The Story Of Sarah And Dominic


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This afternoon.

During Leaders’ Questions, Social Democrats TD Stephen Donnelly raised the case of a family – Sarah, Dominic and their two children – who are being evicted from their home in Kilkenny.

The eviction comes after the Government sold the family’s mortgage to US investment firm, Mars Capital.

Stephen Donnelly: “Sarah and Dominic live in Kilkenny with their two kids and they bought their home in 2007. The shop in which Sarah worked in Kilkenny closed and the couple were unable to service their mortgage fully, although they are getting back on their feet. Two years ago, the Minister’s Government sold Sarah and Dominic’s mortgage to a US investment firm, which is now evicting Sarah, Dominic and their two children. Last week, the journalist Niall Brady reported that the Government sold Sarah’s mortgage and that of thousands of others to the US investment firm at a 58% discount. That would have brought Sarah’s €350,000 mortgage to approximately €140,000, which is approximately the value of the property and a mortgage that Sarah and Dominic can afford. The firm is Oaktree Capital and Sarah and Dominic know them as Mars Capital, which is the company that Oaktree set up to buy thousands of mortgages in Ireland.”

At the time of the sale, the Government refused to allow Sarah and Dominic, or any of the Irish mortgage holders, to bid on their own mortgages. Instead, it sold them to Mars Capital with a discount of 58%. Mars Capital structured the deal in such a way that the real discount it got was closer to 70%, which would have brought Sarah’s mortgage down from €350,000 to approximately €100,000. She cannot service the €350,000 so she is being evicted, which is bad news for her, Dominic and the kids but very good news for Oaktree Capital. Its accounts indicate that for its €80 million investment, it will get a return of €400 million.”

It gets worse. An examination of Mars Capital’s accounts is a masterclass in tax avoidance. The accounts indicate that the interest income minus the interest costs for the year come to €4,559,904. Astoundingly, the figure for administrative expenses against that is €4,558,904, leaving exactly €1,000 in taxable profit. The company has three shares issued to three different charitable trusts. The finances are also structured to ensure all interest payments and mortgage payments from Sarah and Dominic and everybody else, as well as all capital gains, can be offset against costs, ensuring there are no taxes owed.”

Why did the Government sell an asset that required just €80 million to buy and that one of the leading hedge funds in the world believes is worth approximately €400 million? What does the Minister and his Government say to Sarah, Dominic, their children and the many others being evicted by these foreign firms or struggling to pay their taxes? Does the Minister accept the State will receive almost no benefit in taxes, either on profits or capital gains from these companies? Will the Government launch an investigation into the tax affairs of all these funds that purchase these mortgages in Ireland to ensure not just tax compliance – as tax avoidance is legal – but that the real profits and capital gains that these funds make will be declared properly in Ireland and taxed accordingly?


Richard Bruton: “…The Government is acutely conscious of the needs of vulnerable people who are in this situation and we are seeking to develop more effective services, both legal and otherwise. As Deputies know, under the insolvency courts, financial institutions can no longer block an agreement that has been developed by a practitioner in this sphere. The courts can be used to overturn resistance by a lender to giving approval to a reasonable deal.”

Donnelly: “With respect, my question was not about the crash mats the Government is putting in place for people it has pushed off the wall. My question is about tax. Tax avoidance is not an issue for the Revenue Commissioners because it is legal.”

It would appear that this Government is guilty of facilitating wholesale tax avoidance by international investment firms making windfall profits in Ireland off the backs of ordinary, decent people trying to pay their mortgages, like Sarah and Dominic. We do not know where Mars Capital is sending this money. They are called “notes”. We do not know where they are going, but what we do know is that Oaktree Capital, if one looks at the SEC filings, holds multiple investment firms in the Cayman Islands.

An Ceann Comhairle Seán Ó Fearghaíl: “The Deputy is just out of time.”

