Declan Breathnach (Louth, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

88. To ask the Minister for Finance if he will liaise with the Central Bank to ensure that appropriate legislation is brought forward in order to compel banks and mortgage providers to offer distressed mortgages to local authorities at the same floor values at which they are being purchased by vulture funds; if the legislation will include a clause to require that local authorities would then enter into a Rebuilding Ireland home loan proposal or a mortgage to rent scheme proposal with the mortgage holder to allow them remain in their home; and if he will make a statement on the matter. [30684/18]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware, I do not have a role in the decision making process of banks which must be run on a commercial basis. This is the responsibility of the Board and management of the banks.

In relation to the issue of the sale of distressed mortgages, the Single Supervisory Mechanism (SSM) has tasked the management and board of each institution with developing and implementing a strategy to address the challenge posed by the elevated level of non-performing loans across the Irish banking system. Despite progress made over the last few years, the level of such loans in Ireland remains well above the European average. The sale of distressed loans is one of the ways in which banks are able to address this issue.

The role of running these sales processes, including the selection of the successful bidder, is entirely the role and responsibility of the board and management of whatever Bank in question. Any interference by me would be highly inappropriate.

In terms of providing protections to consumers whose loans are part of loan sales, the Code of Conduct on Mortgage Arrears (CCMA) forms part of the Central Bank’s Consumer Protection Framework. It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013. The CCMA provides a strong consumer protection framework, aimed specifically at the process to be followed by relevant firms, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner.

As the Deputy will be aware, most loan agreements include a clause that allows the original lender to sell the loan on to another firm. The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”) was introduced to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm. Under the 2015 Act, if the firm who bought loans from the original lender is an unregulated firm, then the loans must be serviced by a ‘credit servicing firm’ which is regulated by the Central Bank. Credit Servicing Firms are typically firms that manage or administer credit agreements such as mortgages or other loans on behalf of unregulated entities.

Credit servicing firms must act in accordance with the requirements of Irish financial services law that applies to ‘regulated financial service providers’. This ensures that consumers, whose loans are sold to another firm, maintain the same regulatory protections that they had prior to the sale, including under the various statutory Codes of Conduct issued by the Central Bank such as the Consumer Protection Code 2012, Code of Conduct on Mortgage Arrears 2013, and the SME Regulations. Contractual terms are not changed by the sale of the loan.

Over the last number of months, there has been a lot of concern regarding loan sales. Arising from this, Deputy Michael McGrath published a Bill, the Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2018, on the regulation of loan owners. Committee Stage is scheduled for this Thursday, 12th July. The approach taken with this Bill will require that loan owners are authorised by the Central Bank.

In February this year, I wrote to the Governor of the Central Bank and requested that they carry out a review of the CCMA to ensure it remains as effective as possible and this is currently underway and to be completed as soon as practically possible.

Finally, issues relating to Rebuilding Ireland and Mortgage to Rent are a matter for my Government colleague Eoghan Murphy T.D. Minister for Housing, Planning & Local Government.