We need your help now
Support from readers like you keeps The Journal open.
You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.
If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.
Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
By continuing, you are indicating that you accept our Terms of Service and Privacy Policy.
THE CENTRAL BANK plans to scrap the voluntary Code of Practice on the Transfer of Mortgages because it is “not relevant” to the current banking environment.
Sinn Féin’s No Consent, No Sale Bill aims to put the code on a statutory footing – it is currently just a voluntary code that banks can choose to apply.
Donegal TD Pearse Doherty’s Bill also aims to give mortgage holders the power to block the sale of their mortgage bank loans to vulture funds.
The Dáil voted by 80 votes to 45 to pass the Bill – the government opposed the proposed legislation.
Today, Central Bank officials will tell the Oireachtas Finance Committee that it has “significant concerns” regarding the terms of the Bill.
Voluntary code
In its opening statement, the Central Bank states that the code of conduct was issued as a voluntary code.
“Consequently, the Central Bank’s regulatory powers, including the use of its Administrative Sanctions powers, do not apply to the Code of Practice.
“The Central Bank is of the view that the voluntary Code of Practice is not relevant or
appropriate in the current regulatory and financial environment. The Central Bank therefore considers the Code of Practice to be redundant and intends to revoke it,” states the opening statement to the committee.
The code of conduct states that ”a loan secured by the mortgage of residential property may not be transferred without the written consent of the borrower”.
Ask for consent to sell on someone’s mortgage
It also sets out that the bank, when seeking consent from either an existing or a new borrower, must provide a statement containing sufficient information to “enable the borrower to make an informed decision”.
It states that a “clear explanation of the implications of a transfer (including the borrower’s future membership status where the lender is a building society) and how the transfer might affect the borrower” must be given to the homeowner.
It also outlines that the borrower must be approached on an individual basis and given reasonable time to give or to decline to give consent.
Banks who have sold on or transferred their customers to vulture funds, and other intermediaries who act on behalf of vulture funds, have been criticised by politicians, such as Doherty, as well as Fianna Fail’s John McGuinness, for not informing people prior to the sale that their mortgages are being sold or transferred.
The issue of consent was previously raised by Doherty during an Oireachtas Finance Committee meeting when he asked PTSB bosses if they would be adhering to the code of conduct.
Today PTSB confirmed to me they would apply Central Bank rules meaning a borrower must give permission before their mortgage is sold...they soon backtracked when I explained it to them.
— Pearse Doherty (@PearseDoherty) December 6, 2018
I will be tabling legislation to make this Code compulsory. #vultures #EnoughIsEnough pic.twitter.com/SZF6EFyfmr
Doherty said the Central Bank’s Code of Practice on the transfer of mortgages is being ignored and banks “have turned a blind eye” to it because it is voluntary.
Central Bank says there is no need for the code
However, today, the Central Bank will state that “all relevant participants in the market are now subject to regulation by the Central Bank, including compliance with relevant statutory codes in place”.
They add:
Most loan agreements include a clause that allows the original lender to sell the loan on to another firm. It follows that the Bill is in conflict with contractual rights or the lender or loan owner, while not strengthening the consumer protection regulatory framework.
… It is the Central Bank’s view that the introduction of this Bill will significantly constrain the ability of banks to engage in portfolio sales (whether of performing or non-performing loans) and, so, limit their ability to deal with outstanding vulnerabilities…
The Central Bank states that the Bill in its current form “would be costly, both by hindering the continued recovery of the banking system and, most importantly, by reducing the ability of the banking system to absorb adverse shocks in the future”.
“Ultimately, these costs will be faced by households and businesses in Ireland,” it adds.
The Central Bank will tell committee members that from a consumer protection regulatory perspective, the enactment of the Bill “will not offer new or existing borrowers any additional consumer protections and it could result in consumer detriment arising from an increase in interest rates and/or a decline in mortgage availability”.
Large loan book sales by banks
It also defended the actions of the banks, who have been widely criticised for not dealing with individuals, instead choosing to sell on large portfolios of their loan books to third parties.
“There are various methods through which banks can deal with non-performing loans (NPLs), the option to sell portfolios of loans – undertaken alongside strong consumer protection rules – is important”, adds the Central Bank.
It states that loan sales “have been part of the toolkit used by the banking system to deal with non-performing loans”.
Giving an insight into the level of customer’s mortgages the banks have offloaded to third parties, such as vulture funds since 2013, the Central Bank said the stock of NPLs held by the retail banks (across all loan portfolios) has declined by €67 billion.
Selling of family homes and buy-to-lets
Around 12% of that reduction was achieved through residential loan portfolio sales, including Buy-to- Let and Primary Dwelling Home (family home) loans.
The Central Bank will also confirm that further loan book sales are on the cards, though it did not state how many homeowners would be impacted.