Donnelly: “Ceann Comhairle. Let me ask the following questions. Was the Department of Finance, directly or indirectly, shown the tax avoidance structures that these firms, like Mars Capital, were going to use? Why was it not made part of any sale that all profits and capital gains accruing to these firms would be…”

Ó Fearghaíl: “The Deputy is now out of time. The clock applies to him…”

Donnelly: “…would be..”

Ó Fearghaíl: “…in the same way as it applies to everybody else.”

Donnelly: “Thank you.”

Ó Fearghaíl: “The time has elapsed, so will the Deputy resume his seat?”

Donnelly: “Thank you, Ceann Comhairle. Can I ask the Minister…”

Ó Fearghaíl: “No. I am not speaking for the sake of speaking. It is my job to enforce the Standing Orders. The time has elapsed. Will the Deputy resume his seat?”

Donnelly: “To reiterate the question, will the Minister consider an investigation and report back to the House on the extent of the tax avoidance we are seeing here?”

Bruton: The Finance Acts provide for anti-avoidance measures and the Revenue Commissioners execute those. They have the powers to deal with them effectively. Those powers have been enhanced every year, in every Finance Bill over the years. If additional reform to the Finance Acts is necessary, it is open to the Deputy to bring forward such amendments, but in respect of the existing Revenue arrangements, they will enforce those.”

“If the Deputy has details of some new avoidance mechanisms that ought to be scrutinised by the Revenue Commissioners they will more than pleased to consider them and bring forward to the House measures to protect against them in time for the next Finance Bill. I do not have access to the information the Deputy has about the specific avoidance structures he describes but the Revenue Commissioners are there to enforce the rules. There are general anti-avoidance provisions in the Finance Acts and they are overseen and executed by Revenue.”

Transcript via

Related: IBRC sold mortgages to Mars at 58% off (Niall Brady, The Sunday Times)

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44 thoughts on “The Story Of Sarah And Dominic

  1. Joni2015

    They chose to take out a huge mortgage. They continue to live in a property they have not paid for.

    1. Anne

      Our government chose to hand them over to the vultures, giving massive discounts that we’ve paid for.
      We’ll have to pay again when they are homeless.

    2. Kolmo

      I wouldn’t dare to assume the level of financial education this unfortunate family have, but being smooth-talked into taking a mortgage for SOMEWHERE TO LIVE AND MAKE A DECENT LIFE by well-spoken banking and financial experts, experts who actually handed them the money, experts who said everything was grand at the time, “sure go buy a car too, you have nothing to worry about because we are the financial experts you came to for financial advice and help”- yes, blame the family getting thrown out on the street.

      1. SB

        I think the sale of these loans to the vultures is despicable, and it should be possible for NAMA to sell the loans directly back to the people concerned for the same price (or a slight premium to cover the admin of separating them out). However, that was specifically precluded in the legislation, to avoid developers making a quick buck on their own loans.

        I disagree hugely with the idea that people were ‘smooth talked’ into taking out mortgages. I think it does them a great disservice – basically, you’re saying they were idiots. Which they are, if they could be smooth-talked into a huge undertaking without considering the ramifications. People may try and sell me stuff, but I have a brain and I’m going to make the decision myself.

        HOWEVER – and not talking about this case specifically – I would find it very suspicious if a mortgage holder who allegedly hasn’t been able to make ANY payments on a mortgage for 5 years can suddenly afford to take out a mortgage for €140,000. It would certainly make you think that they were strategic defaulters, hoping to get a debt writedown while everyone else has to pay back the full amount of their mortgage. The term ‘moral hazard’ comes to mind.

  2. Anne

    The Irish government – facilitating Paddy for easy pickings for the vultures.
    Well done ye shower of despicable c****.

  3. Owen C

    “Its accounts indicate that for its €80 million investment, it will get a return of €400 million.”

