Following the financial crisis, it became common practice for banks to sell bundles of distressed loans to investment funds, often referred to as “vulture funds.” While this helped banks reduce financial risk, it has left many borrowers in the dark about who actually owns their mortgage and who has the right to enforce it.
As these cases increasingly come before the Irish courts, one critical question has emerged:
When a fund buys a loan, who has the legal right to enforce the mortgage?
At the center of this issue is the difference between legal title and beneficial interest. This technical distinction has real consequences, particularly when it comes to enforcing the mortgage, appointing receivers, or seeking possession of a property.
Legal Title vs. Beneficial Interest
Over the past decade, many Irish banks have sold large groups of mortgages to investment funds. These sales were part of wider efforts to reduce exposure and free up capital. Borrowers had no control over the process.
In many of these transactions, the fund buying the loan does not register the mortgage in its own name. Instead, a credit servicing firm, is listed as the legal owner.
This servicing firm manages the administration of the loan, while the fund receives the financial benefit (known as the beneficial interest). However, this structure can cause confusion. If the fund is not named on the mortgage, does it actually have the legal right to enforce it?
This is now a live issue before the courts. A key question being tested is whether a fund without legal title to the mortgage, can lawfully appoint a receiver or bring possession proceedings. For some borrowers, this uncertainty opens a path to challenging enforcement actions that may lack proper legal grounding.
A Live Argument in Irish Courts
These questions are not theoretical. They are being tested in real cases in the Irish courts today. Borrowers are now actively challenging actions where key loan documents are missing or where the enforcing party may not have legal title to the mortgage.
In one such case, a borrower argued that the appointment of a receiver was invalid because the fund did not hold full legal title and could not produce the original loan agreement.
A related concern was raised in PTSB v Donohoe, where the High Court held that there was an arguable defence regarding the “… ownership of the underlying debt…”. This argument was sufficient to warrant a full hearing rather than a summary judgment. While that case did not turn on ownership rights, it showed the courts’ willingness to examine the legal and documentary foundation of enforcement actions.
Implications for Enforcement
In Irish law, the right to enforce a mortgage, whether that means demanding repayment, appointing a receiver, or seeking possession, depends on legal title. Having a beneficial interest alone is not enough.
A party without legal ownership of the mortgage deed may not have enforceable rights under the Land and Conveyancing Law Reform Acts or the Registration of Title Act 1964.
As a result, more borrowers are now challenging enforcement actions in cases where:
- The original facility letter is missing or incomplete;
- The enforcing party is a credit servicer, not the legal owner;
- The chain of title between the bank, the fund, and the servicer is unclear or poorly documented.
These challenges are forcing courts to take a closer look at who truly has the authority to act on a mortgage.
What Borrowers Should Do Now
If you are facing enforcement by a vulture fund or credit servicer, it is essential to review the legal basis for their actions. You should:
- Request and review the full loan facility documentation;
- Check whether the party enforcing the mortgage holds legal title, not just a financial interest;
- Challenge any receiver appointment where the chain of title is incomplete or unclear.
As the courts continue to address these questions, one point is becoming clear: legal title matters. If the paperwork does not follow the money, the right to enforce a mortgage may not stand up in court.
Need Clarity on Your Mortgage?
If you’ve received a demand letter, faced the appointment of a receiver, or are unsure who actually owns your mortgage, you’re not alone, and you may have legal options!
Contact Anthony Joyce & Co. Solicitors today to discuss your case in confidence. We are helping borrowers across Ireland challenge unclear or unjust enforcement actions, and we can help you understand your rights.
