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Irish mortgage holders await legislation

More than 18,000 mortgage holders are still awaiting clarification over the level of protection to be afforded them under proposed legislation as a row over the detail of the bill rumbles on.

The Consumer Protection Bill, which was drawn up after a lengthy consultation process, is intended to protect families whose mortgages have been bought by third parties.

After being bought by so-called vulture funds, the administration duties are often farmed out to mortgage servicing firms, which then liaise with borrowers.

The bill focuses on regulating these consumer-facing firms rather than the fund which owns the mortgage —something its critics claim could lead to inadequate protection for borrowers.

Figures released to Fianna Fáil finance spokesman Michael McGrath, in reply to a recent parliamentary question, show more than 18,000 customers are awaiting the finalisation of the bill.

The majority of these cases arise from the liquidation of the Irish Bank Resolution Corporation (IBRC) — created from the merger of the former Anglo Irish Bank and Irish Nationwide Building Society.

The sale of mortgages as part of the liquidation account for 12,700 customers while loans sold to GE Money — the financial arm of General Electric — and Lloyds Banking Group in 2012 and 2013 respectively add a combined 3,500 additional mortgage holders to the mix.

“The bill was introduced in the Dáil in February following a lengthy consultation process. Very serious concerns were raised at the time about the way in which the legislation was designed,” Mr McGrath said.

“During the debate, I pointed out the minister had backed away from the initial intention, which was to make the ownership of credit a regulated activity, apparently under pressure from financial institutions. This would leave us with a half-baked system whereby the servicing agent for the mortgage would need to be regulated, but the same requirement would not be placed on the owner of the mortgage.”

Reassuring committee customers late last year that they would enjoy adequate protection under the legislation, Department of Finance legal adviser Antoine Mac Donncha said the legislation could also stretch to the owners of the mortgage in cases where the servicing firm seeks to wash its hands of any complaint.

Finance Minister Michael Noonan previously said the bill would ensure borrowers whose loans are sold by regulated firms to unregulated entities retain the same level of protection.

A spokesperson for the Department of Finance was unavailable for comment.

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