Protection of Residential Mortgage Account Holders Bill 2014

Normally I expect a better outing from Fianna Fail – in particular where Michael McGrath is concerned. Their new bill for protecting mortgage account holders (aimed mainly at IBRC former Nationwide loan holders) is a banger.

It gets down to details in section 3 onwards. In section 4 it calls any buyer to ‘be bound by such Codes of Practice that govern residential mortgages that are in force at the time of the sale and/or transfer or are subsequently introduced by the Central Bank’. This is misinformation.

You can’t ‘opt in’ to regulation, something we already covered here, you are either regulated or not and mimicking best practice doesn’t mean anything as there is no binding force behind it.

In section 4.2 it states that ‘It shall be a precondition to the sale or transfer of residential mortgage loans by persons or entities who acquire, either by purchase or transfer, residential mortgage loans from financial institutions regulated by the Central Bank to other persons or entities that are not subject to the supervision of the Central Bank that such persons or entities shall agree to be bound by such Codes of Practice that govern residential mortgages that are in force at the time of the sale and/or transfer or are subsequently introduced by the Central Bank’.

This is the same point repeated. It also misses the point that any buying firm who isn’t regulated by the Central Bank can’t just ‘not be bound’ by the rules, any buyer who is regulated in the EU or EEA will be bound by the codes of business and any outsourced business servicing the loans here will also be bound – which is equivalent to being regulated.

The right of recourse to the FSO which is mentioned in section 5 but again misses the point because it requires submission to the jurisdiction of the FSO which is not the same as coming under it’s auspices. For a quick dirty fix this bill is ok, but it would be better if the sale came with a precondition of guaranteed lending by the buyer.

There is nothing to say that you can’t make a condition of sale that the buyer must have some lending capacity, even €10.

Why? Because once you lend any money you have to be regulated, and rather than having this as a ‘sale only’ you also get some new lending so in order to buy you force the buyer into getting regulated which then gets all of the benefits of protection that are being sought.

It is that simple. 

 

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