I move:
That leave be granted to introduce a Bill entitled an Act to protect residential mortgage account holders whose mortgage loans are owned by financial institutions or entities supervised by the Central Bank of Ireland by providing that it would be a precondition to the sale or transfer of residential mortgage loans to persons or entities not supervised by the Central Bank of Ireland that the persons or entities that acquire the personal mortgage loans agree to be bound by codes of practice issued by the Central Bank of Ireland.
I am delighted to move the Protection of Residential Mortgage Account Holders Bill 2014. The Bill, if enacted, would ensure that the same vital statutory protections that mortgage holders in Ireland currently enjoy would continue to apply if their financial institution sells their mortgage to an entity that is not regulated in Ireland. The same issue was raised on Leaders’ Questions by Deputy Donnelly today.
Every mortgage holder in the country should be concerned about the issue, not just the IBRC mortgage holders whose mortgages are currently being sold by the special liquidator. The reality is that if the Government is prepared to pull the rug from under the IBRC mortgage holders there is no reason for it not to do it to every other mortgage holder in the country if their bank decides to sell the mortgage book.
If AIB, Bank of Ireland, Permanent TSB or Ulster Bank decide tomorrow that they would sell off their mortgage book to an overseas investor with the result that the mortgage holders would lose essential protections, would the Government stand back and allow it to happen? On the basis of how the IBRC issue is being approached by Government, I am afraid the answer is “Yes”. What is being done to the IBRC mortgage holders is utterly disgraceful and indefensible. It simply cannot be allowed to happen.
Let us look at what a mortgage holder will lose if his or her mortgage is sold to a so-called vulture fund outside of Ireland. That is a very distinct possibility. First, the code of conduct on mortgage arrears will not apply. Even though the Government diluted the code it still provides vital protections for borrowers, especially if one gets into any difficulty whatsoever in repaying one’s mortgage. The code, for example, requires the bank to undertake a series of steps to work with the mortgage holder to come up with a solution to their mortgage distress. If the worst comes to the worst, it ultimately delays significantly any effort to repossess the family home. In the absence of the code, mortgage holders are vulnerable, exposed and isolated. If they get into difficulty they will deal with an unregulated, unsympathetic foreign fund out for a quick buck. That is the simple and harsh reality. The truth is the fund can move on mortgage holders pretty much immediately if they get into any level of difficulty with their mortgage.
A borrower whose mortgage is sold to a vulture fund will lose access to the Financial Services Ombudsman, a crucial channel for resolving disputes between banks and mortgage holders. In addition, an unregulated fund facing no competitive pressures whatsoever in Ireland and immune to any reputational fallout in this country is far more likely to jack up variable interest rates as it suits it.
The Government response so far to the plight facing IBRC mortgage holders has been nothing short of miserable. The subtext from the Government is if we force an unregulated entity to provide the same protections to consumers they will pay the special liquidator less for the mortgage book. My answer to this is very simple. If they are prepared to pay more to be allowed to ignore these vital statutory protections, this is exactly what they intend to do, with inevitable consequences for the mortgage holders.
The Government also states that the two other mortgage books to which the Taoiseach referred earlier were sold to unregulated entities that have decided voluntarily to comply with the code of conduct. This cuts no ice with me because they may comply with the code for as long as it suits them, but when they decide not to comply with it any longer there is sweet damn all any mortgage holder can do about it. That is the truth. There is the notion that somebody taken to court by a non-regulated entity will be able to prevent a repossession order because the code has not been complied with. Are we really suggesting this is the fate we want people to be left with - that the unregulated entity can take one as far as court, where one hopes the judge will not grant a repossession order because it did not comply with the code? This simply is not good enough.
The Government's argument that there is no problem here has been dismantled by its intention to introduce legislation to deal with the issue. The sale of loan books to unregulated third parties Bill, which is number 93 in section C, is in the legislative programme but it is not intended to introduce it until 2015. The Government acknowledges there is a problem. We have published this Bill, which will resolve the problem, in good faith. We also know the Central Bank, as regulator and in its consumer protection role, is not happy with what the Government is doing and has written to the Department of Finance asking that the same protections continue to apply to mortgage holders in this situation.
The sale of the IBRC mortgage book is due to be completed in March, so there is no time to waste. The 13,000 mortgage holders deserve the exact same rights and protections as everybody else, no more and no less. I hope the Bill can be debated and enacted as quickly as possible.
