Last week, Fianna Fáil published the Protection of Residential Mortgage Account Holders Bill 2014(“the Bill”). The Bill relates to the forthcoming sale of 13,000 IBRC mortgages (formerly INBS). The objective of the proposed legislation is to protect INBS mortgage holders whose loans are sold to unregulated third parties. The publication of the draft Bill follows concerns raised that homeowners will not be able to avail of the protections provided by the various codes of conduct issued by the Central Bank of Ireland.
Currently, the Code of Conduct on Mortgage Arrears (“CCMA”) applies to the mortgage lending activities of all regulated entities (except credit unions) operating in the State. This includes financial services providers who are authorised, registered or licensed in another EU or EEA Member State and have provided, or provide mortgage lending activities within the State. It also includes agents acting on behalf of a regulated financial service provider (i.e. where a mortgage related activity is outsourced) but does not apply to unregulated entities.
In its current format, the Bill requires the insertion of a precondition to the sale or transfer of residential mortgage loans that any purchaser shall agree to be bound by the relevant codes.
In the event that the Bill passes, further questions arise as to how it will be possible to enforce or supervise the application of the Codes by the purchaser. However, it is clear that there is pressure on the Government and the possibility of supervision being introduced for unregulated entities purchasing loan portfolios which contain loans that are currently subject to the CCMA is becoming more likely.
To view the Bill, please click here