The Deputy may wish to note that where a mortgage or other loan is sold or transferred the provisions of the Consumer Protection (Regulation of Credit Servicing Firms) Acts of 2015 and 2018 will apply. This provides that any person servicing these loans or who holds the legal title to such loans will, unless it already falls within the regulatory remit of the Central Bank, have to be authorised as a 'credit servicing firm', by the Central Bank. Accordingly, such firms must comply with the financial services law that applies to Central Bank ‘regulated financial service providers’ and this ensures that consumers whose loans are sold or transferred to another firm maintain the same regulatory protections, including under the various Central Bank statutory Codes of Conduct, such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA), which applied prior to the loan sale. Also the contract terms and conditions of the loan will also remain unchanged following a ‘loan sale’, including those terms which govern the adjustment of the interest rate, and the new 'loan owner' will not be able to acquire any additional contractual benefits or rights solely arising from the 'loan sale'. Therefore, any future adjustment of the interest rate on a mortgage following a ‘loan sale’ will be subject to the relevant terms of the mortgage contract and, within that contractual constraint, the setting of the interest rate following a ‘loan sale’ will be a commercial matter for the new ‘loan owner’ or servicer.
However, it should also be noted that in August 2019 the Central Bank wrote to the industry to set out its expectations of all firms in respect of sales, securitisations, purchases and transfers of residential mortgage loans. This letter including expectations in respect of the transfer of alternative repayment arrangements (ARAs) and it indicated that, where a co-operating borrower is complying with the terms of an ARA put in place, and the loan is subsequently sold to another regulated entity, the new regulated entity cannot unilaterally change the loan contract as agreed between the borrower and the original lender. The new regulated entity should continue to honour an ARA in place until review and/or expiry, as appropriate. This includes honouring timelines and terms and conditions for reviews of the ARA.
In addition, the Consumer Protection Code requires that a regulated entity must notify affected personal consumers on paper or on another durable medium of any change in the interest rate on a loan. This notification must include specific information, including details of the date from which the new rate applies, the old and new rate, the revised repayment amount, as well as an invitation for the personal consumer to contact the lender if he or she anticipates difficulties meeting the higher repayments. In relation to variable interest rates, the Code also requires that regulated entities identify the factors which may result in changes to the variable interest rate and clearly outline the criteria and procedures applicable to the setting of the variable interest rate.
Where a borrower experiences difficulties with paying a mortgage on a primary residence, the regulated firm must comply with the requirements of the CCMA. The arrears handling provisions of the Code apply when the loan is not a mortgage loan to which the CCMA applies. Furthermore, if a person is not satisfied with the with the actions of a regulated entity s/he can make a complaint to that entity and if the matter is not resolved at that level s/he can make a complaint to the statutory Financial Services and Pensions Ombudsman (www.fspo.ie).