Dáil debates

Thursday, 20 February 2014

Other Questions

IBRC Mortgage Loan Book

10:20 am

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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8. To ask the Minister for Finance the measures he will take to ensure that loans held by customers of the former Irish Nationwide will be subject to the same contractual terms and conditions of customer mortgages and other borrowings upon the sale of the Irish Nationwide loan book to a third party or the loans reverting to the National Asset Management Agency as would have been in place prior to the loans having been sold. [8241/14]

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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There was a lengthy discussion on this matter, but when I asked the Minister on 28 February 2013 about whether individual mortgage holders would be allowed to bid for their own mortgages, he told me that the contractual terms and conditions of customer mortgages and other borrowings would not change as a result of the appointment of the special liquidator.

As the Minister knows, there is considerable distress among mortgage holders, one of whom contacted me last night via e-mail.

The e-mail reads:

I am very worried and concerned of who might purchased the loan book and as to the possibilities of losing protection from the Central Bank as offered to all mortgage holders in IRELAND. I am concerned that whoever might purchase them will have carte Blanche to increase interest rates on us already struggling to meet our monthly repayments and stay in our homes. I also find it quite disingenuous that the Minister for Finance and IBRC can offer huge Financial discounts to multimillionaires to purchase the commercial loan book but the tax paying working class must just shut up and carry on with there contractual agreement with the IBRC until it's sold to some vulture fund.
Perhaps the Minister would repeat what he said.

10:30 am

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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It is important to highlight that the contractual terms and conditions of all customer mortgages and other borrowings have not changed as a result of the appointment of the special liquidators; nor will those terms and conditions change as a result of the ultimate sale of these obligations to a third party. Purchasers of mortgage loans will be required to honour the legal terms of the loan agreements. None the less, I am fully aware of the concerns raised by the IBRC mortgage holders regarding continued protection under the CCMA for those mortgage holders following the sale of the loan book by the special liquidators.

The special liquidators have, following due consideration, decided that the sale of the residential mortgage book in portfolios was the best method available to maximise market interest and return within the timelines set out in the ministerial instructions.  It was not possible for me to interfere in the sales process developed by the special liquidators to compel them to sell the residential mortgage portfolio to regulated entities as to do so would have had a negative impact on the return achievable by the special liquidators. Such action would have left me open to challenge by other creditors of the bank.

I am keenly aware that the potential loss of protection under the CCMA is a source of great concern to the mortgage holders of the bank.  The continued applicability of CCMA depends on the regulatory status of the ultimate acquirer of the IBRC portfolio, which will not be known with certainty until that process is completed next month. However, I have instructed my officials to examine the issue fully, in consultation with the Central Bank, with a view to bringing forward a solution if required. While work is ongoing in that respect, I am pleased to note that some unregulated firms have already indicated that they intend to voluntarily adopt the CCMA in order to manage acquired loans, as they believe that following the CCMA is in the ultimate best interests of both the businesses and their customers.  I fully expect that this would also be the case in the event that the IBRC portfolio was acquired by such organisations.

It is important to note that in the event that NAMA acquires the IBRC residential mortgage book it will be mindful of its legal obligations and is likely to apply best practice in relation to the CCMA. Furthermore, it has confirmed that no borrower will be in any worse a position.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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We have witnessed a number of serious scandals in this country over recent decades. I recall having a conversation with the Minister when we were in opposition about the endowment mortgage scandal and the fact that nothing was at that time being done about it. Why will the Minister not move quickly on this issue? He was prepared to move in the middle of the night a year ago on an important matter. Why not pass the sale of loan books to unregulated third parties Bill, which is on the C list, this evening rather than waiting until 2015 to do so, which will be too late? This Government may not even be in office then. Or he could simply accept the spirit of Deputy Michael McGrath's Bill and put it on the Statute Book as quickly as possible.

I commend Deputies Mathews and Donnelly on their suggestions with regard to the publication of the advice from PricewaterhouseCoopers. The last comment made by the Minister may offer a tiny glimmer of hope to mortgage holders. However, people believe the Minister is simply standing idly by and allowing them to be thrown to the vultures. That is the net impact of what is being done to Irish Nationwide mortgage holders. Will the Minister reconsider this matter and have the relevant legislation put on the Statute Book? I am aware that voluntary compliance was a feature of the Apollo deal and others. However, one cannot trust vultures to behave in any kind of voluntary or community-oriented manner. This is a matter for Deputy Noonan as Minister.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Hyping up the situation and using extreme emotional language is not helping the mortgage holders.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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That is how they feel.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Yes, because they are being well hyped up by people-----

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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No; they are contacting us.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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------whose interests are not their interests.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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We are acting for them.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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It is unfair to the mortgage holders to be raising unreal fears.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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I am talking about young homeowners.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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The Minister has the floor.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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It is unfair to the mortgage holders to be raising unreal fears. We should not do it. People have different objectives. I am prepared to back the mortgage holders and work towards a solution. I said it was complicated and that my officials are in talks with the Central Bank and the Attorney General's office on the best possible solution. The liquidator must get the best return possible for the creditors of IBRC. That is the legal position. If I were to intervene in the middle of the sale and attach additional conditions to the loan books, that would potentially diminish the value of the loan books. It would also leave us open to being sued in the courts. We should first wait to see who purchases the loan books. If NAMA purchases them - and it is more likely to purchase performing mortgages rather than non-performing ones - there will be no problem with that set of mortgages. If an unregulated institution purchases them we will review the situation, including through the liquidator, reinforced by me, asking that that party do what other private sector mortgage purchasers have done in the past and apply the full code voluntarily. We will be looking for that commitment. If that does not happen, other work, such as Deputy McGrath's proposed solution, will come into play.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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I want to convey to the Minister, as other Members tried to do earlier, the distress people are feeling due to the uncertainty surrounding their family homes. The Minister has a core responsibility in this area. It is all right for him to say that if NAMA purchases the loan books it will voluntarily comply with the CCMA, but what people want at this stage is some decisive action. I again urge the Minister to look at what legislative measures can be introduced to ease people's concerns. I accept that everybody affected by the gangsterism of the Celtic tiger era of the past ten or 15 years is struggling with huge inflated mortgages, negative equity and so on. However, the Minister has a moral obligation to address the situation of this particular group about whom we are speaking now in a manner that is in their interests. I am speaking in this regard about young couples and families.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I accept what the Deputy says. We are working on solutions and monitoring the situation every step of the way. There is a process of sale going on which will be completed in the middle of March. We must wait to see who purchases the loan books, following which, if necessary, we can act. We are not standing idly by. We are working in parallel but for legal reasons I am not going to intervene. If I have to intervene I will do so after and not before the sale.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Deputy Derek Keating is unable to attend to deal with Question No. 9.

Question No. 9 replied to with Written Answers.