I am informed by the Central Bank of Ireland that most loan agreements include a clause that allows the original lender to sell the loan on to another firm. The Central Bank has no jurisdiction over unregulated third parties and, consequently, has no power to either impose requirements on or investigate the activities of such unregulated loan owners.
Regulated credit servicing firms are firms who manage or administer loans on behalf of the unregulated firm and such firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’, such as the Central Bank’s Code of Conduct on Mortgage Arrears. Again, however, the requirements of the CCMA only apply to the regulated firm and not the unregulated loan owner. Therefore, an unregulated loan owner is not required by the Central Bank to provide the reasons, in writing, for refusing a proposal to restructure a mortgage loan made by the regulated credit servicing firm.
However, Section 45 of the CCMA states that in relation to regulated firms:
If a lender does not offer a borrower an alternative repayment arrangement, for example, where it is concluded that the mortgage is not sustainable and an alternative repayment arrangement is unlikely to be appropriate, the lender must provide the reasons, on paper or another durable medium, to the borrower. In these circumstances, the lender must inform the borrower of the following:
a) other options available to the borrower, such as voluntary surrender, trading down, mortgage to rent or voluntary sale and the implications of each option for the borrower; and his/her mortgage loan account including:
(i) an estimate of associated costs or charges where known and, where not known, a list of the associated costs or charges;
(ii) the requirement to repay outstanding arrears, if this is the case,
(iii) the anticipated impact on the borrower’s credit rating, and
(iv) the importance of seeking independent advice in relation to these options;
b) the borrower’s right to appeal the decision of the lender not to offer an alternative repayment arrangement to the lender’s Appeals Board;
c) that the borrower is now outside the MARP and that the protections of the MARP no longer apply;
d) that legal proceedings may commence three months from the date the letter is issued or eight months from the date the arrears arose, whichever date is later, and that, irrespective of how the property is repossessed and disposed of, the borrower will remain liable for the outstanding debt, including any accrued interest, charges, legal, selling and other related costs, if this is the case;
e) that the borrower should notify the lender if his/her circumstances improve;
f) the importance of seeking independent legal and/or financial advice;
g) the borrower’s right to consult with a Personal Insolvency Practitioner;
h) the address of any website operated by the Insolvency Service of Ireland which provides information to borrowers on the processes under the Personal Insolvency Act 2012; and
i) that a copy of the most recent standard financial statement completed by the borrower is available on request.