Everything you need to know about what happened in Ireland's financial sector and mortgage market in December, including the latest portfolio trades, unemployment rate and house prices.

1. December 2014
HML has received three ratings upgrades from Fitch
Ireland has experienced the fastest growing house prices in
the world, at 15% in the year to September
S&P has raised the long-term sovereign credit rating of Ireland
from A- to A

2. HML News
HML has received three
ratings upgrades from Fitch
in its latest round of
evaluation.
Ireland Ratings
HML received two ratings upgrades for
Ireland. Both its Ireland Primary (Prime)
Servicer Rating and its Ireland Primary (Sub-
prime) Servicer Ratings have been upgraded
to RPS2+ from RPS2. These two ratings are
the highest of any servicer in Ireland.
Fitch also assigned HML a new Ireland
Special Servicer Rating assigned at RSS2.
UK Ratings
HML also has had its UK Special Servicer
Rating upgraded from RSS2 to RSS2+. This
means it now has the joint highest Special
Servicer Rating in the UK.
Fitch also affirmed HML’s UK Primary (Prime)
Servicing Rating and its UK Primary (Sub-
prime) Servicer Rating both at RPS1-. HML’s
RPS1- Primary (Prime) servicer rating remains
the highest of any third-party mortgage
administration company in the UK and Ireland.
Its RPS1- Primary (Sub-prime) rating remains
the highest in Europe.
Pole Position
Andrew Jones, chief executive
officer of HML, said: “I am delighted that
HML has received three ratings upgrades from
Fitch, as well as being assigned a new Ireland
Special Servicer Rating and being affirmed for
two more UK ratings.
“The Fitch press release noted HML’s
excellent risk management framework,
commitment to staff development and strong
technology platform.
“In addition, the rating agency said that our UK
Special Servicer Rating was upgraded as a
result of our strong infrastructure, in particular
our proactive management of impaired and
high-risk loans.
“This is testament to our use of advanced
analytics to help shape and deliver our clients’
arrears and debt management strategies, for
which we have won industry awards.
“We believe HML has achieved a milestone in
that, to the best of our knowledge, no other
mortgage administration company has ever
been given a new Ireland Special Servicing
Rating at the RSS2 or above level. This,
combined with S&P recently assigning us a new
Irish Special Servicing Ranking at Above
Average, places us in pole position to build
upon our standing in the market as the UK and
Ireland’s leading third-party mortgage
administration company.”
The Fitch press release also noted that HML’s
new parent, Computershare, will provide
infrastructure and operational support. The
Financial Conduct Authority approved the
purchase of HML by global financial services
company Computershare in November and the
acquisition was been completed on November
17th.

3. HML News
Mortgage portfolio asset
trading in Ireland: getting it
right. Paul Fryers, commercial
director at HML, outlines in
Finance Dublin some of the
considerations that investors
need to take into account to
benefit from the robust asset
trading environment that
Ireland is currently
experiencing.
Is the mortgage market witnessing the first green
shoots of recovery? The background music is
definitely positive. The recent Budget was the first
one in seven years not to include new austerity
measures. Fitch recently reported that early-stage
mortgage arrears have dropped below 2% for the
first time in three-and-a-half years.
Unemployment is also coming down, with the rate
for September standing at 11.1%. In the same
month in 2013, this figure was a much higher
12.6%. With Ireland’s leading banks also
returning profits in their latest financial results,
sentiment is certainly improving.
One area that this is evident is within the asset
trading solutions market. A recent report by PwC
noted that over €27 billion of asset trading has
already taken place during 2014, with many of the
asset purchasers coming to the fore from the US,
such as CarVal, Lone Star and Apollo. They have
undertaken deals quickly, reflecting the robust
appetite within the market.
Private equity firms are fast entering the traditional
lender market; the Investec sale of Start to Lone
Star and the sale of Springboard to Mars Capital
are two significant transactions that have taken
place recently.
However, successful asset trading is not just about
finding the right portfolio at the right price. There
are many complex components to asset trading
that play a central role if investors are to enjoy true
value from the asset trade. So what are the three
key steps which need to be taken?
1. Analysing a portfolio
A portfolio needs to be analysed for risk, as well
as forecasting its performance, arrears levels and
cash-flows. This is where advanced analytics are
essential for creating a solid foundation for the
subsequent steps.
2. Servicing review, including due diligence
As well as analysing the portfolio, a servicing
review can also help investors make the right
strategic decisions. A loan-level risk assessment
of a portfolio, tailored to an investor’s
requirements, can further bolster deal confidence.
3. Portfolio modelling
Portfolio modelling is another important step in the
process of asset trading, with advanced analytics
once again playing a key role. Using a partner that
can develop statistical models enables investors to
predict mortgage redemption, future losses and
the profitability of accounts.
Portfolio valuation and pricing
Once these steps have been taken, investors
are in a strong position to have their portfolio
valued and priced. Indeed, as well as an
increasing number of asset purchasers looking to
acquire mortgage portfolios, there are also sellers
who believe now is the right time to dispose of
their assets as a result of the more attractive sale
prices.
Continued over the page

