MINISTER OF STATE Fergus O’Dowd was tonight critical of a bill put forward by Fianna Fáil’s Michael McGrath, aimed at protecting thousands of mortgage holders with Irish Bank Resolution Corporation (IBRC), the former Anglo Irish Bank, despite a government plan to support the legislation.
Earlier today, it emerged that the Cabinet agreed not to oppose the passage of a bill, which was debated in the Dáil tonight.
Finance Minister Michael Noonan has advised that the Residential Mortgage Account Holders Bill 2014, should be allowed pass to committee stage when it goes to the vote tomorrow.
However O’Dowd said this evening that the bill, as proposed, “is flawed so will require significant additional work to achieve the objectives sought”.
Concerns have been expressed in recent weeks about the plans by the special liquidators at the IBRC to sell 13,000 mortgages with a possibility that families would be stripped of protections.
IBRC’s special liquidators, KPMG, announced an agreement last month with phase two bidders for the mortgage book whereby the successful bidders agreed to sign up to the Central Bank’s mortgage arrears code of conduct.
“Considerable protections already apply to people who are in mortgage difficulties,” O’Dowd told the Dáil. “The government is firmly of the view that the very last resort should be that people lose their family homes. In that regard the government has put measures in place to ensure that this does not happen.”
O’Dowd pointed out that the Central Bank’s code of conduct on mortgage arrears provides protection measures for borrowers either facing or in mortgage arrears.
“The code provides that mortgage lenders should allow for a flexible approach in the handling of arrears and pre-arrears cases and that they should aim at assisting the borrower who is in genuine difficulty as far as possible, having regard to the specific circumstances,” he stated.
He added that the bill has the potential to create further stress for borrowers as it would create an “unenforceable obligation” on the purchasers of loan books, who are not subject to central bank oversight. The bank does not have the power to impose sanctions on entities which are not regulated by it and O’Dowd said the bill would lack the power to impose penalties on institutions breaching the terms of the code of conduct.
A government spokesperson said earlier that coalition’s legislation to protect mortgage holders when loan books are being transferred is being “re-prioritised” and that the situation at IBRC is being “actively monitored”.
In a statement from the Department of Finance, the government said that while it “fully accepts the principle” of McGrath’s bill it does not, as currently drafted, provide the full protections of the Central Bank’s Code of Conduct on Mortgage Arrears to mortgage holders in unregulated financial institutions.
The government said the bill “offers no additional protections to the mortgage holders over and above” an agreement reached with bidders for the mortgage book.
“In addition, the Minister for Finance has committed to bringing forward legislation to offer all mortgage holders in Ireland the full protection of the CCMA,” the statement said.
“The Minister looks forward to working with Deputy McGrath and other members on the Joint Committee on Finance, Public Expenditure and Reform on the legislation.”
- With additional reporting by Michelle Hennessy.