“Looking forward, while NPLs have declined in the Irish banking system, the level is still above the average across European banks. As part of the Single Supervisory Mechanism, the Central Bank requires Irish banks to reduce NPLs in a sustainable way. In this context, Irish retail banks have submitted updated NPL reduction strategies, which include both planned workouts and potential sales.”
‘Grave concerns’
Department of Finance officials are set to agree with the sentiments of the Central Bank stating that it has “grave concerns” about the Bill.
Last week, a UN special rapporteur on housing sent a letter to the Irish government noting that they have facilitated housing financing through “preferential tax laws and weak tenant protections among other measures”, adding that it “cannot continue”.
The UN report said it wished to remind States of their human rights obligations to regulate investment in residential real estate so that it supports the right to adequate housing and in no way undermines it.
They are also critical of the lack of regulations of vulture funds operating in the housing sector.
“What makes this practice particularly egregious is that it is being done without any monitoring, or accountability mechanisms in place. Governments seem not to have made the connection that this new form of finance is taking place in an area that is governed by international human rights law, which imposes obligations on them. We remind all States, that while gold is a commodity, housing is not, it’s a human right,” states the report.
To embed this post, copy the code below on your site
Seems relevant to me. It’s not followed because it’s not mandatory. Why not have proper rules that protect those shown to be making genuine efforts to honour their debts and sell on the loans of those who just don’t feel like paying.
Light touch regulation doesn’t work with Irish banks so we need proper hard rules and harsh penalties if not adhered to, preferably directly impacting the Chairman’s bonus structure.
@Pat Maher: banks are back in profit. Paying back nothing to the debt lumped on to the Irish people who bailed them out . They have become arrogant once again.
@Dave Barrett: The arrogance never stopped
@Dave Barrett: absolutely true & while I myself dislike SF I must give credit to SF for at least making a positive move. to me the banks need the treat of collapse from the Irish people who bailed them out by moving our business elsewhere. Yes that’s very difficult but there are alternatives. The water charges were successfully resisted so the banks should be the next target. These banks are doing nothing they are not supposed to be doing unless we as a society demand differently.
Time the banks paid back there own debts screaming about profits .. while the people of this country are laden with there €64 + billion debts .. time they paid there own gambling debt
@james r: 180 billion mate
Bankers do what they want,central bank protects them and not customers, it’s time strict legislation was imposed on banks.
And we think we can laugh at England. Joke of a society
Odd’s on we heading into another slump and the bank’s want to get the rules sorted before it happen’s as there is noting in the pot for them to grab ,they took it all the last time
@FlopFlipU: They will hit peoples savings the next time round as they are running out of places to go for loans and bailout funds.
Laws should be made to protect the people not banks.
” Governments seem not to have made the connection that this new form of finance is taking place in an area that is governed by international human rights law, which imposes obligations on them. We remind all States, that while gold is a commodity, housing is not, it’s a human right,” states the report. “. Seems the government and the banks need perpetual reminding,of course the Dept of Finance officials ‘have grave concerns’ ,this Bill must frighten the **** ( daylights) out of them.
Am I missing something here
‘Mortgage holders can block the sale of their mortgage to vulture funds’
But that would be a mortgage that the people aren’t repaying?
I’d support that, if it only applies to people who at least make an effort to pay.
@Vin: Performing and non performing loans,the banks want it all ways.
@Vin: vast majority make an attempt to negotiate with the banks. It was the criminal actions of the banks and developers facilitated by politicians that caused this mess, Yet the banks continued their gangsterism with the tracker mortgage scandal. No accountability by government who still facilitated this gangsterism.
@Donal Desmond: Trouble is the banks make no effort in return
@Vin: A non performing loan is also one that’s in negative equity. Something you have no control over.
Remove tax breaks (charity status) for over 5 properties increase tax on l.p.t too €5000 on over 10 €15000 over 15 €20000 over 20 € 100000 per property annual per simple stop big vulture funds
The basic fact is no one with a mortgage is a “Home owner” until the mortgage is fully paid. The right to continued occupation depends on maintaining repayments up to date.
People with insecure employment are therefore poorly rated for mortgage approval, hence the demand for rental accommodation, the cost of which is effectively uncontrolled.
Hence the huge interest by vulture funds in buying up distressed mortgages, converting the properties to long term rental investments.
Since the state sold off the stocks of social rental housing, creating this shortage, the obvious answer is for the state to rebalance the market by buying these mortgage books, converting them to controlled rentals via NAMA & housing associations, thus re imposing a rental control via cost to rental mechanism.
@William Kelly: Anyone with a mortgage is a home owner, if they didn’t own it they would have to get permission from the bank to do alterations to the property but ya can make any changes ya like to it, not like renters.
@brendan H: You don’t own your house until final payment on mortgage!!
@Philip O’Dowd: true, but neither does the bank.
The article is about the debt, not the house.
But selling the debt is selling a share in the house.
It’s share is only equal to the debt, the remainder is yours.
Therefore, if there is some homeowner equity left , I could never understand the courts allowing the banks to unilaterally decide on disposal.
