Fianna Fáil Spokesperson on Finance Michael McGrath TD has called for legislation governing the financial institutions to be tightened to require them to seek prior approval from the Central Bank before residential mortgages are sold.
Deputy McGrath said, “The decision today by Ulster Bank to sell a portfolio of 900 family home mortgages is very concerning. While Ulster Bank have been at pains to point out that the borrowers in these cases have not engaged with the bank, there must be a suspicion that this is a dry run for a more extensive sale of mortgages that have fallen in to arrears. Essentially this is akin to the outsourcing of repossession by one of the major banks in the State.
“We are in a very difficult period where tens of thousands of cases must be dealt with by the banks as part of the Mortgage Arrears Resolution Programme. This is affecting families across the country. Ulster Bank represents a large proportion of mortgage arrears cases in Ireland. It is crucial that these families are dealt with sympathetically and in line with the targets set down.
“I am concerned that the purchasers of these loans may not have the necessary expertise and valuable local knowledge to deal with these cases. The risk of repossession has been increased significantly as a result of the sales process entered in to by Ulster Bank. Before this move goes ahead, the Central Bank should satisfy itself that the arrangements are fit for purpose. There is already a provision in the framework governing the State’s investment in AIB and Permanent TSB that prior Ministerial approval is required before the sale of loans to the value of €100 million and €50 million respectively.
“The Dáil should be afforded the opportunity to legislate to protect customers from the sale of their loans to vulture funds. This was promised in the agreement between Fianna Fáil and Fine Gael. Until this is the case I am asking that the Central Bank request Ulster Bank put the decision on hold.
“In relation to the sale of business loans, and despite lots of anecdotal evidence of very negative consequences, there has been no overall appraisal of the impact on the underlying business of a loan being sold to vulture fund. This is an issue the Central Bank would also be well advised to examine urgently.”