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BOSI may be hindered by judgement
27 Mar 2015 20:08
A Supreme Court judgement may make it more difficult for Bank of Scotland Ireland to take possession of family homes which are in mortgage arrears, it has emerged.
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In her judgement, issued last week, Ms Justice Laffoy said it had "the potential to be of significant importance" for people with mortgages taken out with the bank.
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At the end of 2010 Bank of Scotland Ireland was merged with its British parent Bank of Scotland using a European Law Merger procedure.
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The Irish company ceased to exist as it pulled out of the Irish banking market.
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Ms Justice Laffoy found that while the bank's assets were transferred the securities, or mortgages, remained registered to the old Irish company which has now ceased to exist.
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The development means that a huge part of the portfolio of mortgages could be defective, according to barrister Vincent P Martin.
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In order for the Bank of Scotland to have the power to repossess a property the mortgage will have to be registered to Bank of Scotland.
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However, as the law stands only the registered owner of the mortgage can transfer the mortgage, and the registered owner no longer exists.
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Bank of Scotland recently sold 4,000 of its mortgages to US private equity company Loan Star which may further complicate matters.
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It is understood that Ross Maguire SC of New Beginning led the case.
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However one market source the judgement would only have narrow implication for the bank.
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The source said the judgement would only create difficulties in cases where the bank would have to rely on its statutory powers.
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The source said the bank would be able to resolve the difficulties by re-registering its security over the properties.
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