New mortgage book laws of little use to homeowners, group claims

Ross Maguire

The Government’s decision to introduce consumer protection legislation for unregulated firms “is merely window dressing” and will have very little impact on customers in mortgage arrears, according to Ross Maguire from financial advice group, New Beginning. 

The Government will introduce legislation to force unregulated firms that have bought mortgage books to comply with the Central Bank’s code on mortgage arrears.

The move is in response to a number of unregulated firms who have so far acquired up to 10,000 mortgages following the sale of loan-books through the liquidation of IBRC and foreign banks exiting the country.

The Department of Finance yesterday embarked on a five-week consultation period with various stakeholders. It aims to have legislation in place by the end of this year.

The proposed legislation will make the ownership of credit a newly-regulated financial activity.

The new legislation will not be applied retrospectively, however. Any firms that own loanbooks will be subject to existing consumer protection rules.

However, Mr Maguire said that all the new legislation will do is put customers of unregulated firms on the same legal footing as customers of regulated banks.

“These customers will be subject the mortgage arrears resolution process which is of very limited value.

“It is just a mechanism for banks to deal with customers and decide what is a sustainable solution. It really won’t do much to deal with the overall problem,” he said.

The liquidation of IBRC put €1.6bn of Irish Nationwide mortgages on the market.

Earlier this year, amid much controversy, over half of the mortgage book was sold to two US hedge funds, Lone Star and Oaktree Capital. Even though there has been a lot of negative publicity surrounding ‘vulture funds’ buying mortgage books, this is unwarranted, said Mr Maguire.

“These ‘vulture funds’ have bought mortgages at a discount and are much more willing to deal with customers than banks.”

Under the proposed legislation, customers of unregulated firms will have the same rights as customers of regulated firms, including access to the Financial Services Ombudsman.

The proposed legislation will include all types of loans held with unregulated firms.


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