This is the text of my speech supporting Fianna Fáil’s Bill Protection of Residential Mortgage Account Holders Bill from the debate in Dáil Éireann last night (Wednesday March 5th). This is an important issue for very many hard pressed and vulnerable families. They need action now – not later.
Deputy Brendan Smith: This Bill is an example of a party in opposition contributing positively to political debate by putting forward positive, sensible and viable proposals. Most importantly, it proposes to deal urgently with a major potential problem and avoid putting many hard-pressed families and individuals across the country in a more vulnerable position in dealing with mortgage forbearance and resolution issues.
They also face possible increases on the interest rates they pay when their loans are sold. As a responsible society, we need to act speedily and decisively in advance of the sale of the former Irish Nationwide mortgage book. As the law currently stands, customer mortgages can be sold to a third party which is not regulated by the Central Bank. This is far from a niche problem. In the case of IBRC, 10,633 residential mortgage holders could find themselves in this situation.
Some 4,175 of these accounts are in arrears and 38% have been restructured. The problem extends beyond the IBRC, however. Residential mortgage holders with Danske Bank, ACC and Bank of Scotland face a similarly uncertain fate because these institutions are in the process of closing their personal banking businesses in Ireland. We regularly receive representations from people with mortgages for these institutions. These mortgages could be sold to unregulated third parties who are not subject to Central Bank supervision. Even AIB and Bank of Ireland could decide to sell a portion of their home loan books.
David Hall and his colleagues in the Irish Mortgage Holders’ Organisation have been helpful to individuals and families throughout the country but the Government is maintaining a hands-off approach on the issue.
Hoping is not good enough. We cannot wait until the sale has been completed. Asking a purchaser of the loans to voluntarily comply with existing protections is not sufficient. The special liquidators have indicated that an agreement with phase two bidders would result in the purchasers servicing the mortgages in accordance with the Central Bank’s code of conduct on mortgage arrears.
Resolving this issue is a responsibility for the Government but unfortunately it has decided to leave it in the hands of the liquidators. Deputy Calleary referred to the recent exchange with the liquidators at the Joint Committee on Finance, Public Expenditure and Reform.
When my party colleague, Deputy Michael McGrath, asked one of the liquidators the status these voluntary agreements would have, he replied that it would be a voluntary agreement that would not be on any particular piece of paper.
When it was suggested that the agreement would have no legal standing, the liquidator agreed. This is why Deputy Michael McGrath produced this Private Members’ Bill and we urge the Minister for Finance to use it as a spur to action.
A number of speakers on the Government benches have described the Bill as flawed. Yesterday the Taoiseach went so far as to call it grossly flawed.
How can it be grossly flawed for the Oireachtas to act speedily to protect those who hold mortgages that are being sold by IBRC?
It is in the remit of the Oireachtas to amend the legislation if needs be so it fulfills its purpose.
I contend that it is grossly flawed for the Government to wait until 2015 to deal with the sale of unregulated mortgages to unregulated entities. It is grossly flawed for the Government to fail to legislate in advance of the deadline.
If Government Deputies sincerely believe there are flaws in the Bill, let us address them on Committee Stage at the earliest opportunity. We could show that our politics and parliamentary process can be operated to the benefit of our citizens.
Thirteen thousand families are very concerned about the imminent sale of this loan book and they want to hear from this House that their difficulties will be dealt with speedily and properly.