    The numbers here are confusing. If Oaktree/Mars buys a mortgage worth 350k, for 100k (the 70% discount), on a property worth 140k (per SD), how are they expected to get a return on 500k (ie 5x original investment)? If they evict the tenant, the house is worth 140k, and the residual ‘claim’ is worth 210k (350 – 140), but that will be expunged under the personal insolvency code over a few years. Not for the first time, Stephen Donelly’s maths looks shaky (for the record, i agree with him on the basic premise of it being a terrible idea to sell down these loans so cheap and allow tax avoidance measures to shelter most of the gains/income, i just dont understand where he came up with the maths from)

    1. Anne

      You’re multiplying the overall profits they’re due to make – a multiplier of 500% on the original 80m, and trying to match it to one example of this couple’s house. Your maths looks ok, but your logic, not so much.

      1. Owen C

        Stephen Donnelly is using the same maths i am – overall discount of 58%, applied to an individual case (click the link in the story – we do not know exactly what discount this individual mortgage was transferred at). My maths and logic are exactly as SD is suggesting.

        1. Anne

          I looked up the Times article.. the link doesn’t seem to be working above.

          Mars capital, an unregulated mortgage company, was able to buy almost 1,500 home loans from IBRC for just 42% of the amount owed, even though the homeowners involved remain liable for the full amount of the original debt.

          Bought the loans for just 42%…. 58% discount for the vulture.

          They get a massive return in that 100% is still payable by the mortgage holder.

          1. Joni2015

            The same mortgages that havent had a cent put into them in years.

            Best result is to kick them out, sell the property and hope they build up some assets in the coming years to pay for part of the remaining debt

          2. Owen C

            Yes, but 42 vs 100 does not equate to 80 vs 400, particularly when evicting the mortgagee actually eradicates most of that potential upside (they are no longer on the hook for the full debt). As i said, the maths doesn’t make sense.

    2. Anne

      But, I’m glad you don’t dispute the percentage of discounts the vultures are getting this time.. where you were previously spouting that they were only getting 10%. i’m still waiting for my apology on that btw. Where’s my apology?

      70% discounts. Imagine that.. Our government will facilitate making already disgustingly wealthy vultures even more wealthy, at our expense of the Irish working class.

      1. Owen C

        Anne, i stand by my claim that Stephen Donnelly (a) said 90% of par (as opposed to 90% discount) in another venue, but you are right than on that conversation he did say 90% discount. So apologies. I further stand by my claim that he is wrong (and why else bring up Sarah and Dominic with their 70% discount if a 90% discount story was available???)

        1. Anne

          In another venue? Just one we weren’t talking about..

          It was in relation to a discussion he had on RTE radio 1. I’ll get it again for you if you want.
          90% discount is what he said.. I don’t think he was wrong.

          Apology accepted.. I’m only messing anyway. (it’s about you baggering Anne-Marie McNally about the man-splaining comment for an apology)

          1. Owen C

            Indeed, i picked up on that!

            @ Anne Marie

            dont think I’ve forgotten!!! *shakes fist*

    3. Pip

      And surely the potential return is based on a booming market with far higher (think 2006) house values?

    4. Anne

      Stephen explains it here..

      Mars Capital themselves forecast to make 400million return on the 80m investment.. that’s based on their own estimations. You don’t seem to have factored in interest payments. (80m is not the full amount they paid by the way.. They got a 42% discount too it seems)

      It gets better (or worse if you are Sarah and Dominic, or an Irish taxpayer). Mars bought these 1,400 mortgages for €155m. About half of this was financed by a loan from Citibank, with the remaining €80m being, presumably, the “funds managed by” Oaktree Capital. The 2015 accounts of Mars Capital forecast that this €80m investment will harvest almost €400m (net of the Citibank loan) in mortgage interest and principal repayments (so that’s the €80m back, plus almost €320m extra, less administration costs). And this is just Mars Capital’s first estimate. It assumes a level of non-payment on the mortgages they bought.

