Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank the Deputies for raising this very important issue for the people concerned. As the House will be aware, the special liquidators were appointed on 7 February to manage the liquidation of the IBRC for the benefit of all the creditors of the IBRC. Their role is to ensure the liquidation is carried out in an orderly manner within a given timeframe.

Independent valuers were engaged to value all the assets of the IBRC including the residential mortgage portfolio. All IBRC borrowers including the residential mortgage customers received correspondence from the special liquidators. This provided them with an update on the special liquidation and the sale of their loans. Borrowers were invited to make representations on the method of the disposal of their loans and the criteria for determining who may bid for these assets. The special liquidators took into consideration the responses received from the borrowers and also the independent sales advice they received. They then decided to split the residential mortgage book into four segments, namely, performing, non-performing, owner-occupier and buy-to let-mortgages, to bring them to the market. The special liquidators believe this sales approach would be the most efficient method of disposal. It is their belief that this approach is in the best interest of IBRC creditors, including the State and by extension the taxpayer.

The special liquidators are obliged to ensure that the assets of the IBRC are sold at a price that is equal to or in excess of the independent valuation obtained from the independent valuers. If no bid is received which is either at or above the valuation price, the loan asset will then be transferred to NAMA at the independent valuation price.

On the sale of the residential mortgage book, it is important to remember that phase 2 of that process has only commenced in the last week. I am advised by the special liquidators that the portfolio has attracted a range of credible bidders. However, it is far too early to speculate as to who may ultimately acquire the portfolio.

The regulatory status of the ultimate acquirer of the residential mortgage book will determine whether the Central Bank code of conduct on mortgage arrears, CCMA, will formally apply to that institution. The CCMA is issued under section 117 of the Central Bank Act 1989 and only applies to PDH mortgages by lenders who are regulated by the Central Bank. Unfortunately, given the legal status of the code, it is not possible to apply the code to institutions other than those institutions regulated by the Central Bank.

While I appreciate the concern of IBRC customers over the continued applicability of the code, a number of factors should be considered in the context of the sale of this book. First, I have been advised that in the event that NAMA ultimately acquires this IBRC residential mortgage book, it will determine its strategy for the management of that book being mindful of its legal obligations and also general market norms. As such NAMA is likely to apply best practice and no borrower will be in any worse position legally.

Second, recent court judgments suggest that compliance with the code is becoming a necessary condition for lenders seeking court orders for the repossession of primary residences. This is an important consideration as it is unlikely that an unregulated acquirer of the IBRC residential mortgage book would not seek to apply the code where it might have a detrimental impact on its ability to seek a repossession order.

I understand and appreciate that the sales process of the IBRC loans is an anxious time for mortgage holders with the bank. I reassure customers that the contractual terms and conditions of customer mortgages and other borrowings have not changed as a result of the appointment of the special liquidators. Furthermore they will not change as a result of the ultimate sale of these obligations to a third party.

The liquidation of the IBRC is progressing in a timely and orderly manner, and I am satisfied with the progress that has been made to date. The wind-down of the IBRC has been an arduous task and there have been many challenges in its execution. However, I reassure the House that the mortgage-holder customers of the IBRC are being treated fairly in this liquidation.

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