Govt Urged To Look Again At Mortgage Legislation

New legislation introduced to protect mortgage holders has been described as a "cop out" by Fianna Fáil Spokesperson on Finance, Michael McGrath.

Deputy McGrath said that the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 would leave the key decisions relating to mortgages in distress "in the hands of unregulated vulture funds."

Mr McGrath added that pressure from financial institutions had caused the Minister for Finance to "back away" from the initial intention behind the legislation.

"This leaves us with a half-baked system whereby the servicing agent for the mortgage will need to be regulated but the same requirement will not be placed on the actual owner of the mortgage," Mr McGrath said.

"The Minister is setting up a two-tier system and an opportunity to provide for the effective regulation of the sale of mortgages has been lost.

"Vulture funds who outsource the administration of loans will essentially still control key decisions such as initiating action for repossession or raising the interest rate that applies to the loan without actually be subject to regulation. This leaves a potentially dangerous gap in the legislation.

"There is also very legitimate concern that loans may be sold more than once with each subsequent transaction resulting in a deterioration of the conditions of the borrower in respect of the interest rate, penalty charges and the status of any restructuring arrangement."

The finance spokesperson called on the government to amend the legislation to "ensure that any borrower who has entered into a restructuring arrangement and who is sticking to it, cannot have that payment structure cancelled by the acquirer of a loan or an agent operating on their behalf", and to look again at the adequacy of the Code of Conduct on Mortgage Arrears.

(MH/JP)