    5. Anne

      A 1000 euro too is what they’re submitting as taxable profit. A 1000 euro..

      I think I’m going to loan myself some money before I pay PAYE and tell the tax man get stuffed.
      That’s the equivalent of what they are doing.. subsidiaries lending to subsidiaries.

      In other words, the interest payable on the €80m can be hiked to soak up any, and all, profit Mars Capital makes.
      The accounts of Mars Capital clarify that these notes will suck nearly all of the profits (interest and capital) from the company in excess of the Citibank loan. The 2015 accounts claim exactly €1,000 as taxable profit, while paying millions in interest on the notes.

      1. Anne

        Mars Capital Ireland Limited, Mars Capital Ireland No.2 Limited, Mars Capital Ireland No.3 Limited and Mars Capital Ireland No.4 Limited (Mars Capital Ireland) have been established to own residential owner-occupied and buy-to-let mortgages purchased from other lenders.

        Mars Capital Finance Ireland Limited was established to administer mortgages purchased from financial institutions in Ireland.

        4 separate companies.. hmmmm

      2. Anne

        I’m sick of this sh*thole of a country.. why is this wholesale selling off of Irish peoples’ mortgages to vulture funds at huge discounts which have been funded by the taxpayer acceptable to people?

        Why am I not hearing about this on a nightly basis on RTE?

        Who exactly are the gombeen men at Mars Capital?

        1. Anne

          Oh yes.. didn’t Richard Boyd Barrett say he received an anonymous letter advising him of this –

          I did some research on and discovered that Mars Capital No. 3 Limited had, until January the 15th, two directors – one of whom had the same name as a person who held a senior position in IBRC in the past. And was also, in the past, an employee of KPMG, the firm of liquidators.

          And that’s just the No. 3 Mars.. What of the No. 2, No, 4?

          Anonymous letters.. mortgage holders doing their own digging.. that’s about the extent of information we’ll get, as a generation are enslaved to these vultures..

  4. MoyestWithExcitement

    “the Government sold Sarah’s mortgage and that of thousands of others to the US investment firm at a 58% discount. That would have brought Sarah’s €350,000 mortgage to approximately €140,000….At the time of the sale, the Government refused to allow Sarah and Dominic, or any of the Irish mortgage holders, to bid on their own mortgages”

    A cartoon popped up on my twitter today where someone talks about making a choice between being well informed and maintaining sanity. Sweet fupping Jesus.

    1. Joni2015

      How could they bid on their own non performing mortgages? They had no money. Vulture funds are not inherently evil. They serve a purpose allowing institutions to maximise the return on non performing debts with minimum effort.

      1. Harry Molloy

        This is true but the biggest problem with them is that they are not regulated and so are not subject to the consumer protection code

        1. Owen C

          Agree. The simplest way of fixing this is making them conform with CBoI rules like every banks has to.

      2. MoyestWithExcitement

        As stated in the OP, they couldn’t *fully* service their mortgage. They couldn’t afford payments on 350k but they could have afforded payments on 140k. Our government, which is supposed to be our ‘community admin board’, decided to let foreign millionaires benefit from that reduction as opposed to the Irish family that lived in it who can contribute value and benefit to our community. It’s morally repugnant.

        1. Anne

          “It’s morally repugnant.”

          There seems to be little point in explaining morals to the capitalist rentboys.. max profits for the investors = success.

          They don’t seem to mind about hyper-capitalism that works for a few and harms the many.

      3. ahjayzis

        I think the point is – the mortgage was priced down to 140k, that’s been acknlowedged – but the government sold it for 100k. A loss upon a loss.

        Why couldn’t the government just write down the mortgage to 140k from the off and remain the landlord? It’d recoup more in the long run than it did by selling the mortgage, and this family, to a vulture fund. Now it’s lost between hunrdeds and tens of thousands and will also have to give help to this family to house them.

