Pride Comes Before A Fall. Ulster Bank

Several days ago this blog reposted the two urls of vitally important information regarding Ulster Bank. Here is a brief extract.

http://awakenlongford.wordpress.com/2013/01/31/pride-comes-before-a-fall-ulster-bank/

“There is strong negative sentiment among a large section of the public in Ireland arising from the economic downturn, banking crisis and house price collapse.

In this context, the process of perfecting assignment of mortgages to a securitisation vehicle which issued bonds secured over individual borrower residential mortgages, and notifying borrowers of such transfer of ownership of Mortgages to the Company, gives rise to concerns that the Perfection could have a material adverse effect on the timing and/or amount of collections made under the Loans in the Loan Pool.

Borrowers may be less inclined to repay their Loans once they are formally notified in writing that their Mortgage is now owned by a special purpose vehicle in a securitisation (which entities and labels, unfairly or not, hold significant negative connotations for much of the public at the present time). The serving of such notices on all 15,850 mortgage borrowers concerned is also likely to generate unfavourable media attention and comment. This could materially impact both the timing and amount of collections on the Mortgages, a situation that would be prejudicial to Noteholders.

Even if the Perfection process were to be approved pursuant to an Extraordinary Resolution, there is a significant likelihood that it would take several years for the Perfection to be completed, with the strong possibility that the process itself could have a negative impact on the timing and amount of collections under the Mortgages. Furthermore, new collection accounts would need to be established in the name of the Issuer which would entail the redirection of borrower direct debits in favour of the Issuer. Such a process could involve notifying borrowers of the change which may consequently cause confusion and have a negative impact on the timing and amount of mortgage collections. To the best of the Company’s knowledge, no such comparable bulk transfer of mortgages in a securitisation or otherwise, involving the individual re-registration of approximately 15,850 mortgages, has to date been undertaken in Ireland, and there is some concern that an exercise of this nature could present a significant challenge within the existing system.

While the Issuer is of the opinion that Perfection would be materially prejudicial to the interest of the Noteholders (due to the reasons set out above) it acknowledges that these are the Issuer’s views and not those of the Security Trustee, Note Trustee or Principal Paying Agent.”