In 2022, many foreign property owners in Spain are becoming more and more familiar with the terms ‘Loan Sale’ and ‘Vulture Fund’. These terms are now common within the foreign property market, especially for second homeowners.
As time passes, these funds are becoming more sophisticated in how they acquire homeowner details as well as their debt recovery methods. There are many foreign property owners in Spain who are now back in the UK who haven’t heard from their original lender, potentially due to the fact that their loan has been sold on. They never go away…they are now back, and loan sales are on the rise.
In Spain, property owners are struggling to pay their mortgages due to Covid-19, Brexit and rising living costs. Vulture funds are taking advantage of this situation by acquiring ‘bad debt’ and then aggressively pursuing borrowers who have outstanding payments.
Many of the enquiries that we’ve dealt with so far in 2022 seem to be asking us this common question: “What are vulture funds, and what do they mean for me…will I be pursued in the UK?”.
In this article, we answer some of the most common questions about Loan Sales and Vulture Funds and offer solutions for anyone who has experienced or is currently concerned about a loan sale/pursual from a Vulture Fund.
Can the Bank Sell my Loan?
Ultimately, lenders can sell any loans as they wish, and unfortunately, your lender does not need your permission. This is usually in the small print of your mortgage agreement.
The first you know of a Loan Sale may be the initial correspondence from the Vulture Fund. The Vulture Fund will write to inform you that your lender has sold your loan. This can occur years after you last spoke with your lender; sometimes, it can be 10-12 years before foreign property owners receive any correspondence. This is usually conducted via email or a letter sent out to you.
What does this mean for my holiday home mortgage?
Although it may have been several years since you last spoke with your lender, Vulture Funds can act quickly, and in the immediate term, you can expect:
- More aggressive pursual tactics – Vulture Funds use more aggressive techniques to harass borrowers. This will include threatening letters, calls, emails and texts.
- Your UK assets at risk – Especially with 2nd charges being placed on UK homes – lenders can work across jurisdictions. This puts your UK assets, e.g. your home, at risk.
- Rising costs – As your case goes on, the Vulture Fund will add additional costs, legal fees, and compound interest.
Can I Ignore Vulture Funds?
If you ignore a Vulture Fund, you can expect them to become less receptive to offers down the line. The situation will also have progressed, making it harder to halt legal action & negotiate with your best interests in mind and finally, they will become more likely to chase you in the UK/ROI.
Can Vulture Funds Chase me in the UK?
The simple answer: Yes.
Legal notification will be sent to your 2nd address in Europe. The Vulture Fund may contact you in the UK, but this is not guaranteed. As a result, many overseas borrowers are unaware of proceedings against them until the process is gathering pace. In terms of debt pursuit in the UK or Ireland, lenders will look to recover your home assets.
On top of this, many lenders will appoint UK Debt Collection agents leading to an effect on your credit report.
What can you do?
You have two options at this stage:
- Ignore the issue and hope it disappears – You will face rising costs, additional interest, an increasingly aggressive Vulture Fund, your assets in the UK will be at risk, and your chances of ever finding a resolution are low.
- Speak to an expert, reach a settlement, and leave it all behind you – These funds can be difficult to deal with, so it is important that you speak with people who understand how they work and how to deal with them. Ignoring the issue will only make things worse in the long term.