        Why are venture capitalists the only winners here when their involvement accrues no benefit to either side?

    2. John G

      I have a mortgage that was sold by IBRC to Mars Capital. It’s not delinquent in any shape or form. We got a letter years ago about the sale of our mortgage from Michael Noonan.

      It didn’t say much, other than that the sale was happening and we were allowed to make inquiries of the IBRC liquidator. Some mortgage holders thought that this letter was the government giving us a legally-required opportunity to bid on our own mortgage, but because they didn’t really want that, they designed the letter to be as unclear as possible. Sure enough, when I called the liquidator I was told that we were allowed to bid on our own mortgage, which we duly did and offered to pay 80 or 90% of the amount due.

      We never heard anything back. My guess is that very few people did this and therefore the government was able to, in their minds, justifiably ignore the option of selling mortgages back to the holders.

  5. Junkface

    Vulture funds should be banned from the Irish Housing market. The Irish Government at the time behaved like pigs. In the year that Ireland celebrated 1916 and Enda Kenny and all of the lads sat proudly on O Connell st, they find it perfectly acceptable to screw over their own people and their families, directly contradicting the Proclamation of the Irish Republic which they had read aloud for the world to see.

    Hypocrite Scum!

  6. wearnicehats

    So what is he saying – that the new owners become a non-profit organisation? regardless of who sold what to who this doesn’t make sense. Let’s just say that this house was owned by Ulster Bank. The mortgage was €350,000. They couldn’t be arsed and they sold it to me for €140,000. DO you think I’m going to let the occupiers pay off €140000? Why would I want the thing in the first place?? Also this article doesn’t say what has been going on with this mortgage in the past 2 years or wha tthe house is currently worth to the new owners. I assume there has been attempts to come to a solution but, really, this “getting back on their feet” excuse that keeps getting used is wearing a bit thin 9 years later.

    1. ahjayzis

      The mortgage was written down to 140k – why didn’t the state, as the mortgage holder, just let the family service the mortgage of 140? Instead they took a further 40k loss and privatised the profits?

  7. 15 cents

    the gov. have been selling us out for a long time .. now they are literally selling us out. disgusting

  8. Eamonn Clancy

    Thanks to Sarah and Dominic me and tens of 1000s of others who didn’t borrow way over our heads because we were prudent ended up paying, and still are, for their stupidity.

    1. Stephen

      What a sanctimonious, judgemental person you are, to judge these people without giving them any smidgen of benefit of the doubt.

  9. Andy

    Once again donnelly’s maths don’t add up. It doesn’t matter though as his electorate lap it up.

    Sold for a 58% discount, but a real discount of 70%?

    A return 5x the Value? Is this moron confusing the equity contribution with the gross purchase price which would’ve been partly funded by debt?

  10. Cup of tea anyone?

    If 58% discount is the approximate value on the house, the company would have to buy them for less to actually make a profit on them. So if paying 30% for the mortgages cost 80M selling them at their current value at 48% would only get them 128M. So the profit fould be under 50M not 320M

    also it is not tax avoidance. profit is 1,000 as any interest coming in is paid out to the investors. Investors still need to pay tax on interest received so tax is being paid somewhere.

  11. Observer

    That would have brought Sarah’s €350,000 mortgage to approximately €140,000, which is approximately the value of the property and a mortgage that Sarah and Dominic can afford.

    This doesn’t make a lot of sense.

    House prices nationally are now at 69% of where they were in 2007 according to the CSO data.

    Even allowing for regional variation, it seems unlikely that a house worth €350k in 2007 is now only worth 40% of that. If it were following the national trend, the house should be worth somewhere in the order of €240k.

  12. Anthony Walsh

    Where is Stephen Donnolly getting this surge of compassion from when he has been instrumental in worsening Sarah and Dominic’s plight when he voted with the government in the eviction bill. Playing both sides of the game hoping nobody notices, it seems.

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