Michael McGrath (Cork South Central, Fianna Fail)
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I move:

That leave be granted to introduce a Bill entitled an Act to provide for measures to ensure a primary residence of a borrower is not repossessed by court order in circumstances where the lender in question has not complied with a relevant code of practice.

I seek leave to introduce this Bill. In May of this year, the Supreme Court held that lenders were not required to comply with the Code of Conduct on Mortgage Arrears, CCMA, prior to seeking a court order for the repossession of a person's home. It found that the only circumstance where the courts could use the code as a reason not to grant a repossession order was where a lender sought repossession while ignoring the moratorium periods set out in the code, otherwise non-compliance with the code does not interfere with a lender's entitlement to seek repossession of a home.

The Supreme Court also found that the code is not deemed by current legislation to be an implied term in the agreement between a homeowner and his or her lender. The fact that lenders no longer have to comply fully with the CCMA could lead to a significant increase in the number of home repossession cases before the courts unless emergency legislation is introduced to close this loophole. In August, I called on the Government to introduce the necessary emergency legislation to close the loophole and made it clear that Fianna Fáil would publish its own legislation if the Government failed to do so. Remarkably, the Government has failed to include the necessary legislation in the legislative programme and, therefore, I have brought forward this Bill.

This draft legislation would require lenders to show that they had materially complied with the CCMA and its mortgage arrears resolution process, MARP, before they became entitled to seek a court order for the repossession of somebody's home. The Bill envisages that the courts would dismiss a repossession application where it concluded that a lender had not complied with the relevant code or resolution process. This legislation would also apply to so-called vulture funds that buy mortgage books from lenders. They would be required to comply with the code and resolution process, even if these did not otherwise apply to such funds for other reasons. The CCMA is important because it requires lenders to explore alternative repayment arrangements such as reducing the mortgage interest rate, split mortgage or extending the term of the mortgage. A lender may only commence legal proceedings for repossession of a borrower's primary residence where it has made every reasonable effort to agree an alternative arrangement with the borrower but, as it stands, because of the loophole this legislation seeks to close, there is no effective remedy for homeowners when a lender ignores that requirement and commences legal proceedings for repossession without making an effort to agree an alternative arrangement.

The loophole exposed by the Supreme Court also permits repossessions where lenders have illegally imposed charges or surcharge interest on arrears where borrowers have been co-operating with the lender as best they can. It also devalues the requirement under the code whereby lenders must ensure their communications with borrowers are not aggressive, intimidating or harassing. There have been shocking revelations that some people were forced out of their homes by lenders failing to return them to their original tracker mortgage interest rate after they had temporarily fixed their interest rate. I raised this as a Topical Issue last Wednesday and, in that context, it is particularly significant that the CCMA prevents lenders from forcing a borrower to move from an existing tracker rate to another type of mortgage as part of an alternative repayment arrangement. It seems that the loophole that was discovered in the Dunne case last May could permit a lender to repossess a family home where the borrower has been illegally forced into further mortgage arrears by being forced off their tracker rate, which is unacceptable.

The judgment revealed a massive loophole, which merited emergency legislation immediately to repair it. I have been taken aback that the Government has shown no sign of being willing to require banks to comply with what is supposed to be a mandatory code of conduct before they seek to repossess a family home. I therefore introduce the Bill on behalf of Fianna Fáil to remedy this loophole and the huge injustice that would occur in a case where a bank has acted illegally but is nevertheless entitled to repossess a family home because of a technical flaw in the legislation.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Is the Bill opposed?

Alex White (Dublin South, Labour)
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No.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Since this is a Private Members' Bill, Second Stage must, under Standing Orders, be taken in Private Members' time.

Michael McGrath (Cork South Central, Fianna Fail)
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I move: "That the Bill be taken in Private Members' time."