Fianna Fáil is calling for all funds that buy mortgages to face proper regulation
Fianna Fáil has warned that next week is “critical” in terms of its bid to ensure vulture funds are properly regulated.
This morning, Ulster Bank became the second major bank to announce plans to sell off thousands of non-performing home loans in recent weeks.
The bank said it could sell up to 7,000 loans that are currently in arrears.
It comes after Permanent TSB confirmed it plans to press ahead with the sale of around 18,000 distressed loans worth €3.7bn, despite major political opposition to the plans.
Fianna Fáil has warned that under current laws funds that purchase the loan portfolios are not required to follow Central Bank regulations – although they are obliged to employ an agent that is.
The party has tabled a bill aimed at ensuring that any fund that purchases mortgages must be regulated by the Central Bank – and has demanded the Government’s support under its confidence and supply arrangement with Fine Gael.
Fianna Fáil finance spokesperson Michael McGrath met with the Minister for Finance Paschal Donohoe on the issue earlier this week.
He told the Pat Kenny Show today that he does not yet know if the Government will support the bill:
“It is an issue which is provided for in the confidence and supply agreement,” he said “So we are seeking now to give effect to that.”
“We are going to take this step by step.
“For us the policy is more important than the politics. If we solve the policy problem, then we will also have solved the political problem.
“So that is where our focus is, next week really is critical in terms of getting a decision from Government.”
Ulster Bank published its full year results this morning - showing it had an operating loss of €151 million in 2017.
Between Ulster Bank and Permanent TSB, as many as 25,000 mortgage holders are facing the prospect of having their loans sold on.
The Government has insisted that homeowners will be protected regardless who owns their loans – with the Taoiseach noting that there are certain regulations already in place.
Mr McGrath said he is not convinced the Government’s stance is accurate.
“I would dispute that assertion from Government,” he said.
“I mean, the main protection that a mortgage holder has is set out in the code of conduct on mortgage arrears.
“The Central Bank can only insist on the code being implemented by regulated entities – in this case it would be the middle man.
“The vulture fund who, after all, is making all of the key decisions in relation to the loan is not accountable, is not regulated and so the Central Bank cannot hold them to account.”
He warned that we are likely to see further loan sell-offs in the coming months – adding that there is speculation that “up to €12bn or €13bn worth of loans are going to be sold.”
“We are talking here not just about mortgages but farm loans and small business loans as well,” he said.
“I think it is inevitable that banks are going to seek to do this and we would really be failing in our duties as an Oireachtas if we failed to address this.”
The government has also faced criticism from other opposition parties on the issue – with People Before Profit TD Richard Boyd Barrett calling for the loans to be bought by the Exchequer.
David Hall of the Irish Mortgage Holders Organisation warned that some of the loans earmarked for sale relate to customers who have engaged with the banks and have restructuring arrangements in place.
He said the homeowners must be protected with only mainstream banks or a “friendly fund that will honour the intent and the spirit of those restructures” permitted to buy.