4. HML News
This has been quite evident in Ireland, which has
led the way in Europe for asset trading.
Indeed, at the International Corporate
Restructuring Summit in Dublin in September,
Fabrizio Grena, executive director of European
Special Situations Group at Goldman Sachs said
30% of asset trading activity in Europe has taken
place in Ireland since the economic collapse.
What next after onboarding?
We have seen that the asset traders involved with
recent deals in Ireland have committed
themselves to the Code of Conduct on Mortgage
Arrears (CCMA), so it’s essential that the
mortgage servicing partner they choose places
appropriate customer outcomes at the heart of
everything they do. A partner should have a
thorough understanding of the difficulties that
some borrowers in Ireland face and be highly
experienced at managing borrowers in arrears,
drawing upon comprehensive knowledge of the
CCMA, Mortgage Arrears Resolution Process and
Standard Financial Statements.
When the Department of Finance in Ireland
releases the results of its consultation into the
sale of loan books, it will be clear as to where
borrowers, the market and the wider industry
stand on the matter.
There is certainly plenty for investors to consider
when searching for the right mortgage portfolio
deal in Ireland, from ensuring appropriate
outcomes for consumers and reducing arrears
levels, to finding a profitable portfolio and
migrating the assets. Partnering with a proven
third-party asset trading solutions provider can
help investors quickly overcome these hurdles in
order to enjoy a successful and profitable deal.
HML has launched a new
good practice guide for
lenders with interest-only
mortgage portfolios in Ireland.
The Central Bank of Ireland (CBI) published its
new research on interest-only mortgages in
Ireland in July 2014, which detailed several main
findings and highlighted potential risks for
borrowers who have this type of mortgage.
Early borrower engagement is key to increasing
the available and sustainable repayment options
for borrowers, allowing them to remain in their
home at the end of their mortgage term.
This step-by-step good practice guide details
what lenders should be doing to deliver their
interest-only borrower engagement strategies.

5. HML Ireland Update
Date reflects what the statistic was during that period, rather than when the statistic was published
* Since revised downwards to 10.9%
Consumer Price Index (Central
Statistics Office)
NOV ‘14
0.1%
OCT ‘14
0.2%
SEP ‘14
0.3%
European Central Bank (ECB)
Base Rate
DEC ‘14
0.05%
NOV ‘14
0.05%
OCT ‘14
0.05%
Unemployment Rate (Central
Statistics Office)
NOV ‘14
10.7%
OCT ‘14
11%*
SEP ‘14
11.1%
Average National House Prices
(Myhome.ie)
Q3 ‘14
Up 1.4% from Q2
€193,000
Q2 ‘14
Up 1.3% from Q1
€190,216
Q1 ’14
Down 0.7% from Q4
€187,736
Arrears
(Central Bank of Ireland - CBI)
PDH – total
PDH – 90 days+
BTL – total
BTL – 90 days+
Q3 ’14
117,889
84,955
38,463
31,619
Q2 ’14
126,005
90,343
39.669
31,749
Q1 ’14
132,217
93,106
39,361
31,048
Home Repossessions (CBI)
PDH
BTL
Q3 ‘14
1,393
634
Q2 ‘14
1,110
611
Q1 ‘14
1,116
568

6. Industry Statistics
Consumer Price Index
The CPI in November was 0.1% higher than
the same month in 2013, down 0.1% on
October. Notable upward pressures came
from the education (5%), alcoholic beverages
and tobacco (3.7%) and miscellaneous goods
and services (4%) sectors.
This was partially offset by declines in clothing
and footwear (-3.2%) and food and non-
alcoholic beverages (-2.6%).
ECB Interest Rate
The ECB base rate remained at 0.05% in
November. Mario Draghi, president of
the ECB, said: “Real GDP in the euro area
rose by 0.2%, quarter on quarter, in the third
quarter of this year. This was in line with
earlier indications of a weakening in the euro
area’s growth momentum, leading to a
downward revision of the outlook for euro area
real GDP growth in the most recent forecasts.
The latest data and survey evidence up to
November confirm this picture of a weaker
growth profile in the period ahead.”
Unemployment Rate
The unemployment rate stood at 10.7% in
November 2014, down from 12.2% in the
same month in 2013. There were 352,647
unemployed individuals in November, an
annual fall of almost 38,860 people.
House Prices
The national average house price in Ireland
stood at €193,000 in Q3 2014, a 1.4%
increase on the previous quarter, according to
Myhome.ie’s analysis of asking prices.
On an annual basis, the asking price rose by
1.1%, which is the first positive year-on-year
growth in seven years.
According to the Central Statistics Office,
national residential property prices climbed by
16.2% in the year to November. This is slightly
down from the 16.3% rise in October.
Arrears
Principal Dwelling Houses (PDH)
The number of PDH mortgage accounts in
arrears declined by 6.4% between Q2 2014 and
Q3 2014. Out of the total mortgage accounts,
15.5% were in arrears, representing 117,889.
The number of PDH mortgage accounts in over
90 days of arrears also declined during Q3,
falling by 6%. These accounts totalled 84,955,
11.2% of all the PDH mortgages in arrears.
Accounts in arrears of more than 720 days
increased in number by 418 during Q3 and
currently account for almost 7.6% of total PDH
mortgage accounts. The outstanding balance of
such accounts was just over €8 billion at the
end of September.
Buy-to-let (BTL)
The number of BTL mortgage accounts in
arrears decreased between Q2 and Q3 2014 to
38,463 (26.8% of the total accounts) from
39,669 (27.5% of the total accounts).
Home Repossessions
At the end of Q3 2014, there were 1,393 PDHs
and 634 BTLs in lenders’ possession. Of the
PDHs, 302 were taken into possession during
the quarter, 47 of which were the result of a
court order, while 255 were abandoned or
voluntarily surrendered.

