Bank last year, offers terms of up to 40 years on its mortgages with a maximum loan to value ratio of 75pc.
Núa, which began mortgage lending last year, dropped its main lending rate to 0.75pc.
But while Núa is a non-bank meaning it does not fund itself using customer deposits it should, in theory, offer higher mortgage rates. However, since its entry into the market it has cut rates providing competition in the overall market.
Attempts have also been made under the EU Directive on Credit Servicers and Credit Purchasers to offer forbearance to homeowners not insolvent but in arrears and maybe facing eviction by offering certain concessions including an extension of the loan term, a change of the type of credit agreement, a payment deferral and partial repayments.
This directive was transposed into Irish law in December 2023 – two years after it came into force within the EU. However, it has yet to be tested with the Central Bank now permitted to regulate Credit Servicers.
The Oireachtas Library research paper also referenced a report by the London School of Economics in 2023 on those facing difficulties with vulture funds which suggested interest-free equity loans to clear the unsecured element of the loans, and government equity loans on the model of Help to Buy, interest-free for the first five years as possible solutions.
A section of Ireland’s homeowners are trapped in a grim spiral, fleeced by vulture funds and their tax-dodging credit servicers. Initiatives like Núa Money and the EU directive offer potential respite, but taxpayers and homeowners continue to suffer while vultures pursue vulnerable households.
Until the government begins to seriously clip the wings of vultures and the enabling credit servicers , this vicious cycle will only continue.
Documents seen by Gript show that the physical fitness test required to join An Garda Síochána was significantly changed based, in part, on internal concerns that the then-existing test, which held men and women to different targets, “contains elements that may be open to legal challenge under the Employment Equality Acts 1998 – 2015.”
In 2024 Dr Michael McCorry of Dundalk Institute of Technology was commissioned by An Garda Síochána (AGS) to review the fitness test, alongside a “Steering Group of Subject Matter Experts” drawn from within the Guards. It was agreed that the test should be redesigned to “move away from the traditional age- and gender-related pass thresholds used in the current assessment” whilst ensuring the pass threshold remained “related to the minimum standard required to undertake the role of a Garda.”
An email from Superintendent Kieran Ruane, who oversees the Foundation Training programme at the Garda College and who sat upon the Steering Group, acknowledged the legal concerns regarding the old test, stating:
“It appears that in its current form the current fitness testing, particularly in the shuttle run, could be seen to engage in direct discrimination against young males…A fitness test that sets different pass marks for men and women (gender-fair assessment) could constitute direct discrimination against men on the basis of sex.”
“This issue,” Superintendent Ruane went on to say, “becomes even more complex when considering pass standards for non-binary or transgender applicants.”
The Superintendent stated that:
“Garda College is of the view that the removal of standards based on age and gender allows for a robust method of testing and future proofs the pre-entry fitness testing from future legal challenge.”
A presentation on the proposed changes to the test, given to Commissioner Drew Harris in December 2024, stated that the proposed changes to the fitness test were “reflective of the physical demands experienced by a Garda”, and “robust enough to discriminate between individuals who can/cannot meet the physical demands of the job”, but did not reference legal concerns with the current test.
That presentation also states that, under the old system, 43% of applicants over a six month period had failed at least one part of the fitness test.
The old test consisted of a beep test, which involves participants running between cones set 20m apart at an increasing pace; sit-up and push up tests; and, after a two hour interval, three laps of an obstacle course. The new test has been cut down to the beep test and two laps of an obstacle course, although the two hour rest interval has been removed.
Two trials of the new fitness test were conducted, but neither tested general applicants. The first trial was conducted on serving Garda members, while the second was on Trainee Gardaí.
In the Trainee Gardaí group, only one out of 197 participants failed – a failure rate of 0.5%. The higher failure rate amongst serving Gardaí, 7%, may be partially explained by the fact that 44% of that group were 40 years or more of age, with 12% being 50 years old or more.
The Garda Press Office, in response to queries from Gript, told Gript that the results of the two groups could not be compared as “the 43% failure rate refers to a population dataset of candidates who had applied to join An Garda Síochána”, whilst “the 2% failure rate refers to a population dataset of Members of An Garda Síochána and Garda Trainees who had all passed the previous An Garda Síochána PCT to join An Garda Síochána, and took part in the new PCT trials to validate and test the proposed new PCT. Therefore, it would be expected that this cohort would be in a position to pass an An Garda Síochána PCT test.”
AGS is correct that the populations are sufficiently different that it makes a direct comparison of their results difficult, but nowhere in the documentation available to Gript is there mention of any attempt by AGS to trial the newly designed test on candidates who were applying to join AGS rather than serving members and/or trainees.
The old test had four components points, with a combined failure rate of 43% across all components, according to figures presented to Commissioner Drew Harris.
| Component | Failure Rate |
| Beep Test | 34% |
| Sit-Up Test | 20% |
| Push-Up Test | 24% |
| Obstacle Course | 8% |
Under the new system:
The push-up and sit-up tests were removed as it was felt they lacked “face validity” – which is to say there were concerns that it didn’t directly measure something which was of relevance to the job of being a guard. In the past, Dr McCorry stated in his report, there has been “a strong judicial reaction against setting arbitrary standards that are not validated by careful task analysis.”
