Speaking at the Joint Committee on Finance, Public Expenditure and Reform, IBRC special liquidators Kieran Wallace and Eamonn Richardson admitted under questioning that the voluntary agreement to buy the IBRC loan book that includes the Irish Nationwide Building Society (INBS) mortgages and IBRC mortgages was unenforceable.
Fianna Fáil Finance spokesperson, Michael McGrath, struggled to find a comparison for just how worthless the agreement that the special liquidators had announced hours beforehand was.
“I was going to say that this agreement isn’t worth the paper it is written on, but it’s not even written,” he said.
Mr Wallace admitted that the agreement had no legal standing but he said that in his professional opinion the bidders would honour the agreement.
When pushed by Independent TD Stephen Donnelly, Mr Wallace said that the only proof of any agreement was “email traffic.”
Mr Wallace argued that it had taken the liquidators two weeks of negotiation to get to the point of them accepting a voluntary commitment to abide by the code of conduct on mortgage arrears. However, any attempt to make the commitment binding would have a negative impact on the value of the loan book.
Mr Donnelly said that any firm that will pay less if there is a binding agreement is not serious about the voluntary agreement.
“You stated earlier on that it was your professional view that if it was a binding agreement it would affect the sales price. Can I put it to you that if a bidder would lower their sales price if it was a binding agreement they are de facto not serious about the voluntary agreement?”
Mr Wallace said that they had received independent advice that forcing firms to obey the mortgage arrears code could leave the liquidators open to failing to maximise value on the liquidation and “from that perspective it opens up a potential issue for myself and Mr Richardson as liquidators”.
The Department of Finance’s second secretary Ann Nolan said the Government was considering introducing legislation to cover the sale of all mortgage books to unregulated entities.
She added the likely time frame would be 2015.
Sinn Féin finance spokesperson Pearse Doherty called on the Department of Finance to call off the sale until the legislation is brought in.
Ms Nolan said the minister cannot intervene on behalf of mortgage holders under the IBRC Act.