Irish Mortgage Brokers, complaint free in 2014! We’re happy about it.

Last year marked our 10th anniversary and also the 10th year for which we had no customer complaint which required any adjudication by the Financial Services Ombudsman (or any other office prior to their existence).

This makes us very happy, and is a sign of our continued commitment to our clients who are the people who keep us in business.

It doesn’t mean people never get upset, mortgages and in particular the closing part of the process can be plagued with difficulties but we do our best to manage this process and help our customers avoid the brunt of it.

And we also do get ‘complaints’ as any firm does, but none have ever gone to the FSO and required their adjudication which means we either put things right on our own or the complaint was invalid/frivolous.

We think 2015 will mark our 11th year of being complaint free (not an invitation to the trolls to mess up our record!), and look forward to another year of being open for business and both ready and willing to help.

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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 …

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NAMA can’t ‘opt in’ to regulation

Something that has been circulating of late is that if NAMA buy the Irish Nationwide (subsumed into IBRC) loan book that they will follow best practise and no borrower will be ‘less well off’ due to it in terms of regulatory protection.

This is not true because an important aspect of regulatory protection is that of recourse to the office of the Financial Services Ombudsman (FSO). This recourse is covered in section 51 of the Code of Conduct on Mortgage Arrears and also in the Consumer Protection Code of 2012 10.9(d).

Simply stating that you will follow or mimic the existing codes and regulation isn’t the same as actually being covered by them, it doesn’t grant jurisdiction. The FSO cannot structurally cover a complaint made against an unregulated entity. It really isn’t far different than going to them with a complaint about a restaurant you ate at, if they don’t cover the institution they can’t deal with the complaint.

The oft overlooked point is that the granting of regulation …

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How does a mortgage holder get a writedown when banks sell their loan?

Tonight on RTE’s Primetime they are going to cover the dilemma some IBRC mortgage holders (residential mortgage holders from both Irish Nationwide and Anglo) face when their loans are sold.

If the loans have a discount limit set on them as the commercial loans do then there will be little or no appetite for them because as it stands estimates are that 50% of the former INBS loan book are impaired in some way.

The  sale will probably proceed but it’s a question of who the buyer may be. The IBRC loan assets are being independently valued and then offered for sale through a competitive auction process.

Loan assets may only be sold for bids that exceed these independent valuations. All but a very small number of loans are being offered for sale as part of larger portfolios of loans.  

Successful bids must exceed the independent valuation, this is in effect a restriction on any discount. We have found no difference in the sale process as between IBRC mortgage loan assets and other IBRC loan assets.

The values that …

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The issue with the case against ‘Reckless lending’

In operations I have two main roles, firstly is the obvious operational aspect of any company which has to do with logistics of loan suppliers and our distribution to clients as well as looking at the general business planning to ensure we are always at the best of our abilities. The other role is regulatory, I act as a compliance officer, while that is not a legal position, it is one in which the practical aspects of law surrounding financial services are to be found, how it works in real life.

On that basis I was surprised to see that there were several articles talking about the use of tort law to prove negligence in lending, and with that, a particular reference to the Consumer Protection Code (CPC) which has since been updated. While I admire the initiative being taken by New Beginning I have some doubts which I will express here.

One issue we have had with regulation is that it actually …

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The tax of Regulation

It is worth noting that the constant calls for ‘Regulation’ are partly flawed, on one hand we do need more regulation, such as regulation of our Government agencies who can’t control their spending, regulation and accountability of our regulator, and of course (most importantly), some regulation of central banks who’s ability to keep rates too low and aid in the creation of money is closely linked with every major boom/bust in the last 100 years.

However, further regulation on financial services companies, and in particular small financial companies is not going to achieve the very aim it sets out to do, namely that of protecting consumers. It would be far better to have an ombudsman and regulator with teeth than to look for more laws that can be broken without retribution [in this respect banks have broken strict rules with almost total impunity].

Financial services are also a zero VAT business, this means that while we pay 21.5% VAT for everything we receive, we cannot charge VAT to our clients, thus, all of our …

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FSA warns banks, but will the Irish Regulator follow suit?

The FSA (Financial Services Authority) has warned specialist lenders that it has extreme reservations over how they are handling some arrears cases which may ultimately end in repossession. They felt that many lenders were overly ready to take court action against borrowers irrespective of their individual circumstances and that they focused purely on regaining the arrears.

From a lenders perspective this is a concern, if the FSA starts to come out in support of people who don’t repay their loans it can spell disaster for the financial institutions who lent out the money in good faith, if there is a prevailing belief that ‘you dont’ have to repay because the government is behind you’ it will send out the wrong message and creating an ‘unwillingness’ to repay debts and that won’t stop with banks, it can permeate into many aspects of the economy, right down to companies not paying eachother. Thankfully, the FSA stopped short of saying that they would get behind people in arrears and instead tried to keep …

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