This means that two of the main points of failure have been eliminated entirely, and the remaining major failure point – the beep test – has been reduced to a level just above what a 55-year-old man was previously required to meet.
The obstacle course, which had the lowest failure rate at under 8%, was also amended. The mannequin pull and push/pull machine were removed and replaced with a ‘tank’ sled push/pull, requiring candidates to push or pull a sled 12 meters per lap. The total laps required were reduced from three to two.
Under the old test, the shuttle run (beep test) had the highest failure rate, at nearly 35%. Applicants were given different targets to hit depending on both their sex and their age.
| Old Beep Test Standard | Men | Women |
| 18-29 | 8.5 | 6.1 |
| 30-39 | 7.7 | 5.9 |
| 40-49 | 6.3 | 4.9 |
| 50-55 | 5.4 | 4.4 |
Under the new test, the requirement has been standardized at Level 5.6 for all applicants, regardless of age or gender. This means that:
Dr McCorry’s report notes that “It was agreed by the Steering Group that police officers who serve the community should, at a minimum, possess the physical fitness of the ‘average’ or typical citizen.” That minimum requirement appears to have effectively set a ceiling on the test standards as it was noted that test targets must be set at a level which requires participants to demonstrate the “minimum acceptable physical and physiological demands of the job” but “no more” than that.
As such it was decided that applicants should be measured against the fitness of the ‘untrained population.’ More specifically it was decided that the target should be set at “88.2% of median aerobic capacity of the untrained population aged 20-50yrs.”
Following the introduction of the new test, feedback was gathered from those who participated in a trial of the revised assessment.
Both the final Report and Superintendent Ruane’s email state that the new standard is “well validated and operationally defensible.”
It’s unclear then if the previous test, which was objectively more onerous, may have been unnecessarily difficult, particularly for younger men.
As noted above, Dr McCorry says in his report that test targets must be set so that those who pass can demonstrate they can meet the “minimum acceptable physical and physiological demands of the job” but “no more” than that.
Given the elimination of upper-body endurance testing, the reduction in required aerobic fitness, and the overall easing of requirements, Gript asked the Garda Press Office how the likely substantial increase in the test’s pass rate was balanced against maintaining the physical standards necessary for frontline policing.
Their response stated that the “rationale and process” for determining the pass levels “were determined by the expert.”
The Garda Press Office did not respond to Gript’s questions on whether legal concerns over discrimination drove the changes more than operational needs. Nor did they confirm if any formal risk assessment was conducted to ensure the new standards would still ensure those expected to train as Gardaí were physically capable of handling the demands of frontline policing.
The Government will fall short of its own housing targets for the next three years in a row, according to a new forecast from the Central Bank.
A warning that the years ahead will feature economic uncertainty due to President Donald Trump’s tariffs is included in the Central Bank’s first quarterly bulletin for the year. In the report, the Central Bank has reduced its forecast for economic growth for 2025 due to growing uncertainty as a result of the trade war between the US and Europe. It predicts that Ireland’s economy will grow by 2.7 per cent – 0.5 per cent lower than its last forecast.
It adds that due to a fall in residential construction last year, fewer homes will be built domestically over the next two years than it had previously forecast.
Last year, the bank said that there would need to be 70,000 homes built annually in Ireland over the next decade in line with population growth and in order to meet the housing shortfall. However, in 2024, just over 30,000 houses and apartments were built.
The Bank’s experts predict that housing completions for the next three years will be significantly lower than the government’s own targets. The State’s target for 2025 is for 41,000 new homes, followed by 43,000 in 2026 and 48,000 in 2027.
However, the Bank predicts that there will be 35,000 houses and apartments built this year, rising to 40,000 next year and 44,000 in 2027. The government’s pwn targets were detailed in a briefing document which was handed to newly appointed Minister for Housing, James Browne. The targets in the Minister’s briefing were based on decisions made by the last government alongside the commitment made in the Programme for Government to deliver 300,000 homes between 2025 and 2030.
If the Central Bank’s prediction is accurate, the Government would miss their housing targets for the next three years.
In the economic bulletin, the Central Bank said: “Several factors are restraining housing supply including low productivity in the construction sector, delays in utility connection, delays in planning system and a shortage of zoned and serviced land in high-demand areas.”
While the Bank said that the Irish economy is continuing to perform well, it added: “Risks to the growth outlook remain firmly on the downside as the risk of more pronounced global tensions have risen.”
“As a small open economy with extensive trade and foreign direct investment linkages with the US, the Irish economy, public finances and labour market are highly exposed to changes in US economic policy and any broader deterioration in the global trading environment,” it said.
On tariffs threatened by the US, the Bank predicts that some €15 billion of corporation tax receipts collected from multinationals could be “at risk.” This could lead to a “fiscal shock” which could impact the public finances and result in changes to Government spending and taxation.
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