Fianna Fáil Finance spokesperson Michael McGrath has described as inexplicable the delay by the Government in bringing forward legislation to protect mortgages holders whose loans are sold to unregulated third parties.
He was speaking following the announcement by Bank of Ireland that its ICS division is selling €250m worth of mortgage loans to Dilosk, a financial services company not currently regulated by Central Bank of Ireland. The announcement comes in the same week as the decision by PermanentTSB to sell its Springboard sub-prime mortgage division. Earlier this year over €1bn of IBRC mortgages were sold to un-regulated entities and previously GE Money and Bank of Scotland sold their Irish home loans to international investors.
Deputy McGrath commented: “Mortgage holders whose loans are with a financial institution regulated by the Central Bank of Ireland currently enjoy the projection of the Code of Conduct on Mortgage Arrears and have recourse to the Office of the Financial Services Ombudsman if a dispute arises with their lender. In the event that their loans are sold to an unregulated their party they lose these rights and potentially are exposed to higher variable rates, more interest surcharges and a heightened risk of action for repossession. In simple terms people who find their mortgages sold in such circumstances are at the mercy of unregulated third parties.
“The Government have promised legislation in 2015 to deal with the sale of mortgages to unregulated entities. That is too late. We need action now. I raised the issue with the Taoiseach again in the Dáil this week but not been given any indication of when the legislation will be forthcoming. Fianna Fáil published a bill in February of this year which was debated in the Dáil. While they said they recognised the urgency of the issue, the Government have sat of their hands since then. The Minister for Finance appears to be intent on relying on pledges of voluntary compliance. This is causing unnecessary distress to many mortgage holders who are struggling to meet repayment.
“There is some good news attaching to today’s announcement. Dilosk have indicated that they intend to operate as a mortgage lender and its acquisition of the ICS distribution platform will assist it in this regard once it has achieved regulatory approval. Given the very weak nature of the mortgage market at the moment this is certainly to be welcomed. However Dilosk’s stated intention to become a regulated entity does not negate the need for legislation to deal with this issue on an industry wide basis,” added Deputy McGrath.