When they repossess, the mortgage contract is ended. All that is left is a property with claims upon it.
The idea that they can, without permission, ‘haircut’ your share and retain their own, may be legal, but certainly not just. It may even be unconstitutional.
@William Kelly: The state did get all the INBS, Anglo and IBRC loan books SUBJECT to the promissory note.
We carry cost of NTMA borrowing of thirteen billion to buy bonds from CBI who took money out of circulation and hold TWELVE BILLION MORE.
EU insisted on that p note being a term of deal m noonan made for more money for aib and b of ire etc and that was when DAIL should have been representing taxpayer to get better terms instead E Kenny thought he could get term changed and liquidated IBRC when Mrs Merkel word did not work ???
Another term of that deal was reduction in public pay .. by ten per cent and union still thinking the govt has control of public fund. ???
As far as EU concerned Ireland is A borrower on say so of one man min for finance and he did that under authority of credit institution act 08.
The sheep are well and throughly fleeced, an ya know what we deserve it because we do nothing about it
Vulture funds calling the shots on compromised regulators
@William Bryan: “John Perkins, Former Advisor IMF.
“My job was to identify countries with resources that corporations covert, like oil and then arrange a huge loan to that country from the World Bank or from one of its sister organisations. The money however would not go to the country, it would go to our own corporations who would make huge profits, but the majority of the people would suffer terrible as a result, because money would be diverted from Education, Healthcare and other Social Services to pay interest on the debt.”
What happened when the IMF moved in and the debt couldn’t be repaid?
“We go back into that country and say, since you can’t pay your debt, sell your resource oil or whatever real cheap to our corporations without any environmental restrictions or, or social regulations. Privatise, sell your electric utilities, your water, sewage systems, your schools, your jails, all your public sector businesses to our corporations, and in the few cases where we failed economic hitman, the jackals went in and still do and aah, they either assassinate the leaders of the country or overthrow them in coups.”
Probably another IMF idea?
. . . You can watch the Central Bank and Fine Gael TDs committing economic treason before the Finance Committee today live on Oireachtas TV at 1.30 . . . #NoConsentNoSale #LandAct2019 #VultureCulture
We seriously need to get a guillotine erected outside the central bank as a warning to these criminals!
Bowing to the vulture funds again, the central bank is a government mouthpiece promising some protection to mortgage holders and giving none. The behaviour of the central bank and government has been nothing short of disgusting on the behaviour concernong mortgage holders. Shame on them all
This is good news for first time buyers as the more restrictive the rules on banks when it comes to handling their mortgage defaulters the more difficult it will be for people to get loans to buys houses.
@Neville Bartos: How is it good so if we can’t get loans??
@Rob Cahill: my point is that banks should be allowed to offload mortgages where defaulters make no effort. If there are laws that stop banks from doing that then it will be much harder for people to get loans going forward.
The architect obviously had one hand down his trousers designing that new Central Bank. That’s my input. Many thanks.
UN SAID THE IRISH GOVERNMENT BETRAYED THE IRISH PEOPLE ON HOUSING TO VF, AND THE HOMELESS CRISIS, PASCAL GOT HIS FINGER PRINTS ALL OVER THIS WITH ALL HIS CABAL BUDDIES HOPE THE KARMA COMES REAL BAD TO HIM.
I wish people would stop going on about BANK for our woes.
We are bearing cost of what DaiL AND A minister DID UNDER power conferred by legislation, credit institutions finance act 08 on minister for finance the power to pledge public fund for banks.
A promissory note issued to central bank by one brian lenihan pledging taxpayer money to pay of debt of anglo to other banks if they defaulted which they did of thirty four billion
AND
terms of a deal by another minister with the EU /IMF who insisted that the promissory note be honoured under which a further debt of fifty five billion due to the EU under terms never laid before the dail and which give EU commission a say in tax raised and how they are spent.
These bills are just P Doherty’s and other T.D.’s way of addressing the problem they refused to deal with .. the absence of DAIL in the terms of that deal on behalf of the taxpayer.
It does not matter what party is in power the min for finance has that legislation to make a deal with EU and not lay it before the Dail unless a minister lay a bill before the Dail repealing the act.
The parties to that deal are
The Min for Finance ,
The gov of the c bank
The eu commission
and
The ECB ( as interested party)
the latter three share a common interest in BANKS
the min cant serve them and act on mandate he was elected to dail as TD.
That is DAIL job to represent taxpayer.
But TD not doing that and seem to me will not do it unless VOTER telling TD that is their job to represent taxpayer and in meantime voter carrying cost of thirteen billion euro borrowing to buy that promissory note /bond from CBI for anglos debts who hold twelve billion euro more bonds.
Taoiseach talks about closing a tax loophole that v funds avail of OPENED by his predecessor and passed by dail in legislation. So if his predecessor with dail could open the loophole why cant they close it?
have your say