Pearse Doherty (Donegal South West, Sinn Fein)
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10. To ask the Minister for Finance if he will fast-track the sale of loan books to unregulated third parties Bill to safeguard the rights of those whose mortgages have been sold or will be sold to unregulated entities. [8345/14]

Pearse Doherty (Donegal South West, Sinn Fein)
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This question also deals with the issue of mortgages and the real concern people have in this regard. There has been some good news, which should be acknowledged at this point. In regard to the two tranches of loan books sold heretofore in 2012 and 2013, one of the institutions is obliged to comply with the CCMA and the other has voluntarily agreed to do so. I understand the party interested in acquiring the loan books in March is willing to voluntarily comply with the CCMA. I am concerned about the so-called voluntary requirement to comply with the CCMA. If a party can voluntarily enter into the CCMA, can it voluntarily withdraw from it, or is there a legally binding agreement between the Central Bank and the party that voluntarily enters into the CCMA? Perhaps the Minister would respond to that question first before I move on.

Michael Noonan (Limerick City, Fine Gael)
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The Bill to which the Deputy refers is listed in the legislative programme, published last month, under the category "Bills in respect of which heads have yet to be approved by Government".  The purpose of the Bill is to provide for the application of the protections provided to mortgage holders under the Central Bank's CCMA to loan books which have been sold by regulated financial institutions to unregulated financial institutions.  The matter is legally complex as it could affect contracts already entered into, and so needs careful consideration. For that reason, my officials are currently examining the issue with their colleagues in the Central Bank and the Attorney General's office. In the meantime, I understand that a number of the purchasers of mortgage loan books are abiding by the code on a voluntary basis.  As the Deputy is aware, the code confers certain protections on distressed borrowers when dealing with lenders and sets out a clear framework for dealing with cases in arrears.

I also understand that Deputy Michael McGrath has put forward a Private Members' Bill with a similar intent.  I look forward to discussing that Bill when it comes before the House.

Pearse Doherty (Donegal South West, Sinn Fein)
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I need an answer to my question. For example, the Apollo Group which bought 2,000 mortgages from Bank of Scotland last year has indicated it wants on a voluntary basis to enter into the code of conduct on mortgage arrears, CCMA, with the Central Bank and the Department of Finance. What does that mean? Is that a cast-iron guarantee for those 2,000 mortgage holders who reside in the State that they are now locked into it, as they would be if Bank of Scotland still held these mortgages, or can it voluntarily opt out of it? Is an agreement being put in place between the Central Bank and the unregulated institution? That was my original question. If the sale process does not proceed in March because the bid targets have not been met, the loan book will revert to NAMA. It is not likely that NAMA will hold on to these loans to their conclusion; it will be wound down before many of these loans are extinguished. In that case will the Government facilitate individuals in purchasing their loans at a lower discount than that offered to the markets or at least the same discount offered to the markets?

Michael Noonan (Limerick City, Fine Gael)
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The commitment given previously by the unregulated purchasers of mortgage books was a formal one, but I could not say whether it has the force of contract law without checking the legal position. However, I would not expect anybody to resile from it; if a formal commitment is given, it stands. The commitment is given publicly to the mortgage holders in the first place, but it is also given to the Central Bank and we expect it to stand. I will ask the officials dealing with the Central Bank and the Office of the Attorney General to have a look at that point.

Michael Kitt (Galway East, Fianna Fail)
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I thank the Minister.

Pearse Doherty (Donegal South West, Sinn Fein)
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The Minister had more time left and I asked a second question.

Michael Kitt (Galway East, Fianna Fail)
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I am not going to write the script for the Minister or the Deputy.

Pearse Doherty (Donegal South West, Sinn Fein)
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You cut off the Minister. The second question still stands. If the loans revert to NAMA, will the Government facilitate the people whose loans they are in purchasing them from NAMA at a reduction, similar to that offered to the markets in the process taking place in March or at a lower rate? I assume there will be an administration burden on NAMA. It is important for the Minister to have clarity on whether there is a legal contract because these loans may be sold on again. He has indicated that legislation will be introduced in 2015. The Taoiseach has said the reason for not introducing it this year is that 61 bids have been received. He has indicated that that was one of the bids and that it did not come out of the hat in time, which is somewhat strange. Given the level of interest in the issue which I presume is reflected across the Opposition benches, the Sinn Féin Party will facilitate the speedy passage of such legislation. If it means sitting additional days, let us do so in order to have a clear-cut system to ensure mortgage holders will be protected when these loans are sold on to unregulated institutions.

Michael Noonan (Limerick City, Fine Gael)
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It is important to think the matter through. NAMA is required to get the best return possible for the taxpayer on anything it sells. The only way for it to establish this is to have a competitive process. That is exactly what the liquidator is doing. It cannot sell a single mortgage unilaterally to the mortgage holder because it needs to establish value in the market. If it were to sell mortgages individually, rather than in loan books, it could result in a mortgage holder's neighbour who had a row over planning permission buying the mortgage. Alternatively, someone with whom the mortgage holder is in dispute or another family member, in circumstances where the family is not pulling together, could come in and buy the mortgage. Therefore, it is not a solution. If the rule requires a competitive bidding procedure to establish value, there is no guarantee that the person who has the mortgage will end up being owner in that situation. Of course, if NAMA acquires a large tranche of the mortgages which originated in Irish Nationwide Building Society, over time it will also sell them. However, we will have time to look at what conditions it might attach to them for the benefit of mortgage holders. We can have that discussion subsequently. We are now in phase 2 and the liquidator has advised that he will complete the sale sometime in March. We will see where we stand at that point and then address outstanding issues.

Michael McGrath (Cork South Central, Fianna Fail)
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I do not regard voluntary compliance with the code as a solution because it is simply unenforceable, which is the fundamental weakness. Who will police voluntary compliance if an issue arises? The answer is that nobody will. We will have two standards of a code, one that is statute-based, enforced and policed by the Central Bank and another that is entirely voluntary. That is not a solution. I know the Minister has a concern about being sued if he issues a direction order now when the sales process is under way. However, we could pass legislation - it does not even need to be Government legislation - to deal with the issue. The Government is far less likely to be sued if legislation that originates from the Opposition benches is passed by it. It would have to be implemented and enforced. I do not believe it could be sued in that scenario.

Michael Noonan (Limerick City, Fine Gael)
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The publication of the Deputy's Bill was quite helpful to us and me, personally. It sharpens the consciousness of anybody thinking of buying that there are concerns in the House and that there is a legislative route that this Parliament might follow. We can discuss it, but I see it as something we will deal with as the situation develops. It should develop very rapidly and conclude in March, if the liquidator sticks to the deadline he has suggested to me.