Code of conduct has no legal standing, hears Oireachtas committee

The voluntary commitment from bidders for the mortgages being sold by the Irish Bank Resolution Corporation (IBRC), that they will abide by the Code of Conduct on Mortgage Arrears, has no legal standing, an Oireachtas committee was told yesterday.

IBRC liquidator Kieran Wallace told the Joint Committee on Finance, Public Expenditure & Reform, that there was nothing in writing showing the bidders voluntarily agreeing to implement the code. He said the bidders had agreed on Tuesday that they would abide by the code, following negotiations that had lasted two weeks.

Asked by Michael McGrath of Fianna Fáil if he was saying the agreement had zero legal standing, Mr Wallace said: “That is correct.”

The committee was discussing the sale by the liquidators, Mr Wallace and Eamonn Richardson, both of KPMG, of the former mortgage book of the Irish Nationwide Building Society, which is now part of the IBRC.

Mr McGrath said thousands of mortgage holders now felt they will be at the mercy of foreign-owned funds in relation to mortgages they took out in good faith from an Irish-owned institution regulated by the Central Bank.

Mr Wallace said he understood Mr McGrath’s concerns, but that he and his colleagues were liquidators with a job to do.

'Absolutely determined'
Ann Nolan, head of the financial services division of the Department of Finance, said it was looking at introducing legislation that would extend the protection of the code to people who had mortgages with unregulated entities.

“The minister is absolutely determined that the code of conduct will apply and the minister will legislate as necessary,” she said.

The IBRC has 12,702 mortgages with a par value of €1.8 billion. More than 80 per cent are private home mortgages, of which 39 per cent are in arrears. Of the mortgages in arrears, 78 per cent were co-operating with the mortgage arrears resolution process.

Restructuring had been concluded with 38 per cent of these and a further 6 per cent were in the final stages of completion. With a further 42 per cent, they were working to complete an agreement before the loans were sold.

Mr Wallace said restructuring deals agreed would be binding on the buyers of the loans. However he agreed with Pearse Doherty of Sinn Féin that some restructuring deals could be withdrawn when they came up for review.

The resolution deals agreed included split mortgages, the recapitalisation of interest on accounts, the changing of terms, moratoriums and “trade down solutions”.