What You Need to Know
Learn how vulture funds operate and why they are buying loans, especially in holiday property markets like Spain and Cyprus. Find out how this affects you and what your options are to resolve foreign property debt issues.
Why Vulture Funds Matter to You
Since the 2008 financial crisis, a significant surge in bad loans has prompted banks to sell these loans to vulture funds. These funds typically target properties in holiday hotspots such as Spain and Cyprus, where mortgages were often mis-sold at inflated prices. If you find yourself receiving a letter or phone call about a loan from a vulture fund, it’s essential to understand what’s happening and how to take action.
What Are Vulture Funds?
Vulture funds are third-party companies that buy distressed loans (also known as Non-Performing Loans, or NPLs) from banks. These loans are often challenging for banks to recover due to arrears, mis-sold mortgages, or other issues that make them difficult to collect. By selling these loans, banks aim to offload the risk and avoid lengthy recovery processes.
Why Are They Called ‘Vulture Funds’?
Vulture funds operate by purchasing bad loans for a fraction of their value—sometimes as low as 20% of the original loan. For example, a €100,000 loan may be bought by a vulture fund for just €20,000. The fund then attempts to recover the full amount, making a significant profit in the process.
What Makes Vulture Funds Different from Banks?
There are several key differences that set vulture funds apart from traditional lenders:
Cross-Jurisdiction Recovery:
Unlike banks, which tend to focus on domestic markets, vulture funds operate across borders. This means that if you live in the UK but took out a mortgage in Spain or Cyprus, the vulture fund can pursue your UK assets, including placing second charges on your home or impacting your credit rating.
Aggressive Tactics:
Vulture funds are more commercial and pragmatic in their approach, using methods like letters, phone calls, and emails to contact borrowers. This is because they typically buy the loans at a significant discount, so they are more motivated to recover the debt.
Harder to Negotiate With:
Since vulture funds have paid less than the loan’s full value, they are less flexible when it comes to negotiating or settling the debt. This makes it challenging for borrowers to secure more favourable terms.
Change of Loan Terms:
When a loan is sold to a vulture fund, any previous agreements are typically cancelled. This means the fund can demand higher repayments, add interest, and incur legal fees that weren’t part of the original agreement.
What Happens When Your Loan Is Sold?
When a vulture fund purchases your loan, they will typically send you a formal letter informing you of the transfer. This could happen years after you last interacted with your lender. You might also see insistent pursuit tactics, including:
- Letters, calls, and emails
- Risk to your UK property, especially if you have a second charge on your home
- Rising costs, as interest and legal fees accumulate
Ignoring this situation will only make it worse. Vulture funds will push forward with legal action and increase the pressure on borrowers who don’t respond.
Can Vulture Funds Chase You in the UK?
Yes, vulture funds can pursue you across borders, including in the UK or Ireland. If you own property or assets there, they may attempt to place a second charge on your home or contact you through UK debt collection agents. This can have significant consequences, including affecting your credit report.
What Should You Do?
If you’ve received a letter or phone call from a vulture fund like SKY CAC or Finsolutia, here are your options:
- Ignore the Issue (Not Recommended):
Ignoring the letter will not make the problem go away. Vulture funds will likely become more persistent, adding legal fees, interest, and continuing to chase you for repayment. - Speak to an Expert:
The best course of action is to speak with a professional who understands how vulture funds operate. At EU Property Solutions, we specialise in helping clients navigate these tricky situations. We can:- Negotiate on your behalf
- Achieve significant debt reductions
- Protect your assets (including UK properties)
How EU Property Solutions Can Help You
We’ve been working with clients dealing with foreign property debt and vulture funds for almost 20 years. Our expert team can:
- Help you negotiate settlements with vulture funds
- Translate and communicate on your behalf to avoid confusion and mistakes
- Ensure that you don’t risk losing your UK assets due to foreign debts
Get in Touch Today!
If you’ve received a letter or notice from a vulture fund, don’t panic—take immediate action to protect your financial future. EU Property Solutions offers a free initial consultation to assess your situation and provide guidance on the best steps to take.
📞 Call us today on 0330 124 1230
📧 Or email us at [email protected]
Check out our website to read more on being pursued in the UK.
Conclusion: Don’t Let Vulture Funds Control Your Future
Dealing with vulture funds can be overwhelming, but it’s important to remember that you don’t have to face this alone. With the right advice and expert support, you can negotiate a settlement and move on from foreign property debt.
