For one industry, there is life after debt
Here’s an article which mentions Camelot-
Forget the debt collector… meet the debt counsellors. A new industry is growing fast with at least five ventures targeting the Irish market, writes Jon Ihle “Counsellors visit delinquent borrowers in their homes to work out debt restructuring or repayment schedules, usually on behalf of a client bank but sometimes at the customer’s request” Jobs are disappearing, defaults are piling up, insolvencies are rising and the banks are in crisis. The economy is a mess. But while all the evidence points to even more pain next year, one specialised sector is actually set for a boom: debt management and counselling services. At least five new ventures in this area are either in the market already or planning to enter it in 2009. The idea behind all of them is to offer banks and their customers a solution to an unfamiliar problem: how to manage bad debts in a failing economy. Mortgage arrears and delinquencies are expected to continue rising over the next two years as unemployment and tighter credit makes it harder for borrowers to meet debt obligations. Banks have been shifting staff into credit control, but many lack specialised skills to cope with the rapid rise in problem loans after so many years of boom-level growth. Enter the debt counsellors. Debt counselling, virtually invisible during the boom, has been around for a while. An alternative to straightforward collection or repossession when loans go bad, it was pioneered in the UK during the property bust of the early 1990s. The service operates on the principle that half a loaf is better than no bread. In other words, getting some money is better than a write-off. Counsellors visit delinquent borrowers in their homes to work out debt restructuring or repayment schedules, usually on behalf of a client bank but sometimes at the customer’s request. Such services can help lenders preserve some level of income during times – like now – when seizing and disposing of an asset would only crystallise a loss. Little-known vacant property management firm Camelot is moving into the debt counselling business in the new year, joining a growing list of firms offering to deal with rising mortgage arrears on behalf of the banks. The company began advertising for part-time “mortgage arrears counsellors” two weeks ago and plans to be operational by January. The company’s directors declined to comment except to say “a number” of financial institutions were interested in its offering. Camelot, part of a Dutch multinational group with other outposts in the UK, specialises in “protection by occupation” for vacant commercial properties and large country houses. The company hires “guardians” to house-sit vacant buildings – for some owners, a cheaper option than buying protection insurance. It has also developed a sideline in managing repossessed properties as more foreclosure cases have come before the courts in Ireland, so it sees the ugly end of rising loan impairments. The directors obviously saw an opportunity to get involved earlier in the process. Camelot won’t be alone in this market, though. The firm will be competing with White Horse Mortgage Services, a long-established UK debt services specialist that offers Irish banks a package including arrears counselling as well as repossession and other related services. White Horse has been in Ireland since the beginning of the year and has approximately 70 counsellors working across every county in the Republic. It has done business with at least three mortgage lenders, including a subprime firm, but chief executive Richard Lay would not disclose its current client list. He said a rise in bad debts was a “macro-economic certainty” in Ireland as overall growth slows in the economy and unemployment rises. The opportunity for debt services is clear: White Horse expects to handle 4,200 cases a year. “The issues that will cause arrears to grow in the forthcoming period will be things outside the borrowers’ control,” Lay told the Sunday Tribune, saying higher unemployment especially is a “real concern”. That concern is reportedly drawing the interest of another UK mortgage counselling specialist, Property Services Partnership, a London firm that got its start in the early 1990s but has moved into Northern Ireland this year. The pattern is nearly identical to White Horse’s strategic entry into Ireland. Senior industry sources expect PSP to set up here in 2009. The Sunday Tribune is also aware of two other parties starting companies in this space. One involves a prospective joint venture between an Irish specialist finance firm and a significant UK debt purchase company. According to sources close to the venture, at least four major lenders have expressed an interest its services. “Banks can only do so much,” said one senior source, a former chief executive of a home loan company. “Their leverage is gone. There is no equity left. They don’t want a load of property with no tenants.” This firm is pitching itself as a new kind of financial intermediary, one that provides a 90-day grace period during which it can provide counselling and debt solutions free to the customer on behalf of the bank. The directors are hoping to tie the service into the bank guarantee scheme, as the taoiseach and the finance minister have come under pressure recently for supporting the banks while customers are starved of credit or pushed to repay loans they can no longer afford. The second prospective player is proposing a “middle-class MABS” (Money Advice and Budgeting Service) for people with credit problems but who can still afford to pay for advice. The firm is currently interviewing a possible managing director and has had informal talks in the finance industry, including with at least one of the listed banks. The entrepreneur behind the venture expects to be up and running within months, focusing on the buy-to-let market, where loan impairments are higher than for owner-occupiers. All those positioning to get involved in this market agree on one thing: they won’t be the only ones. Bad debt is becoming big business.
Don't live as a property guardian 