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Buyers of IRBC mortgages not bound by Central Bank rules

THE buyers of IBRC’s book of mortgage loans will not be hit with penalties if they break the Central Bank’s code of conduct for dealing with customers in arrears, the bank’s liquidators have admitted.

About 11,825 customers are affected as their mortgages are being sold as part of the liquidation of IBRC.

Bidders for the loans have said they will voluntarily comply with the Central Bank code, but did not sign any written agreements. There is no authority to actually supervise whether the commitment is being adhered to, the special liquidator of IBRC Kieran Wallace told members of the Oireachtas Finance Committee yesterday.

“I was going to say it’s not worth the paper it’s written on,” Fianna Fail spokesman Michael McGrath said after Mr Wallace admitted the agreement is not binding. Mr Wallace said: “My personal view is that they will honour the commitment.”

He admitted, however, that he is “not aware” of any penalties that will apply if prospective buyers of the IBRC end up breaking the consumer code. Of the 10,700 residential home loans being sold there are 4,175 behind on repayments, Mr Wallace said. Most are cooperating, but around one in five is not communicating with the bank, he said.

Customers who have already gotten a debt restructuring from IBRC will have that contract honoured after the loans are sold.

The Central Bank can only impose its code on regulated entities, such as banks, but the INBS loans are expected to be sold to US investment funds.

Stephen Donnelly TD said two of those funds – Lone Star and Oaktree – have been named in the press as bidders.

Senior Department of Finance official Ann Nolan also admitted that affected homeowners who end up in dispute with their lender would have no right to complain to the Financial Ombudsman if the loans are sold to a non-regulated buyer.

Plans are in train to introduce legislation next year so that any institution buying mortgages will be subject to the code, she said.

But under intense questioning from TDs and senators, Ms Nolan said there would be nothing to prevent a buyer from hiking interest rates after they take control of the mortgages.

The time and cost of allowing bidding on the loans, and the likely invasion of privacy of having each customer’s mortgage details including the size of the loan and repayment recorded, were factors in the decision.

In a separate development, the special liquidators said they plan to appoint an independent group to look into whether the bust bank should sue employer KPMG for its role as auditor of Irish Nationwide Building Society before the lender was nationalised.

IBRC is made up of the former Anglo Irish Bank and the former Irish Nationwide.


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