Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I move amendment No. 11:

In page 5, between lines 34 and 35, to insert the following:“(2) Section 33A of the Central Bank Act 1997 is amended by inserting the following subsection after subsection (5)—

“(6) The Bank shall also impose, on a debt management firm and or a credit servicing firm, a condition that a customer shall, within 30 days of his or her credit agreement being sold be:

(a) advised of the terms on which his or her credit agreement was sold,

(b) advised on any material change to the terms under which the credit agreement is serviced,

(c) advised whether the loan was sold at a discount, and

(d) provided with details of his or her rights under—

(i) the Code of Conduct on Mortgage Arrears 2013, and

(ii) the Financial Services Ombudsman.”.”.

Essentially the amendment proposes that the bank shall impose on a debt management firm and-or a credit servicing firm, a condition that within 30 days of a credit agreement being sold, the customer be advised of the terms on which his or her credit agreement was sold, and also be advised of any material change to the terms under which the credit agreement is serviced and whether the loan was sold at a discount. The customer should be advised of his or her rights under the code of conduct on mortgage arrears and the Financial Services Ombudsman.

The major issue is that the customer should be notified of all issues relating to proposed changes to his or her credit agreement within 30 days. Each of the paragraphs stands on its own merit, but the most important paragraph is that the consumer be advised whether the loan was sold at a discount.

We have all dealt with several such cases, for example, a mortgage of €200,000 being sold to a debt management firm and-or a credit servicing firm at a 50% discount and yet the customer is still being pursued for €200,000 by the company who bought the loan for €100,000. If that company gets €150,000 they have made a mega profit. In many such situations, the customer would wish to settle at below the book value but at a substantially higher level than what the debt management firm bought his or her loan for, but it may not be willing to do that. People are entitled to know if their loans have been sold at a discount of 30% or 40%. I know the Minister will say that these loans were bundled and one cannot state the exact price of each individual loan in the 5,000 mortgages in the portfolio but I think people are entitled to assume that the average discount, by and large, applied across the portfolio. There must be some measure whereby people with distressed mortgages in substantial arrears can deal with the company which has bought their loans at a discount.

I equate my proposal with NAMA. NAMA acquired the loans from the major banks at rates ranging from 47% to 53%, but at approximately 50% of the book value. NAMA considers it has done its job if it collects what it paid for the loans, notwithstanding that the book value of the loans was almost double. I want the same principle that applied to the NAMA business loans to apply to householders. The cost to the Exchequer of the write-down of the loan from the bank on transfer to NAMA is between €35 billion to €40 billion.

NAMA is not pursuing the book value of €70 billion but is only going after the €35 billion at which it booked the loans and it is happy with that. The same principle should apply if one of these vulture funds buys loans at a 50% discount The customer is entitled to know that is the effective market value of the loan at this point. The original book value does not apply in the commercial world but it is being forced on home owners. I am looking for equality of treatment. One might say the new owner would not do a deal except on those terms but a home owner would be in a much stronger negotiating position if he or she knew what the investor had actually paid for the mortgage. People are entitled to know what their mortgages are worth and what has been paid for them.

This follows directly on from the previous amendment of Deputy Tóibín, which sought to allow people to know the ultimate owner of their mortgages. It is fine dealing with the local estate agent or local debt servicing company but they are only the front-of-house people for those who actually own the loans. People are entitled to know because they are looking at ultimately being forced to give up their houses and may have to do so even if they are in a position to pay far more than those who took over the mortgages in the first place. We want to see this matter addressed. That is the essence of amendment No. 11.