7. Top News Stories
Unregulated entities that
have purchased mortgages
must be a priority for Fianna
Fáil in 2015.
The party’s finance spokesperson Michael
McGrath said the Department of Finance
estimates that more than 10,000 mortgages
have been purchased by unregulated entities.
He added that “mortgage holders are left in a
no man's land scenario relying on the goodwill
of unregulated firms who are accountable to
no Irish authorities”.
Recent transactions include the sale of
Springboard Mortgages to Mars Capital, which
said it will adhere to the Code of Conduct on
Mortgage Arrears.
He also voiced concerns following the news in
September that Investec had sold Start.
At the time, Mr McGrath said: “The
government initially promised legislation to
deal with the issue in 2015 but subsequently
agreed to bring it forward earlier. Now that the
Department of Finance's public consultation
on the issue has been concluded, the
legislation needs to be accelerated.”
The sale of Start has
completed.
Lone Star purchased Start from Investec in
full, with Investec deciding to sell the £540
million (€692 million) Irish mortgage book in
order to simplify its banking model.
S&P has raised the long-
term sovereign credit rating
of Ireland from A- to A.
The rating agency also placed a stable outlook
on the rating, as well as on Ireland’s short-term
debt rating. It upgraded this latter rating from A-
2 to A-1.
S&P raised its forecast for Ireland’s average
expansion between 2014-2016 from 2.7% to
3.7%.
The rating agency commented: “The
upgrade reflects our view of Ireland’s solid
economic growth prospects, which we expect to
underpin further improvements in the
government’s budgetary position.”
It also said that banks in the country have made
important progress in balance sheet
consolidation and repair, which should
eventually result in banks being less dependent
on the sovereign.
This follows the news last month that, according
to the European Commission’s 2014 Autumn
Forecast, Ireland is expected to experience the
fastest growth in the EU in 2014.
Its real GDP growth forecast for the country
stands at 4.6%, with the EU figure placed at
1.3%.
The forecast noted: “Ireland is decoupling from
the euro area, as its recovery broadens and
gathers firm momentum. This robust and faster-
than-expected expansion should bolster
government revenues and facilitate a reduction
of the deficit.”

8. Top News Stories
Ireland has experienced the
fastest growing house prices
in the world.
This is according to a new survey by Knight
Frank, which assessed Q3 2014. The results
show that despite Ireland remaining at the
bottom of the price growth table between 2009
and 2012, property values rose by 15% in the
year to September.
In second place lies Turkey (14%), followed by
Dubai and the United Arab Emirates (12.5%)
and the UK (10.5%).
Despite topping the table, house prices in
Ireland are still almost 40% below their peak in
2007.
The Irish Independent reported Liam
Bailey, global head of research at
Knight Frank, as commenting: “I
wouldn’t be too concerned for Ireland just yet
given that it has rebounded and is making
ground after one of the worst property crashes.
“There is an obvious return to confidence in
the Irish economy overall and interest rates
remain low. However, these sort of increases
are unsustainable in the long run and it is likely
that Ireland’s market will show some cooling
going forward.”
Permanent TSB has
reportedly been given the
go-ahead for its plan to plug
its shortfall.
During the European bank stress tests in
October, it was found that the lender had a
€855 million capital shortfall. However, the
Irish Times reported that Permanent TSB’s
plan to plug this gap has been given the green
light by the Single Supervisory Mechanism.
Details of the plan have not been revealed, but
the newspaper stated that a spokesperson for
the lender has “welcomed” the endorsement by
the SSM. The capital shortfall needs to be
covered by the end of July.
Permanent TSB is over 99% owned by the
state.
Households continue to pay
down their debt.
The Central Bank of Ireland has released its
latest Money and Banking Statistics, which
noted that for November, household loan
repayments surpassed drawdowns by €335
million.
Repayments for house purchase loans
exceeded drawdowns by €2.2 billion for the
year-to-date. The figure for non-housing loans
stood at €1.6 billion.
The CBI also noted that lending to households
in Ireland decreased on an annual basis, falling
by 3.8% last month.
Bank of Ireland has acquired
a portfolio of performing
residential mortgages.
The lender has purchased the portfolio from the
special liquidators to Irish Bank Resolution
Corporation, with a consideration of €253
million payable in cash upon completion.
Gavin Kelly, director of Bank of
Ireland consumer banking, said: “We
are pleased to announce this transaction which
is a positive development for our business and
look forward to welcoming a new group of
customers to Bank of Ireland.”