Michael Noonan (Limerick City, Fine Gael)
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When the Deputy was quoting the competitiveness sentence, in fairness she should have quoted the next sentence also in which I talked about the issues of homelessness and housing supply giving rise to major social issues, including rising homelessness.

I make that point in case anyone listening to us misunderstands what I am saying.

Deputy Coppinger subsequently asked a series of questions. She also stated it would be unwise to stick rigidly to the fiscal rules, arguing that we should borrow money at the current rate of less than 1% and spend it on solving the homelessness problem. The bit she missed is that if we no longer stuck to the fiscal rules, we would not be able to borrow money at less than 1%. When my party entered government in 2011, the top rate of lending was more than 13% but this quickly settled at around 10%-11% for ten year money. The actions of the Government in adhering to a rigid set of fiscal rules brought the interest rate to under 1%. If the Deputy would like more evidence, she should look at the model she has admired on a number of occasions in the Dáil, namely, the Greek model. Greece has been trying to correct its problems for eight years by following a different model from us. It is paying 10% for ten year money, whereas we are paying less than 1%. It is not a question of having choices. To keep the interest available to us at current rates, we must impose fiscal discipline on ourselves. However, as we do so, the position is improving and we are getting more flexibility, which we will then use in pursuit of the objectives to which the Deputy referred.

Deputy Coppinger criticised me for not intervening with what she described as vulture funds. The investment companies in question may be colloquially known as vulture funds but it was, in the first instance, a compliment when they were so dubbed in the United States where vultures provide a very good service in the ecology through cleaning up dead animals that are littered across the landscape, especially in the prairie provinces. They were given this title as a kind of a joke. Nevertheless, I will refer to them as vulture funds.

The Consumer Protection (Regulation of Credit Servicing Firms) Act, which I introduced, protects consumers whose loans are sold to previously unregulated entities, thus creating a consistent level of consumer protection for borrowers regardless of who owns their loans. Put simply, if Bank of Ireland has a mortgage, it must comply with a code of conduct and the rules under the code of conduct will have to be complied with down to the final detail by any purchaser of that mortgage. There is, therefore, no diminution of the rights of the mortgage holder when the loan is transferred.

In addition, tenants and landlords of rental properties which serve as security for loans sold by the National Asset Management Agency or any other agency have the same rights and obligations as all other tenants and landlords. The purchaser of the loan book does not shed its responsibility under the law and its obligations are carried forward to the new owner. Vacant possession cannot be legally sought anywhere in Ireland by any landlord without meeting specific requirements, as set out in the Residential Tenancies Act. When the mortgage book is transferred to a new owner, the obligations on that owner under the Act are not cleared but remain exactly the same as those that applied to the previous owner. If such properties are vacated legally and subsequently sold, why should the property owner not sell on the vacant property in compliance with the law if it increases supply in the market?

Certain issues arise regarding vulture funds. For example, protocols in place for dealing with mortgage arrears do not carry across. In the next period of office, I intend to enshrine in the code of conduct the principle underpinning these protocols. As such, an extended code of conduct will apply to existing and new owners. No issue arises in this regard; as a matter of fact, I expect an advantage will arise if a so-called vulture fund buys a loan book because it will do so at substantially less than its nominal value.

If the nominal value is €100,000 and it buys at €80,000, the fund has more discretion than the original owner to do deals because it is still profitable if it does a deal with the 20%.

In terms of making arrangements that would involve arrears write-offs, the vulture fund has a lot more flexibility than the original mortgage owner. There are difficulties and I will address those. If new difficulties emerge and are pointed out to me, I will address those too. However, they are not the difficulties that are recited so frequently. Those difficulties are non-existent because the new owner must comply with the law in the same way as the previous owner. We legislated for that in the House approximately two years ago. As stated, there are advantages on one-to-one negotiations if people are seeking an arrangement as a result of the fact that the vulture fund has more flexibility because it bought not at the nominal rate but at a much cheaper one. Of course, the vulture fund is in it to make profit. Who in the commercial world is not in it to make a profit? The profit does not arise from selling houses out from under people - that is not the way these funds operate. Their main activity involves taking a loan book where there are many non-payers and under-payers and working their way up to try and get all the loans serviced to a payment system. That is how it makes its money; it is not by disposing of property. Ultimately, they are free to sell in the same way as every other property owner.