Jackie Cahill
Ceist:130. Deputy Jackie Cahill asked the Minister for Finance if he will address a matter (details supplied) relating to the housing crisis; and if he will make a statement on the matter. [8064/18]
Amharc ar fhreagraTuesday, 20 February 2018
Ceisteanna (130)
Freagraí scríofa
As the Deputy will be aware, most loan agreements include a clause that allows the original lender to sell the loan on to another firm.
The Consumer Protection (Regulation of Credit Servicing) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm. Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities.
Under the 2015 Act, if the firm who bought loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’ . Loans can be sold by regulated entities to entities that are not regulated by the Central Bank of Ireland (the Central Bank).
Credit servicing firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including under the various Statutory Codes of Conduct issued by the Central Bank.
The Code of Conduct on Mortgage Arrears (CCMA) is a key part of the Central Bank’s Consumer Protection framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. The CCMA provides a strong consumer protection framework, aimed specifically at the process to be followed by relevant firms with each borrower by reference to that borrower’s individual circumstances, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner by reference to that’s borrower’s individual circumstances.
Regulated entities, including credit servicing firms servicing loans on behalf of unregulated loan owners, are all required to comply with the CCMA. The overriding objective of the CCMA is to ensure the fair and transparent treatment of consumers in mortgage arrears or pre-arrears, and that due regard is had to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. The CCMA recognises that it is in the interests of borrowers and regulated firms to address financial difficulties as speedily, effectively and sympathetically as circumstances allow. It sets out the MARP, a four-step process that regulated entities must follow:
Step 1: Communicate with borrower;
Step 2: Gather financial information;
Step 3: Assess the borrower’s circumstances; and
Step 4: Propose a resolution
Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm. The CCMA includes requirements that arrangements be sustainable and based on a full assessment of the individual circumstances of the borrower and that repossession be used only as a last resort. The CCMA does not prescribe the solution which must be offered. A regulated entity may only commence legal proceedings for repossession where the firm has made every reasonable effort under the CCMA to agree an alternative repayment arrangement with the borrower or his/her nominated representative, and the specific timeframes set out in the CCMA have been adhered to or the borrower has been classified as not co-operating.