Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I propose to take Questions Nos. 1 and 5 together.

I am fully aware of the concerns raised by residential mortgage holders of IBRC whose loans are currently being sold by the special liquidators. The issue around the continued applicability of the various protections afforded to mortgage customers is legally very complex and requires careful consideration. As indicated previously, my officials are currently examining the issue closely with their colleagues in the Central Bank and in the Office of the Attorney General.

It is important to note that the sales process for the residential mortgage book is ongoing. The valuation process for this portfolio was completed on 11 September 2013 and the sales process began on 14 October 2013. Following receipt of indicative bids, a reduced number of bidders were progressed to the second phase of the sales process, which was launched on 29 November 2013 and is expected to be completed next month. Like all of the IBRC loan sales, the residential mortgage book is being sold in an open and transparent process, and should bids not be received in excess of the valuation they have obtained, then the portfolio will be sold to NAMA.

The ultimate purchasers of these books, be it NAMA or any other unregulated entity, will be required to honour in full the legal terms of the loan agreements entered into between IBRC, or INBS, and its customers. It must be stressed that the contractual terms and conditions of all customer mortgages will not change as a result of the ultimate sale of these obligations to a third party.

While it is too early to speculate as to the identity of the ultimate purchaser of these loans, I have been advised that in the event that NAMA acquires the loans, it will be mindful of its legal obligations and is likely to apply best practice in respect of the code of conduct on mortgage arrears, or CCMA. Furthermore, it has confirmed that no borrower will be in any worse a position. 

Following two recent portfolio sales of residential mortgages to institutions not covered by CCMA in Ireland, in both cases the acquirers of those books have chosen to implement the CCMA voluntarily, as they believe it is in the best interests of both the institution and its customers. I have no reason to believe that this will not also be the case in respect of the sale of the IBRC residential mortgage book.

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