Fianna Fáil Spokesperson on Finance Michael McGrath has published legislation designed to protect mortgage holders whose loans are sold to unregulated third parties.

Deputy McGrath said: "The issue is given particular urgency by the imminent prospect of the sale of the former Irish Nationwide mortgage book by the special liquidator of IBRC. As the law currently stands, customer mortgages can be sold to a third party who is not regulated by the Central Bank of Ireland.

"This would leave customers in a potentially very vulnerable position with regard both to mortgage forbearance and resolution issues and also possible increases in the variable interest rate they pay when their loans are sold. In the case of IBRC, there are 13,000 residential mortgages holders who could shortly find themselves in this situation.

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"The important point to note is that, when these mortgages were originally issued, it could only be done by a regulated entity. Therefore it is logical that, if they are being sold on, the entity that is purchasing them should be required to abide by the Code of Conduct on Mortgage Arrears (CCMA) in dealing with customers and those borrowers should also retain the right to access the Office of the Financial Services Ombudsman. Our Bill will ensure that customers retain these vital protections.

"The IBRC mortgage book has a higher than average level of arrears. Therefore the customers concerned have an even greater need for the protection of the Code of the Conduct on Mortgage Arrears and recourse to the financial services ombudsman.

"Fianna Fáil was sharply critical of the Government for the changes they introduced to the CCMA in 2013 but notwithstanding the dilution of it that has taken place, the code still provides vital protection in terms of how a financial institution deals with a distressed borrower.

"We are bringing this legislation before the Dáil to ensure that IBRC mortgage customers do not lose protections in the Code which obliges lenders to handle arrears cases sympathetically with the objective of helping people to meet their mortgage obligations.

"Our contention is that, without this protection, mortgage holders are at heightened risk of repossession action as any vulture fund which buys out the loan book will have the sole aim of maximising their return. The Bill would also apply to the customers of any other financial institution whose home loan is sold to an unregulated third party."

(CD/JP)